nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒05‒16
thirteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The Evolution of Owner-Entrepreneurs’ Taxation: Five Tax Regimes over a 160-Year Period By Elert, Niklas; Johansson, Dan; Stenkula, Mikael; Wykman, Niklas
  2. The Export of High Knowledge Intensity Services of European Countries By LEOGRANDE, ANGELO
  3. Internationalization impacts on team innovation in Lithuanian high-tech firms By Mindaugas Laužikas; Aistė Miliūtė; Mukhammad Khalili
  4. Assessment and analysis of accounting and finance apps in start-ups in Germany: an explorative study By Salvy Goel, Salvy; Berrones-Flemmig, Claudia Nelly
  5. How Distortive Are Turnover Taxes? Evidence from Replacing Turnover Tax with VAT By Jing Xing; Katarzyna Anna Bilicka; Xipei Hou
  6. Deconstructing misconceptions about startups, the new responsibility devolved to entrepreneurial support actor By Thomas Houy; Flavien Bazenet
  7. Research management models to promote breakthrough innovation: analyzing success case stories of simultaneous discovery-invention research processes. By Jean-Alain Héraud; Nathalie Popiolek
  8. Climate change affectedness and innovation in German firms By Horbach, Jens; Rammer, Christian
  9. A business model pattern arrives... and then? A translation perspective on business model innovation in established firms By Kajsa Ahlgren Ode; Céline Louche
  10. The rise of process claims: Evidence from a century of U.S. patents By Ganglmair, Bernhard; Robinson, W. Keith; Seeligson, Michael
  11. SME Related Provisions in Free Trade Agreements – An Analysis of India’s Strategic Focus By Tandon, Anjali
  12. Giving zombie firms a second chance: An assessment of the reform of the Portuguese insolvency framework By Ernesto Nieto Carrillo; Carlos Carreira; Paulino Maria Freitas Teixeira
  13. Early exit from business, performance and neighbours’ influence: a study of farmers in France By Emmanuel Paroissien; Laure Latruffe; Laurent Piet

  1. By: Elert, Niklas (Research Institute of Industrial Economics (IFN)); Johansson, Dan (Örebro University School of Business); Stenkula, Mikael (Research Institute of Industrial Economics (IFN)); Wykman, Niklas (Örebro University Schoolf of Business)
    Abstract: The institutional literature suggests that long-term tax incentives are crucial for entrepreneurs, but studies on this topic are hampered by theoretical and empirical problems related to how to define and measure entrepreneurial income. We resolve these problems by drawing on a theoretical definition of the entrepreneur as an owner, which enables us to identify entrepreneurship empirically by means of investments made by active owners of closely held firms. Using detailed Swedish tax data, we analyze the tax incentives for such owner-entrepreneur investments from 1862 to 2018, thereby highlighting the evolution of a general institutional phenomenon through a long-run, in-depth, country-specific analysis. We calculate the annual marginal effective tax rate (METR) on capital income for investments, distinguishing between average- and top-income entrepreneurs, and between three sources of finance. We identify five tax regimes that indicate substantial differences in institutional quality over time according to the magnitude of the METR and METR differences between average- and top-income entrepreneurs and across sources of finance. Increased taxation of owner-entrepreneurs helps explain the absence of new large entrepreneurial firms in Sweden after World War II, while improved incentives can be associated with Sweden’s recent entrepreneurial renaissance.
    Keywords: High-Impact Entrepreneurship; Institutional Quality; Marginal Effective Tax Rates; Tax Regimes; Tax Reforms
    JEL: H21 H31 H32 L25 L26 N44
    Date: 2022–05–06
    Abstract: The European Innovation Scoreboard-EIS calculates the export value of knowledge-intensive services produced in Europe. By knowledge-intensive services we mean a set of activities ranging from sea and air transport to financial services, the use of intellectual property, telecommunications, and audiovisual services. The value is considered as a percentage ratio with respect to the complex value of the exports of services.
    Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O3 O30 O31 O32 O33 O34
    Date: 2022–04–18
  3. By: Mindaugas Laužikas (GILE Experts Limited, Vilnius University Business School); Aistė Miliūtė (Vilnius University Business School); Mukhammad Khalili (Vilnius University Business School)
    Abstract: Given a well-established literature on internationalization processes and its main impacts on companies' performance (Begeny, 2018; Bužavaitė et al., 2019), it is worth examining how internationalization affects companies, driven by innovation at three different levels (individual, team and organizational) which is anchored in three main pillars: effectiveness, creativity and efficiency. The first pillar is related to strategic decision-making and business intelligence (along with data collection and analysis; setting efficiency criteria, strategic goals and outputs, as well as the tactics for each criteria). The second pillar covers a set of internationalization-related aspects, such as creative ideas generation, marketing and communications strategies, HR and R&D culture, leadership and talent development; while the third pillar is liaised with monitoring and execution of innovative activities. In line with studies with regard to innovation processes (Szopik-Depczyńska, 2015; Gries et al., 2017; Von Schomberg and Blok, 2018), the present paper continues examining the innovation performance; however, the main focus is on team innovation performance or the ways of unlocking the internationalization potential within team innovation processes via a set of aspects, such as effective decision-making, creative and divergent thinking, and efficient execution in teams. In light of the emergence of modern technology, employees of Lithuanian high-tech companies were selected for a quantitative survey, while scrutinizing the liaison between team internationalization and innovation commercialization success. Having the primary quantitative data (related to internationalization level, creative thinking, innovation performance in high-tech respondents' teams) collected and analysed, further on, the innovation performance improvement suggestions are provided for the leaders of high-tech international teams.
    Keywords: internationalization,technologies,impacts,team innovation,high-tech,commercialization,creativity,effectiveness,efficiency
    Date: 2021–03–30
  4. By: Salvy Goel, Salvy; Berrones-Flemmig, Claudia Nelly
    Abstract: Small and medium-sized enterprises face several challenges mainly related with lack of access to Finance frequently due to a lack of formal Accounting system and financial management, which leads to weaknesses in their internal financial capabilities. Moreover, from the supply side traditional financial institutions have failed to fulfil the needs of SMEs and presently FinTechs have developed innovative ways to increase the financial literacy in SMEs and to facilitate financing for SMEs (Imanbaeva et al., 2017). This study aims to assess and analyze one of these innovative financial instruments in an explorative way: some relevant Accounting and Finance applications present in the market, based on criteria decided by exploring the scientific literature and evaluating it by interviewing Accounting professionals working in start-ups in Germany. The results show that Zoho Books and Xero turned out to be better than the others in the services provided by them and they received the best ratings and feedback. Their best features are their user friendliness, the integrations offered by them, the diversity of the financial reports that they offer and amount of automation they offer to perform the everyday tasks. The most important factor when choosing an Accounting system is assessing the needs and requirements of the business and then to select the software that best suits the needs. Therefore, this research can be also helpful for small and medium business owners who do not have much idea about the financial aspects and need help with choosing the right accounting software for their business, based on the experience and perspectives of the interviewing Accounting professionals. It can act as a guide for them to understand which factors they should take into account while making their decision and the feedback from the participants can help them while choosing among the five software analysed during this research.
    Keywords: SME Finance,Fintech,Accounting and Finance apps,innovative financial instruments,start-ups,Germany
    JEL: M O
    Date: 2022
  5. By: Jing Xing; Katarzyna Anna 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 _rms. 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.
    Keywords: turnover tax, value-added tax, outsourcing, R&D investment
    JEL: H25 H26 O32 D25
    Date: 2022
  6. By: Thomas Houy (SES - Département Sciences Economiques et Sociales - Télécom ParisTech, ECOGE - Economie Gestion - I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, IP Paris - Institut Polytechnique de Paris); Flavien Bazenet (I3, une unité mixte de recherche CNRS (UMR 9217) - Institut interdisciplinaire de l’innovation - X - École polytechnique - Télécom ParisTech - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - Université Paris sciences et lettres - CNRS - Centre National de la Recherche Scientifique, MMS - Département Management, Marketing et Stratégie - TEM - Télécom Ecole de Management - IMT - Institut Mines-Télécom [Paris] - IMT-BS - Institut Mines-Télécom Business School - IMT - Institut Mines-Télécom [Paris])
    Abstract: The intense media coverage of the startup ecosystem has led to the dissemination of misconceptions about entrepreneurship. This article shows that first-time entrepreneurs believe in these misrepresentations. The results of this research therefore give a new prerogative to the actors of the entrepreneurial support world: to deconstruct all the clichés and false representations about startups that are popularized by the press.The article is based on survey data from 90,278 people who revealed their interest in starting a business between 2007 and 2018. We isolate the answers given by digital entrepreneurs (n=1,425) and compare them to those of other respondents (n=88,853). Examining the beliefs of this large panel of respondents shows that digital first-time entrepreneurs believe they can access high revenues, predict success with a high probability, go into entrepreneurship relatively unprepared, and anticipate improved employability if their business fails.
