nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒01‒10
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation Performance and the Signal Effect: Evidence from a European Program By Nadine Levratto; Aurelien Quignon
  2. Remittances and firm performance in sub-Saharan Africa: evidence from firm-level data By Kabinet Kaba; Mahamat Moustapha
  3. The effect of the manager gender on SMEs export and import decisions: Evidence for Spain By Alfonso Expósito; Amparo Sanchis-Llopis; Juan A. Sanchis-Llopis
  4. Entrepreneurial Ecosystems and Regional Persistence of High Growth Firms: A 'Broken Clock' Critique By Coad, Alex; Srhoj, Stjepan
  5. Tracing Productivity Growth Channels in the UK By Mr. Daniel Garcia-Macia; Julia Korosteleva
  6. The dynamics of wage dispersion between firms: The role of firm entry and exit By Schröpf, Benedikt
  7. Industrial innovation for competitive sustainability - Science-to-policy evidence from the 8th European Conference on Corporate R&D and Innovation (CONCORDi 2021) By Dario Diodato; Pietro Moncada-Paternò-Castello; Francesco Rentocchini; Alexander Tübke
  8. On the consequences of firm growth By Freel, Mark; Gordon, Ian
  9. Knowledge Spillovers From Superstar Tech-Firms: The Case of Nokia By Fuad Hasanov; Reda Cherif; Jyrki Ali-Yrkkö; Natalia Kuosmanen; Mika Pajarinen
  10. How institutions moderate the effect of gender diversity on firm performance By Hoch, Felix; Seyberth, Lilo
  11. Private or Public Equity? The Evolving Entrepreneurial Finance Landscape By Michael Ewens; Joan Farre-Mensa
  12. The geography of environmental innovation: A critical review and agenda for future research By Losacker, Sebastian; Hansmeier, Hendrik; Horbach, Jens; Liefner, Ingo
  13. World Corporate Top R&D investors: Paving the way to carbon neutrality By Sara Amoroso; Leonidas Aristodemou; Chiara Criscuolo; Antoine Dechezleprete; Helene Dernis; Nicola Grassano; Laurent Moussiegt; Lorenzo Napolitano; Daisuke Nawa; Mariagrazia Squicciarini; Alexander Tuebke
  14. Improving effectiveness of Lithuania’s innovation policy By OECD
  15. Policy-Induced Innovation in Clean Technologies: Evidence from the Car Market By Rik L. Rozendaal; Herman R. J. Vollebergh
  16. Public Investment, Convergence and Productivity Growth in European regions By Roberto Martino
  17. Invención y patentes en Uruguay: evidencia empírica entre 1970 y 2018 By Carlos Bianchi; Pablo Galaso; Sergio Palomeque; Santiago Picasso; Adrián Rodríguez Miranda

  1. By: Nadine Levratto (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique); Aurelien Quignon (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper seeks to estimate the effect of a European policy that subsidizes innovation investments. By carefully selecting observables, we compare recipients of the program with non-recipient firms to overcome the endogeneity of R&D grants. We conduct a difference-indifferences design on the universe of a unique firm-level dataset of European SMEs between 2008 and 2017. We find a significant effect of proof of concept grants, which implies an increase in the number of patent applications and the probability of patenting. There are positive impacts on credit financing, which suggest a signal effect to investors about the project quality of young firms.
    Keywords: Innovation,Patent,Financing constraints,H2020,R&D subsidies
    Date: 2021–12–06
  2. By: Kabinet Kaba (CERDI, University Clermont Auvergne); Mahamat Moustapha (Paris Dauphine University-PSL)
    Abstract: Sub-Saharan African firms face enormous obstacles to their development. The main constraints to business performance identified are poor access to finance and a weak domestic market. In this paper, we examine how international remittances affect firms’ performance. Specifically, we investigate the role of remittances on capital accumulation, sales, and employment in 34,010 f irms operating in 42 Sub-Saharan African countries between 2006 and 2020. Using a fixed-effect instrumental variable approach to control for the endogeneity of remittances, we find that international remittances positively affect the share of capital held by nationals in manufacturing firms. Moreover, international remittances positively affect sales in non-manufacturing firms, while a negative effect on the sales of manufacturing firms is observed. Regarding the effect of remittances on employment, we find a positive impact on both manufacturing and non-manufacturing f irms. Heterogeneity tests suggest that the effect of remittances on firms’ performance is larger in less financially developed and non-resource-rich countries. As for the negative impact of remittances on sales in manufacturing firms, the results show that it is entirely due to small firms. Finally, using remittances per capita instead of remittances relative to GDP, similar result are found.
