nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒03‒07
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. How to foster climate innovation in the European Union: Insights from the EIB Online Survey on Climate Innovation By Delanote, Julie; Rückert, Désirée
  2. Financial Factors, Firm size and Firm Potential By Ferreira, M.; Haber, T.; Rörig, C.
  3. Heterogeneous Effect of Uncertainty on Corporate Investment: Evidence from Listed Firms in the Republic of Korea By Kim, Cheonkoo; Park, Jungsoo; Park, Donghyun; Tian, Shu
  4. The effect of climate policy on innovation and economic performance along the supply chain: A firm- and sector-level analysis By Antoine Dechezleprêtre; Tobias Kruse
  5. Private or Public Equity? The Evolving Entrepreneurial Finance Landscape By Ewens, Michael; Farre-Mensa, Joan
  6. Agricultural Technology Commercialization to Entrepreneurial Startups: Case study on Networking By Loganathan, Muralidharan; Subrahmanya, MH Bala
  7. Collaborative innovation within SMEs in the wilaya of Bejaia By Ait Foudil
  8. Partisan Entrepreneurship By Engelberg, Joseph E.; Guzman, Jorge; Lu, Runjing; Mullins, William
  9. How Distortive are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT By Jing Xing; Katarzyna A. Bilicka; Xipei Hou
  10. Caught In The Middle: The Bias Against Startup Innovation With Technical And Commercial Challenges By Ashish Arora; Andrea Fosfuri; Thomas Roende
  11. R&D Productivity And The Nexus Between Product Substitutability And Innovation: Theory And Experimental Evidence By Christos Ioannou; Miltiadis Makris; Carmine Ornaghi
  12. Resilience among the disadvantaged: How losses influence the post-crisis behaviour of Cameroonian entrepreneurs By Castellanza, Luca

  1. By: Delanote, Julie; Rückert, Désirée
    Abstract: Using survey data on climate innovation, we map climate innovation patterns across different regions and technologies, and study the cooperation, protection and reach of climate innovation. Our analysis confirms that there is a strong link between climate innovation and firm performance. We nevertheless observe that European firms seem to suffer from the availability of finance. If European policymakers want to create more successful firms in the climate sector, they should strengthen policies that aim to reduce regulatory uncertainty and work actively to improve access-to finance conditions, in particular for start-ups.
    Keywords: Climate action and environment,Economics
    Date: 2022
  2. By: Ferreira, M.; Haber, T.; Rörig, C.
    Abstract: Using a unique dataset covering the universe of Portuguese firms and their credit situation we show that financially constrained firms are found across the entire firm size distribution, account for a larger total asset share compared to standard heterogeneous firms models, and exhibit a higher cyclical sensitivity, conditional on size. In light of these findings we reassess the importance of the firm distribution in shaping aggregate outcomes in the canonical model of heterogeneous firms with financial frictions. We augment the productivity process with ex-ante heterogeneity of firms, allowing us to match the distribution of constrained firms conditional on size. This, together with the fact that constrained firms have a higher capital elasticity, leads to up to four times larger aggregate fluctuations and capital misallocation.
    Keywords: Firm size, business cycle, financial accelerator
    JEL: E62 E22 E23
    Date: 2021–11–03
  3. By: Kim, Cheonkoo (Korea Chamber of Commerce and Industry); Park, Jungsoo (Sogang University); Park, Donghyun (Asian Development Bank); Tian, Shu (Asian Development Bank)
    Abstract: In this paper, we analyze the effect of financial uncertainty on corporate investment using firm-level panel data from the Republic of Korea. We find that financial uncertainty has a significant negative effect on corporate investment, and that the effect is heterogeneous across firms of different sizes. Small firms and large firms are more exposed to the negative effect of uncertainty than are medium-sized firms. The negative effect of uncertainty on large firms slightly declined after the global financial crisis, but it increased for small and medium-sized enterprises (SMEs). Financial constraints and investment irreversibility amplify the negative effect of uncertainty. The inverted U-shaped curve of the uncertainty effect along the firm-size spectrum can be understood as follows: Small firms are more financially constrained and large firms’ investments are more irreversible in nature. Lastly, contrary to widespread belief, uncertainty has waned since 1990, dampening the trend of declining investment ratios. To counter the negative effect of uncertainty on SMEs, policies need to be directed toward the development of capital markets and bond markets for SMEs. Furthermore, SME policies should be redirected to target competitiveness, not protection.
