nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒05‒23
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation catalysts: how multinationals reshape the global geography of innovation By Crescenzi, Riccardo; Dyevre, Arnaud; Neffke, Frank
  2. The Innovation Index in Europe By Leogrande, Angelo; Laureti, Lucio; Costantiello, Alberto
  3. Improving Entrepreneurs' Digital Skills and Firms' Digital Competencies through Business Apps Training: A Study of Small Firms By Drydakis, Nick
  4. The Economy of Collaboration between Reciprocity and Profit By Leogrande, Angelo
  5. Can the Government Be an Effective Venture Capital Investor? By Martina Fraschini; Andrea Maino; Luciano Somoza
  6. Has Open Innovation Taken Root in India Evidence from Startups working in Food Value Chains By Chandra S.R. Nuthalapati
  7. Impact of International Investment Agreements on Japanese FDI: A Firm-level Analysis By URATA Shujiro; BAEK Youngmin
  8. Industries, Mega Firms, and Increasing Inequality By John C. Haltiwanger; Henry R. Hyatt; James Spletzer
  9. Performance feedback and export intensity of Chinese private firms: Moderating roles of institution-related factors By Meitong Dong; Liwen Wang; Defeng Yang; Kevin Zhou
  10. The Role of Clusters in the Performance of the Mexican Economy By Miriam Juárez-Torres; Jonathan Puigvert; Francisco Zazueta-Borboa
  11. How Can Students' Entrepreneurial Intention Be Increased? The Role of Psychological Capital, Perceived Learning From an Entrepreneurship Education Program, Emotions and Their Relationships By Séverine Chevalier; Isabelle Calmé; Hélène Coillot; Karine Le Rudulier; Evelyne Fouquereau
  12. The banking system and the financing of southern Italian firms By Giorgio Albareto; Michele Cascarano; Stefania De Mitri; Cristina Demma; Roberto Felici; Carlotta Rossi
  13. Entry, exit and market structure in a changing climate By Cascarano, Michele; Natoli, Filippo; Petrella, Andrea
  14. How causal machine learning can leverage marketing strategies: Assessing and improving the performance of a coupon campaign By Henrika Langen; Martin Huber
  15. Nobody's gonna slow me down? The effects of a transportation cost shock on firm performance and behavior By Branco, Catarina; Dohse, Dirk; dos Santos, João Pereira; Tavares, José
  16. Green start-ups and the role of founder personality By Chapman, Gary; Hottenrott, Hanna

  1. By: Crescenzi, Riccardo; Dyevre, Arnaud; Neffke, Frank
    Abstract: We study whether and when Research and Development (R&D) activities by foreign multinationals facilitate the formation and growth of new innovation clusters. Combining information on nearly four decades’ worth of patents with socio‐economic data for regions that cover virtually the entire globe, we use matched difference‐in‐differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: over a five‐year period, foreign research activities help a region climb 14 centiles in the global innovation ranks. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers with local firms abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with lower levels of economic development than less advanced firms, yet with comparable public sector research capacity. These findings suggest that multinationals with high levels of technological sophistication face comparatively unfavorable tradeoffs between the costs and benefits of local spillovers, underscoring the importance of understanding corporate strategy when analyzing innovation clusters.
    Keywords: innovation; regions; foreign direct investment; patenting; cluster emergence; European Union Horizon 2020 Program H2020/2014‐2020) (Grant Agreement n 639633‐MASSIVE‐ERC‐ 2014‐STG; T&F deal
    JEL: O32 O33 R11 R12
    Date: 2022–04–21
  2. By: Leogrande, Angelo; Laureti, Lucio; Costantiello, Alberto
    Abstract: The following article analyzes the determinants of the innovation index in Europe. The data refer to the European Innovation Scoreboard-EIS of the European Commission for the period between 2010 and 2019 for 36 countries. The data are analyzed using the following econometric techniques: Panel Data with Random Effects, Panel Data with Fixed Effects, Dynamic Panel Data, Pooled OLS, WLS. The results show that the Innovation Index is negatively connected to some variables, among which the most significant are "GDP per capita", "R&D expenditure public sector", "Venture capital", "Tertiary education", and positively connected to some variables among which the most relevant are: "Government procurement of advanced technology products", "Average annual population growth", "Finance and support", "Human resources", "Marketing or organisational innovators", "Linkages". A clustering was then carried out using the unsupervised k-Means algorithm optimized with the Silhouette coefficient which shows the presence of 2 clusters per value of the Innovation Index. Eight machine learning algorithms has been used for prediction with real data. The Tree Ensemble Regression algorithm has been chosen as best performer. A further prediction has been made with the augmented data. The result shows that the best performing algorithm is Linear Regression with an innovation index value predicted to grow by approximately 3.38%.
    Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O30 O31 O32 O33 O34
    Date: 2022–04–23
  3. By: Drydakis, Nick (Anglia Ruskin University)
    Abstract: The lack of awareness of digital services and outcomes is a concern in business environments since small firms need to improve their digital competencies. The present exploratory study investigated whether business apps training was associated with entrepreneurs' and firms' digital advancements. The business apps training was offered to migrant entrepreneurs running small firms in Athens (Greece) over three months, with data collected before and after the training. The analysis revealed that business apps training was positively associated with entrepreneurs' attitudes toward technology, willingness to change (relating to technology/skills/operations), and internet/digital skills, as well as increased use of business apps. Moreover, the training was positively associated with firms' digital competencies related to communication, networking, social media, customer relationship management, payments, accounting and finance, and project management operations. Furthermore, the business apps training was positively associated with migrant entrepreneurs' integration into Greek society. Given the increased number of migrants in Europe, factors that positively impact their entrepreneurship and integration merit consideration. The study provides researchers with a systematic method for evaluating the association between business app training and entrepreneurs' and firms' digital advancements.
    Keywords: training, entrepreneurs, small firms, business apps, digital skills, digital competencies, artificial intelligence, integration
    JEL: M53 L26 O31 O33
    Date: 2022–04
  4. By: Leogrande, Angelo
    Abstract: The book entitled “L’Economia della Collaborazione. Le Nuove Piattaforme Digitali della Produzione e del Consumo” was written by Francesco Ramella and Cecilia Manzo in 2019 and published in Bologna for il Mulino. The book has 245 pages and a cover price of 22.00 euros. The book consists of an introduction, 8 chapters and conclusions.
    Keywords: Business Objectives of the Firm, Firm Organization and Market Structure, Organization of Production, Contracting Out • Joint Ventures • Technology Licensing, Firm Performance: Size, Diversification, and Scope, Entrepreneurship
    JEL: L20 L21 L22 L23 L24 L25 L26
    Date: 2022–04–24
  5. By: Martina Fraschini (University of Lausanne, HEC; Swiss Finance Institute); Andrea Maino (University of Geneva); Luciano Somoza (University of Lausanne, HEC; Swiss Finance Institute)
    Abstract: In recent years, governments have allocated increasing capital to direct startup funding through Government-sponsored Venture Capital funds (GVC). In this paper, we study the role of GVCs in the venture capital market and their relationship with Private Venture Capitalists (PVC). Using European data, we find that GVCs invest consistently with their policy mandates, favoring specific industries, geographical areas, and firms with high innovation potential, but have lower average performances. These findings indicate that GVCs can identify innovative companies and prioritize positive externalities over profit maximization. We build an asset pricing model with heterogeneous preferences to study the role of GVCs in catalyzing PVC investments. We find that PVCs invest less in startups previously funded by GVCs, in line with empirical evidence. At aggregate level, GVC investments can crowd-in private ones if they focus on startups in VC hubs.
    Keywords: venture capital, public investments, crowd-in, subsidy, industrial policy, patent data, innovation.
    JEL: G24 G11 G18 H54 O30
    Date: 2022–04
  6. By: Chandra S.R. Nuthalapati (Institute of Economic Growth, Delhi)
    Abstract: Open innovation represents a paradigm shift in the technology development process from the advent of the New Millennium. Though evidenced mainly in technology-intensive sectors of developed countries, several ‘erosion factors’ and their interplay catalyse open innovation in relatively traditional sectors of developing countries. The rise of startups with supplementary venture capital industry is hypothesised to play this role in the Indian food system. This paper examines this hypothesis by leveraging a large database of startups. Several types of startups have come up in the last decade and are filling the gaps in the food value chains in infrastructure deficit regions and introducing innovations. The interconnections between startups themselves and their business partnerships with input companies, processors, aggregators, traders, hotels and restaurants, supermarkets, e-commerce companies, research organisations, various governments, international institutions like the World Bank, various crop associations like the tea growers association, constitute a complex web. The knowledge flows are both outbound from the startups to the companies and other actors and sometimes in the opposite direction as well as bi-directional. These fast expanding knowledge flows have brought several innovations that could not be imagined just a few years back in developing countries. The emergence of open innovation in agriculture bodes well to food value chain flows and to harness the higher level of technologies. There is a need to internalise these innovations in the national food policy for addressing issues of inclusion. The paradigm shift also calls for rigorous research on the business models, and collaboration and licensing agreements between companies, universities, and governmental agencies
    Date: 2021–01
  7. By: URATA Shujiro; BAEK Youngmin
    Abstract: In this study, we examine the impact of Japan’s international investment agreements (IIAs) on the locational choice of Japanese firms’ foreign direct investment (FDI) by considering the quality of IIAs. We estimate the conditional logit model covering 94 host countries, 16 manufacturing sectors, and 12 non-manufacturing sectors from 2000 to 2019. We found that the presence of IIAs, particularly comprehensive and high-level ones, has a positive impact on Japan’s FDI. On the contrary, the past incidence of investor–state disputes has a negative impact. These effects are found to be particularly strong for FDI by small and medium-sized enterprises. High regulatory quality is found to attract FDI, whereas the positive impact of IIAs in attracting FDI is strong in countries with low regulatory quality.