    Keywords: Remittances, Firm Performance, Entrepreneurship, Saving and Capital Investment, Firm Employment, Africa
    JEL: F24 L25 L26 M51 O16 O55
    Date: 2021–12
  3. By: Alfonso Expósito ((University of Málaga, Spain) ORCID number: 0000-0002-9248-4879); Amparo Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0002-0872-7859); Juan A. Sanchis-Llopis ((University of Valencia and ERICES, Spain) ORCID number: 0000-0001-9664-4668)
    Abstract: Using a sample of 1,405 Spanish businesses, this paper explores the role of manager gender in SMEs’ decisions to get involved in exporting and importing activities. We borrow insights from international entrepreneurship theories and feminist theories to set testable hypotheses regarding how managerial gender and entrepreneurial orientation (proactiveness, risk-taking and innovativeness) may influence SMEs export and import propensities. Using a bivariate probit model and controlling for other managerial and business characteristics, results indicate that there are not significant differences in exporting propensities between male- and female-led businesses. However, female-led SMEs show a lower importing propensity, as compared to male-led counterparts. In addition, the three dimensions of entrepreneurial orientation (proactiveness, risk-taking and innovativeness) are important drivers for participating in overseas markets, and do not depend upon the manager gender. The role of managers gender in SMEs importing activities has not been investigated so far, and this is the main contribution of our research.
    Keywords: Manager gender; entrepreneurial orientation; small and medium-enterprises; exporting and importing; bivariate probit model.
    JEL: C35 J16 F14 M21
    Date: 2021–12
  4. By: Coad, Alex; Srhoj, Stjepan
    Abstract: The Entrepreneurial Ecosystems (EE) approach makes specific predictions regarding how EE inputs are converted into high-growth firms (HGFs) as an output. A simulation model draws out our hypothesis of regional persistence in HGF shares. Based on intuitions that EEs are persistent, we investigate whether regional HGF shares are persistent, using census data for 2 European countries taken separately (Croatia for 2004-2019, and Slovenia for 2008-2014). Overall, there is no clear persistence in regional HGF shares - regions with large HGF shares in one period are not necessarily likely to have large HGF shares in the following period. This is a puzzle for EE theory. In fact, there seems to be more persistence in industry-level HGF shares than for regional HGF shares. We formulate a ‘broken clock’ critique - just as a broken clock is correct twice a day, EE recommendations may sometimes be correct, but are fundamentally flawed as long as time-changing outcomes (HGF shares) are predicted using time-invariant variables (such as local universities, institutions and infrastructure).
    Keywords: High-Growth Firms, Persistence, Regional Persistence; Entrepreneurial Ecosystems; Clusters; Sectoral Systems of Innovation
    JEL: L52 L78 M21 O38
    Date: 2021–12–07
  5. By: Mr. Daniel Garcia-Macia; Julia Korosteleva
    Abstract: What drove the UK productivity slowdown post-GFC, and how is the post-Covid recovery expected to differ? This paper traces the sources of TFP growth in the UK over the last two decades through the lens of a structural model of innovation, using registry data on the universe of firms. The dominant innovation source in the pre-GFC decade were improvements by incumbent firms on their own products, whereas creation of new varieties by entrants took a leading role post-GFC. In the Covid recovery, survey data suggests that creative destruction (i.e., innovation replacing other firms’ products) is expected to gain importance. This emphasizes the need for growth policies that facilitate labor and capital reallocation across firms, in addition to R&D support.