    Keywords: uncertainty; corporate investment; financial constraints; investment irreversibility
    JEL: E22 G31
    Date: 2022–02–21
  4. By: Antoine Dechezleprêtre (OECD); Tobias Kruse (OECD)
    Abstract: The paper empirically assesses the effect of climate policy stringency on innovation and economic performance, both directly on regulated sectors and indirectly through supply chain relationships. The analysis is based on a combination of firm- and sector-level data, covering 19 countries and the period from 1990 to 2015. The paper shows that climate policies are effective at inducing innovation in low-carbon technologies in directly regulated sectors. It does not find evidence that climate policies induce significant innovation along the supply chain. In addition, there is no evidence that climate policies – through the channel of clean innovation – either harm or improve the economic performance of regulated firms. This supports the evidence that past climate policies have not been major burdens on firms’ competitiveness, and that clean innovation may enable firms to compensate for the potential costs implied by new environmental regulations.
    Keywords: Firm performance, Low carbon innovation, Policy evaluation, Porter Hypothesis
    JEL: Q55 Q58 O38 L25
    Date: 2022–02–15
  5. By: Ewens, Michael (California Institute of Technology); Farre-Mensa, Joan
    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.
    Date: 2021–11–07
  6. By: Loganathan, Muralidharan (PrivateCircle); Subrahmanya, MH Bala
    Abstract: Technology commercialization from public research universities provide impetus to startups with know-how that have a potential to succeed in the market. We examine a network-based incubator, in an agricultural research university, that supports the development of startups. Our study explores networking and technology commercialization support utilized by the incubated startups. We examine the mechanisms of network formation in a university-based incubator and distinguish the entrepreneurial and university networks formed. From the study, we develop a set of propositions relating outcomes at the startup level with entrepreneurial affiliation, experience, institutional incentives considering the local contextual factors. Using these, we derive managerial and policy implications for the stakeholders looking at diffusion of university developed technologies. The study explores the black box of entrepreneurship support, and provides appropriate strategies to technology commercialization with agri-tech startups. The study has implications to universities that support entrepreneurship formally and informally.
    Date: 2022–01–25
  7. By: Ait Foudil (Université Abderrahmane Mira [Béjaïa])
    Abstract: The subject of this paper is the study of collaborative innovation in the context of Algerian SMEs. Based on the SMEs of the wilaya of Bejaia, this study consists of examining their potential to collaborate with each other and with other actors to innovate. To do this, a sample of 60 SMEs was the subject of a field survey. Using the data collected, we were able to determine the factors that prevent SMEs from practicing collaborative innovation, including the lack of financial, human and material resources.
    Abstract: L'objet de ce papier est l'étude de l'innovation collaborative dans le contexte des PME algériennes. En se basant sur les PME de la wilaya de Bejaia, cette étude consiste à examiner leur potentiel à collaborer entre elles et avec d'autres acteurs pour innover. Pour ce faire, un échantillon de 60 PME a fait l'objet d'une enquête de terrain. L'exploitation des données recueillies nous a permis de déterminer les facteurs qui empêchent les PME à pratiquer l'innovation collaborative, entre autre, l'absence de ressources financières, humaines et matérielles.