    Abstract: L'intense médiatisation autour des start-up du numérique a conduit à populariser, auprès du grand public, un certain nombre d'idées reçues sur l'entrepreneuriat. Le présent article établit que les primo-entrepreneurs, en raison de leur manque d'expérience dans la conduite d'un projet de création d'entreprise, adhérent à ces lieux communs. Les résultats de cette recherche confèrent donc aux acteurs de l'accompagnement entrepreneurial une nouvelle prérogative : déconstruire, auprès des jeunes porteurs de projets, l'ensemble de ces clichés et de ces représentations fallacieuses du monde des start-up véhiculés par la presse. L'article se fonde sur des données d'enquêtes réalisées auprès de 90 278 personnes ayant signalé leur intérêt pour la création d'entreprise entre 2007 et 2018 [1]. Nous isolons les réponses données par les porteurs de projets numériques et les comparons à celles des autres répondants. L'examen des croyances de ce large panel permet de montrer que les primo-entrepreneurs du numérique pensent pouvoir accéder à des rémunérations élevées, envisagent le succès avec une probabilité forte, se lancent dans l'entrepreneuriat en étant relativement peu préparés et anticipent une amélioration de leur employabilité en cas d'échec de leur entreprise.
    Keywords: Digital entrepreneurship,Entrepreneurial coaching,Start-up,Mythes,Entrepreneuriat numérique,Accompagnement entrepreneurial
    Date: 2020–10
  7. By: Jean-Alain Héraud; Nathalie Popiolek
    Abstract: Economic innovations are not systematically triggered by scientific discoveries or technological inventions. They can benefit from a new scientific idea without really depending on it as a key element. For instance, incremental innovations almost by definition do not exploit a new techno-scientific paradigm. Moreover, some very creative ideas happen to arise in other fields than science or technology, like the domain of usage. Nevertheless, scientific discoveries and breakthrough innovations, during the 20th and 21th centuries, were often linked. We wish to check here the existence of cross-fertilization mechanisms between academic and industrial researches in specific cases of high creativity level, and try to describe the simultaneous discovery-innovation process taking place at such occasions. We base our study on historical examples and a series of interviews of actors from public research organizations as well as industrial R&D departments. We learnt a lot about the various dimensions of the knowledge co-creation, but also about the difficulties to overcome in such cooperative schemes: differences in individual and institutional motivations, in the perception of science (its raison d’être, its ownership), of risk, and of time (unsynchronized clocks).
    Keywords: Discovery, Radical innovation, Academy - industry partnerships, Models of innovation.
    JEL: O31 O32
    Date: 2022
  8. By: Horbach, Jens; Rammer, Christian
    Abstract: Eco-innovations are crucial for the mitigation of climate change effects. It is therefore important to know if the existing climate change regulations and carbon pricing are appropriate and sufficient to trigger such innovations. Besides government measures, the demand for carbon neutral products or the impacts of climate change such as extreme weather conditions leading to higher costs for the affected firms may also promote eco-innovation activities. For the first time, the new wave of the Community Innovation Survey 2020 in Germany allows an analysis of the effects of climate change policy and costs, demand for climate friendly goods and extreme weather conditions on (eco-)innovation. The results of probit and treatment effect models show that innovative firms seem to be significantly more affected by climate change measures and consequences compared to other firms. All climate change indicators are positively correlated to eco-innovations. Interestingly, other innovation activities also profit from the extent to which a firm is affected by climate change albeit the marginal effects are lower compared to eco-innovations. Demand for climate neutral products is significantly important for all eco-product-innovations.
    Keywords: Climate change,eco-innovation,Community Innovation Survey,probit regression,treatment effect models
    JEL: C25 C21 O31 Q54 Q55
    Date: 2022
  9. By: Kajsa Ahlgren Ode (Lund University [Lund]); Céline Louche (Audencia Business School)
    Abstract: This study examines business model innovation (BMI) in an established firm. We investigate the case of a Swedish utility company that adopted and implemented a business model (BM) pattern originating from outside the firm. We draw upon Scandinavian translation theory to understand the micro-level dynamics of how BMI unfolds. Our findings show that the BM pattern is disassembled into its constituent parts, that these are translated separately and, little by little, (re)assembled into a whole to form a new BM. This process involves several loops of translation activated by the interplay between five practices: formulating, engaging, resisting, anchoring, and energizing. On the basis of our findings, we develop a BM translation framework. We thereby contribute to a better understanding of the micro-level perspective on BMI initiated by the adoption of a BM pattern. We also reveal that BMI processes triggered by BM patterns from outside differ from those taking place when a new BM is entirely developed within a firm.