    Keywords: economic growth, innovation, creative destruction
    Date: 2021–11–12
  6. By: Schröpf, Benedikt
    Abstract: Although wage inequality is a prominent and widely studied issue, the literature is vastly silent on the relationship between firm entry and exit and the wage dispersion between firms. Using a 50% random administrative sample of West German establishments over the period 1976-2017, I study wage dispersion dynamics between and within the groups of entering, exiting and incumbent establishments by examining the distribution of average wages across establishments. The results show that entering establishments became increasingly unequal over time, thereby contributing to the rise in the wage dispersion between establishments. However, stronger exit dynamism of young and low-wage establishments has dampened this effect. These findings suggest taking the consequences for wage inequality into consideration when designing and assessing policy instruments for firm entry and exit.
    Keywords: Firm entry,Firm exit,Wage dispersion,Firm Dynamics,Germany
    JEL: L26 M13 J31
    Date: 2021
  7. By: Dario Diodato (European Commission - JRC); Pietro Moncada-Paternò-Castello (European Commission - JRC); Francesco Rentocchini (European Commission - JRC); Alexander Tübke (European Commission - JRC)
    Abstract: This background note describes five core global disruptions affecting the world economy in the context of industrial innovation for competitive sustainability. It discusses how scientific evidence presented at the 8th CONCORDi conference proposes to tackle some of these disruptions, and concludes by highlighting the policy-relevant issues. This resonates with CONCORDi’s science-to-policy objective - from the four conference organisers JRC, EARTO, OECD and UNIDO. The note is addressed to the participants of CONCORDi 2021 as well as to a wider audience interested in the main themes of this conference.
    Keywords: R&D, firm innovation, innovation policies
    Date: 2021–12
  8. By: Freel, Mark; Gordon, Ian
    Abstract: Recent contributions to the literature on small firm growth have been marked by a growing sense of frustration with the state-of-the-art and what it implicates in both theory and policy. In short, while growth events appear relatively common, a tiny proportion of firms sustain growth and ‘scale’; calling into question the very basis of policies seeking to target high growth firms (HGFs). We argue that understanding the frequency of growth events and the rarity of sustained growth requires a better understanding of growth consequences. To this end, we report case study evidence from ambitious entrepreneurs whose firms had experienced an episode of high growth followed by longer periods of mixed performance. Our goal is to shed light on how the experience of growing affects further growth. Our data provide initial insights into the mechanisms linking past growth to growth motivations and into the ways in which past growth lays the foundations for future performance.
    Keywords: firm growth, growth intention, ambidexterity, income, barriers
    JEL: L21 L25 L26
    Date: 2020–02–01
  9. By: Fuad Hasanov; Reda Cherif; Jyrki Ali-Yrkkö; Natalia Kuosmanen; Mika Pajarinen
    Abstract: Do workers hired from superstar tech-firms contribute to better firm performance? To address this question, we analyze the effects of tacit knowledge spillovers from Nokia in the context of a quasi-natural experiment in Finland, the closure of Nokia’s mobile device division in 2014 and the massive labor movement it implied. We apply a two-stage difference-in-differences approach with heterogeneous treatment to estimate the causal effects of hiring former Nokia employees. Our results provide new evidence supporting the positive causal role of former Nokia workers on firm performance. The evidence of the positive spillovers on firms is particularly strong in terms of employment and value added.