    Date: 2022–04
  8. By: John C. Haltiwanger; Henry R. Hyatt; James Spletzer
    Abstract: Most of the rise in overall earnings inequality is accounted for by rising between-industry dispersion from about ten percent of 4-digit NAICS industries. These thirty industries are in the tails of the earnings distribution, and are clustered especially in high-paying high-tech and low-paying retail sectors. The remaining ninety percent of industries contribute little to between-industry earnings inequality. The rise of employment in mega firms is concentrated in the thirty industries that dominate rising earnings inequality. Among these industries, earnings differentials for the mega firms relative to small firms decline in the low-paying industries but increase in the high-paying industries. We also find that increased sorting and segregation of workers across firms mainly occurs between industries rather than within industries.
    JEL: J21 J31
    Date: 2022–04
  9. By: Meitong Dong (HKU - The University of Hong Kong); Liwen Wang (Audencia Business School, Shenzhen Univerisity [Shenzhen]); Defeng Yang (Jinan University [Guangzhou]); Kevin Zhou (HKU - The University of Hong Kong)
    Abstract: Building on the behavioral theory of the firm and institutional view, we examine how performance feedback (i.e., a focal firm's performance relative to its industry peers) affects export intensity and how institution-related factors moderate this relationship. Using a sample of Chinese private manufacturing firms, we find that positive performance feedback lowers export intensity while the relationship between negative performance feedback and export intensity is insignificant. Moreover, outperforming firms are likely to decrease their export intensity even more when they are located in regions of better institutional development or have political connections. Underperforming firms with political connections tend to increase their export intensity. These findings enrich our understanding of the export behavior of emerging market firms.
    Keywords: performance feedback,export intensity,institutional development,political connections,behavioral theory of the firm,institutional view
    Date: 2022
  10. By: Miriam Juárez-Torres; Jonathan Puigvert; Francisco Zazueta-Borboa
    Abstract: This paper follows an algorithm that considers different dimensions of linkages across service and manufacturing industries to identify a cluster configuration of the Mexican economy and analyze their role in the economic performance of regions. It identifies 24 clusters and analyzes their geographical distribution, their role in regional growth, the evolution of their employment concentration, and their spillover effects. The main findings suggest that manufacturing-oriented clusters have a strong presence in the Northern states of the country, while services-oriented clusters in the Central ones. Finally, clusters such as plastic products manufacturing; retail and eating services; food and beverage manufacturing; and, automotive show relatively high direct and indirect spillover effects on the economy.
    JEL: L60 L80 O54
    Date: 2022–04
  11. By: Séverine Chevalier (QualiPsy - E.E. 1901 - Qualité de vie et Santé psychologique [Tours] - UT - Université de Tours); Isabelle Calmé (VALLOREM - Val de Loire Recherche en Management - UO - Université d'Orléans - UT - Université de Tours); Hélène Coillot (QualiPsy - E.E. 1901 - Qualité de vie et Santé psychologique [Tours] - UT - Université de Tours); Karine Le Rudulier (IODE - Institut de l'Ouest : Droit et Europe - UR1 - Université de Rennes 1 - UNIV-RENNES - Université de Rennes - CNRS - Centre National de la Recherche Scientifique); Evelyne Fouquereau (QualiPsy - E.E. 1901 - Qualité de vie et Santé psychologique [Tours] - UT - Université de Tours)
    Abstract: Entrepreneurship education has become a major focus of interest for researchers and national policy makers to encourage students to pursue entrepreneurial careers. The research on entrepreneurship education-entrepreneurial intentions (EIs) has yielded mixed results, and indicates the need to focus on antecedents of EI. More precisely, the aim of this paper was to examine antecedents of students' EI in French entrepreneurship education programs. Participants were 460 French university undergraduates. Structural equation modeling results revealed that students' Psychological Capital (PsyCap) had a significant positive relationship with perceived learning from the program and a significant negative relationship with negative emotions related to entrepreneurial actions. They also show that PsyCap indirectly enhanced EI. More precisely, students with high PsyCap learned more from the program in terms of perceived skills and knowledge and in turn had a higher EI. Moreover, students with high PsyCap had less entrepreneurial action-related doubt, fear and aversion, which also increased EI. This decrease in negative emotions can be explained notably by what students perceived they had learned from the program. This article concludes with the implications of these findings for future research and practical applications.