    Keywords: business model innovation,business model pattern,Scandinavian translation theory,change process
    Date: 2022–04–01
  10. By: Ganglmair, Bernhard; Robinson, W. Keith; Seeligson, Michael
    Abstract: We document the occurrence of process claims in granted U.S. patents over the last century. Using novel data on the type of independent patent claims, we show an increase in the annual share of process claims of about 25 percentage points (from below 10% in 1920). This rise in process intensity is not limited to a few patent classes but can be observed across a broad spectrum of technologies. Process intensity varies by applicant type: companies file more process-intense patents than individuals, and U.S. applicants file more process-intense patents than foreign applicants. We further show that patents with higher process intensity are more valuable but are not necessarily cited more often. Last, process claims are on average shorter than product claims; but this gap has narrowed since the 1970s. These patterns suggest that the patent breadth and scope of process-intense patents are overestimated when claim types are not accounted for. We conclude by describing in detail the code used to construct the claim-type data, showing results from a data-validation exercise (using close to 10,000 manually classified patent claims), and providing guidance for researchers on how to alter the classification outcome to adapt to researchers' needs.
    Keywords: innovation,patent claims,patents,patent breadth,patent scope,process claims,process intensity,R&D,text analysis
    JEL: C81 O31 O34 Y10
    Date: 2022
  11. By: Tandon, Anjali
    Abstract: In the backdrop of the increasing government emphasis on strengthening the domestic and international participation of the small and medium enterprises (SMEs), this paper presents a review of the SME related provisions that have been incorporated into the free trade agreements (FTAs) signed by countries, including India. A comparative approach has been used to bring out the difference in strategic focus adopted by India vis-à-vis other countries. The review of the trade agreements informs that the SME related provisions are not very prevalent, more so in the Indian context. Only about half of the 60 plus trade agreements reviewed are observed to include SME specific arrangements. These provisions are mostly non-binding and of an endeavouring nature, putting the onus on the host country to initiate and benefit from the stated activities of cooperation and similar mechanisms for better opportunities for the SMEs. By comparison with other countries, most FTAs signed by India are either silent on SMEs or lack aggression. India’s emphasis on transparency is minimal in comparison to the inclusion of a cooperation clause in the text of the agreements. The absence of an SME focus in trade agreements indicates that smaller enterprises have been considered at par with other businesses, thus ignoring their exceptional needs and the handholding that might be required for their greater and faster internationalisation. Although it can be argued that the mere existence of an SME related provision may not necessarily result in better opportunities, it is important to highlight the emphasis on SMEs in the text of the agreements, as pursued by other countries.
    Keywords: small and medium enterprises; SMEs; free trade agreements; FTAs; international trade; India.
    JEL: F1
    Date: 2021–10
  12. By: Ernesto Nieto Carrillo (Ph.D. Student at Faculty of Economics, University of Coimbra); Carlos Carreira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics); Paulino Maria Freitas Teixeira (University of Coimbra, Centre for Business and Economics Research, CeBER and Faculty of Economics)
    Abstract: In most advanced economies productivity growth has been hampered by barriers that allow zombie firms to survive. We examine the effectiveness of institutional reforms in Portugal that were aimed to improve efficiency in insolvency framework. Estimates show that reallocation barriers declined. The reforms appear to have larger and more effective results in zombie recovery than in exit. Firm size plays a major role in tackling zombie-entrenchment. The decline in barriers has also implied a lower distortion in the economy-wide selection process. The new setting seems to be more desirable than forcing zombie exit at all costs.
    Keywords: Insolvency regimes; Zombie firms; Productivity; Reallocation barriers; Firm exit;Restructuring.
    JEL: D24 G32 G33 K22 L25 O47
    Date: 2022–01
  13. By: Emmanuel Paroissien (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Laure Latruffe (GREThA - Groupe de Recherche en Economie Théorique et Appliquée - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique); Laurent Piet (SMART-LERECO - Structures et Marché Agricoles, Ressources et Territoires - AGROCAMPUS OUEST - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)
    Abstract: This article investigates the effects of economic performance and neighbours' characteristics on farmers' exit behaviour before retirement age. Using a unique set of social security data describing all French farmers under 50 over the years 2004–2017, we explore how these effects depend on farmers' characteristics and how they stand relative to their neighbours. Our probit estimations reveal that younger farmers and farmers operating smaller farms are more sensitive to their own and neighbours' performance than other farmers. Allowing for an asymmetric comparison effect between farmers and their neighbours, we uncover a nonlinear influence of own and neighbours' profit and size.
    Keywords: Neighbours,Performance,Farms,Exit,Heterogeneity
    Date: 2021

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