    Keywords: human capital, employment, value added, Nokia, difference-in-differences, heterogeneous treatment, knowledge spillovers, superstar firms.; superstar tech-firm; spillover effect; Nokia employee; superstar firm; effects from Nokia; Spillovers; Employment; Labor productivity; Positive spillovers; Human capital; Global
    Date: 2021–10–29
  10. By: Hoch, Felix; Seyberth, Lilo
    Abstract: Research investigating the relationship between firm performance and gender diversity has so far reported conflicting evidence: Some studies find firm performance to benefit from gender diversity, others find negative results or no effect at all. Taking this inconclusive evidence as a sign for moderators influencing the effect of gender diversity on firm performance, we investigate the moderating influence of institutions on this relationship. Using data on 7,661 firms in 71 countries, we employ a multilevel linear regression with fixed effects to examine the moderating effect of formal as well as informal institutional characteristics. We find that institutions indeed moderate the relationship between gender diversity and firm performance. In particular, informal institutions seem to moderate the effect of diversity on market valuation (Tobin's Q), while formal institutions moderate the effect of gender diversity on firm financial performance (ROA). These results have important theoretical implications for the academic debate on gender diversity and firm performance as well as practical implications for both businesses and lawmakers.
    JEL: J16 J71 L25 M12 M14
    Date: 2021
  11. By: Michael Ewens; Joan Farre-Mensa
    Abstract: The U.S. entrepreneurial finance market has changed dramatically over the last two decades. Entrepreneurs raising their first round of venture capital retain 30% more equity in their firm and are more likely to control their board of directors. Late-stage startups are raising larger amounts of capital in the private markets from a growing pool of traditional and new investors. These private market changes have coincided with a sharp decline in the number of firms going public—and when firms do go public, they are older and have raised more private capital. To understand these facts, we provide a systematic description of the differences between private and public firms. Next, we review several regulatory, technological, and competitive changes affecting both startups and investors that help explain how the trade-offs between going public and staying private have changed. We conclude by listing several open research questions.
    JEL: G23 G24 G28 G34 G38
    Date: 2021–12
  12. By: Losacker, Sebastian (University Hannover); Hansmeier, Hendrik (Fraunhofer Institute for Systems and Innovation Research ISI); Horbach, Jens (University of Applied Sciences Augsburg); Liefner, Ingo (University Hannover)
    Abstract: Environmental innovations make an important contribution to solving ecological and climate crises. Although these crises are global phenomena, the regional dimension plays a crucial role, as regions both provide the conditions for the development of environmental innovations and promote widespread use and diffusion. Against this background, this article has two objectives. Firstly, we critically review the state of research on regional determinants of environmental innovation. Secondly, based on these results, we develop an agenda for further research in regional studies that will help to better understand the geography of environmental innovation and to come up with useful region-specific policy recommendations.
    Keywords: environmental innovation; geography of innovation; sustainability transitions; regional development; geography of transitions
    JEL: O31 O33 Q55 R11
    Date: 2021–12–17
  13. By: Sara Amoroso (European Commission - JRC); Leonidas Aristodemou (OECD); Chiara Criscuolo; Antoine Dechezleprete (OECD); Helene Dernis (OECD); Nicola Grassano (European Commission - JRC); Laurent Moussiegt (OECD); Lorenzo Napolitano (European Commission - JRC); Daisuke Nawa (OECD); Mariagrazia Squicciarini; Alexander Tuebke (European Commission - JRC)
    Abstract: This biennial report continues the joint JRC-OECD analysis of the IP portfolios of the world's top 2 000 R&D investors. The report shows that global R&D and patenting activities are highly concentrated among the world’s top 2 000 R&D investors. These are equivalent to 87% of global business R&D expenditures by the private sector and 63% of patent filings across all technologies. There is much less concentration at the commercialisation stage, with only 6% of total trademarks owned by the top R&D investors. The world’s top R&D investors are key contributors to global climate-related innovation. They own 70% of global climate change mitigation or adaptation patents and over 10% of global climate-related trademarks, which is larger than their contribution to overall patents and trademarks across all fields. Looking at the potential contribution of the digital revolution to climate-related innovation at the invention stage, 20% of climate-related patents have a digital component (against 33% for patents across all technological fields). Finally, this edition of the report investigates for the first time the gender composition of both the board of directors of the top 2 000 R&D investors, and of their R&D workforce. In general, EU27 companies have on average more gender-balanced boards than the US and the Asian ones, with a women representation of at least 26%. A substantial gender gap is also observed for inventors listed in patent applications, with significant heterogeneity across countries and sectors.