    Keywords: Bejaia,SME,Knowledge,Cooperation,Collaborative innovation,PME,Connaissances,Coopération,Innovation collaborative
    Date: 2021
  8. By: Engelberg, Joseph E.; Guzman, Jorge; Lu, Runjing (University of Alberta); Mullins, William (UC San Diego)
    Abstract: Republicans start more firms than Democrats. Using a sample of 40 million party-identified Americans between 2005 and 2017, we find that 6% of Republicans and 4% of Democrats become entrepreneurs. This partisan entrepreneurship gap is time-varying: Republicans increase their relative entrepreneurship during Republican administrations and decrease it during Democratic administrations, amounting to a partisan reallocation of 170,000 new firms over our 13 year sample. We find sharp changes in partisan entrepreneurship around the elections of President Obama and President Trump, and the strongest effects among the most politically active partisans: those that donate and vote.
    Date: 2021–03–01
  9. By: Jing Xing; Katarzyna A. Bilicka; Xipei Hou
    Abstract: In this paper, we investigate distortions created by turnover taxes. As a natural experiment, we explore a reform that replaced turnover taxes with value-added taxes for some service industries in China, while the taxation of manufacturing industries remained unchanged. The reform increased sales, R&D investment, and employment for affected service firms, which is primarily driven by outsourcing from downstream manufacturing firms. We document that smaller and less innovative manufacturing firms outsource more, and reallocation increases the quality of innovation for affected service firms. Our study provides new evidence on the negative impact of turnover taxes imposed on business inputs.
    JEL: D25 H25 H32 O32
    Date: 2022–01
  10. By: Ashish Arora; Andrea Fosfuri; Thomas Roende
    Abstract: Startups in IT and life sciences appear to be flourishing. However, startups in other sectors, such as new materials, automation, and eco-innovations, which are often called "deep tech", seem to struggle. We argue that innovations with both technical and commercial challenges, typical of deep tech innovations, are especially disadvantaged in a startup-based innovation system. We develop an analytical model where startups are more efficient at solving technical challenges and incumbents are more efficient at solving commercial challenges. We find that the startup-based system works better for "specialized" innovations, where only one type of challenges is significant. Startups which face both technical and commercial challenges are disadvantaged because they capture a smaller fraction of the value they create. We discuss the implications for various public policies that have been proposed to encourage deep-tech.
    JEL: L26 O31 Q55
    Date: 2022–01
  11. By: Christos Ioannou (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique); Miltiadis Makris (University of Kent [Canterbury]); Carmine Ornaghi (University of Southampton)
    Abstract: The present study proposes a theoretical model that investigates how R&D productivity influences the relationship between product substitutability and R&D investment in a duopolistic market. We argue that the effects on R&D investment are more complex than the previous literature suggests. We show theoretically that, in unlevelled industries, the laggard's R&D investment decreases with product substitutability regardless of the R&D productivity level. In sharp contrast, in levelled industries, whether R&D investment increases or decreases with product substitutability depends crucially on the level of the R&D productivity. We choose parameters and formulate testable predictions that we take to the laboratory. We find that subjects' behavior is largely consistent with the model's predictions.
    Keywords: Experiments,Product Substitutability,R&D Productivity,Duopoly
    Date: 2021
  12. By: Castellanza, Luca
    Abstract: Crises hamper entrepreneurship by eroding the entrepreneurs’ resource bases and causing psychological distress. Entrepreneurial resilience, the act of taking advantage of opportunities during adverse circumstances, requires using resources to counteract crisis-related disruptions. Building on these ideas, we develop theory as to how entrepreneurs operating in poverty settings, who are susceptible to instability and resource erosion, may behave resiliently when confronted with losses. Through a grounded-theoretical analysis of entrepreneurship in South-West Cameroon, we identify three behaviours local entrepreneurs enact in reaction to losses: non-resilience, urgency-driven resilience, and synergy-driven resilience. Then, we build theory as to how the mechanisms of resource erosion and psychological distress interact in determining post-crisis reactions. The study generates novel insights on the antecedents of entrepreneurial resilience with implications for theory and practice.
    Date: 2021–10–14

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.
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