    Keywords: psychological capital,entrepreneurial intention,entrepreneurship education
    Date: 2022
  12. By: Giorgio Albareto (Bank of Italy); Michele Cascarano (Bank of Italy); Stefania De Mitri (Bank of Italy); Cristina Demma (Bank of Italy); Roberto Felici (Bank of Italy); Carlotta Rossi (Bank of Italy)
    Abstract: This paper investigates the territorial gap in firms’ access to credit between 2008 and 2019 and describes the functioning of the credit market in the southern regions of Italy. The southern firms are characterized by a higher level of credit risk; all other things being equal, these firms face less favourable credit conditions than others, paying higher interest rates and providing more collateral on loans. Despite this, the dynamics of loans to firms was more marked in the south with respect to the rest of the country, given the support of the southern banks, which increased lending to firms in these regions, especially to small businesses, more than other banks. During the period 2008-2019, the proportion of riskier loans of banks headquartered in the south increased; these banks are characterized by lower quality credit portfolios and lower profitability.
    Keywords: firm credit, banking system, credit conditions territorial gaps, Italy’s southern regions
    JEL: G10 G21 G3 L10
    Date: 2022–04
  13. By: Cascarano, Michele; Natoli, Filippo; Petrella, Andrea
    Abstract: Climate change has long run effects on the size and composition of a country's corporate sector. Using administrative data on the universe of Italian firms, we find that an increase in the incidence of very hot days over a multiyear period persistently reduces the growth rate of active firms in the market. This is due to a drop in firm entry and an increase in firm exit, with relocation playing a minor role. A firm-level investigation reveals a dichotomy between smaller firms, which suffer from high temperatures, and larger firms that successfully adapt, increasing production and net revenues. According to an average climatic scenario, the projected evolution of local temperatures will impact corporate demography further, also exacerbating the divergent effects across warmer and colder areas over the current decade.
    Keywords: climate change; temperatures; firm dynamics
    JEL: D22 Q54 R12
    Date: 2022–04–26
  14. By: Henrika Langen; Martin Huber
    Abstract: We apply causal machine learning algorithms to assess the causal effect of a marketing intervention, namely a coupon campaign, on the sales of a retail company. Besides assessing the average impacts of different types of coupons, we also investigate the heterogeneity of causal effects across subgroups of customers, e.g. across clients with relatively high vs. low previous purchases. Finally, we use optimal policy learning to learn (in a data-driven way) which customer groups should be targeted by the coupon campaign in order to maximize the marketing intervention's effectiveness in terms of sales. Our study provides a use case for the application of causal machine learning in business analytics, in order to evaluate the causal impact of specific firm policies (like marketing campaigns) for decision support.
    Date: 2022–04
  15. By: Branco, Catarina; Dohse, Dirk; dos Santos, João Pereira; Tavares, José
    Abstract: This paper takes a deep and comprehensive look into the firm-level behavioral reactions to a massive transportation cost shock. Exploiting rich data encompassing the universe of Portuguese private firms and a natural experiment we find that the introduction of tolls on previously toll-free highways caused a substantial decrease of turnover and firm profits. In response to the tolls, firms reduced expenses, cutting employment-related expenses and purchases of other inputs in a similar magnitude. Labor costs were reduced by employment cuts rather than by wage cuts. We find evidence for increased firm exit in treated municipalities, but not for increased re-location.
    Keywords: road tolls,infrastructure,firm performance,firm behavior,location,Portugal
    JEL: R48 L25 R12
    Date: 2022
  16. By: Chapman, Gary; Hottenrott, Hanna
    Abstract: Green start-ups play a vital role in the needed transition towards more environmentally sustainable economies. Yet our understanding of why some founders start green ventures and others do not remains incomplete. We build on the cognitive and decision-making perspectives on start-ups proenvironmental engagement to shed light on the role of founders' personality traits - focusing on the 'Big 5' and risk tolerance - in explaining whether founders' start new ventures with environmentally friendly products. Our analysis of a large, representative, manufacturing and service sector sample of German start-ups illustrates the important role of founder personality traits. Specifically, openness and extraversion promote environmentally friendly products while neuroticism inhibits it. We discuss the implications of these insights.
    Keywords: emission reduction,environmentally friendly products,green innovation,Big Fivepersonality traits,sustainability
    JEL: G24 L26 O25 O31
    Date: 2022

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