    Keywords: R&D investment, Green Patent, Intellectual Property, Patents, Trademarks, Gender Balance
    Date: 2021–11
  14. By: OECD
    Abstract: This paper concludes the project “Support to Improve Effectiveness of Lithuania’s Innovation Policy” which summarises the findings, policy options and recommended actions. It aimed at providing support to efforts of the Government of Lithuania to better deliver existing policies, and develop and implement appropriate new policies, instruments and institutions in selected areas of science, technology and innovation (STI) policy. The report takes stock of recent policy actions taken since the “OECD Review of Innovation Policy: Lithuania 2016”. Drawing on international good practices it explores the scope for improvement in selected areas of STI policy: a) consolidation of innovation agencies and enhancing Lithuania’s STI Council, b) public procurement of innovation , c) mission-oriented innovation policies, and d) industry 4.0 and artificial intelligence. The project has been aligned with ongoing Lithuanian reform processes, some of which are reflected in the ‘New Generation Lithuania’ plan related to the EU’s Recovery and Resilience Facility.
    Keywords: Artificial intelligence, Governance, Industry 4.0, Innovation policy, Mission-orientation, Public procurement
    JEL: O31 O38 L52
    Date: 2021–12–21
  15. By: Rik L. Rozendaal; Herman R. J. Vollebergh
    Abstract: This article tests the effects of fuel economy and greenhouse gas emission standards on the direction of innovation, in particular on breakthrough technologies in the automotive industry. We develop an intuitive measure of standard stringency that captures the policy’s most important features for the decision as to whether or not to innovate. To test the role of these standards relative to prices and taxes, we construct a firm-level panel of patents in clean and dirty automotive technologies for the years 2000-2016. Our results indicate that standards are a very robust driver inducing clean innovation, whereas taxes also seem to play a role but prices (net of taxes) do not. This effect is driven by patenting for breakthrough technologies, in particular electric vehicle and hydrogen fuel cell technologies. We find no evidence that these policies negatively impact dirty innovation.
    Keywords: environmental policy instruments, regulatory stringency, innovation, directed technical change
    JEL: O30 Q55 Q58
    Date: 2021
  16. By: Roberto Martino
    Abstract: This paper estimates an augmented growth model to analyse the contribution of public investment to productivity growth for European regions. The empirical model accounts for the accumulation of public capital, the stock of infrastructure and the creation of knowledge by the government sector, alongside other growth determinants, as institutions, education, and business R&D. Convergence dynamics are also explored. Data include 273 NUTS2 European regions from 27 countries from 1999 to 2018. The empirical evidence presented suggests that public investment is positively associated with productivity growth and complementarities with business investment are in place. Furthermore, returns on both types of investments are larger in the regions of the Southern periphery, flagging policy space for further public and private productive spending. No significant effect is found for the stock of infrastructure. Public R&D has an indirect impact on productivity growth through the mediating effect of business R&D, while institutional quality is a horizontal determinant of growth.
    Date: 2021
  17. By: Carlos Bianchi (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Pablo Galaso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Sergio Palomeque (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Santiago Picasso (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Adrián Rodríguez Miranda (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This document compiles, systematizes and analyses patent data in Uruguay for the first time. For this purpose, it uses the official records of patents filed at the Uruguayan Patent Office. The paper explains the processing of the original records to generate a database for research purposes. Subsequently, a descriptive study of the data is carried out, analyzing the temporal evolution of patents between 1970 and 2018, the territorial distribution of invention activities in the country's regions, the technological specialization of inventions, the main companies and organizations, and the participation of actors residing abroad. The results provide some interesting findings about innovation processes in the country. These include the growth experienced by the number of patents registered since 1990, the high territorial concentration, as well as a positive association between patenting levels and regional development indicators. This evidence also illustrates the diverse possibilities presented by patent data to study innovation processes in countries such as Uruguay.
    Keywords: O31, O54, P48
    Date: 2021–10

This nep-sbm issue is ©2022 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.