nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒06‒20
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovative SMEs Collaborating with Others in Europe By Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Matarrese, Marco Maria
  2. The contribution of higher education institutions to innovation ecosystems: Innovative practices from Higher Education for Smart Specialisation By Patricia Canto-Farachala; James R. Wilson; Eskarne Arregui-Pabollet
  3. Differentiating artificial intelligence capability clusters in Australia By Bratanova, Alexandra; Pham, Hien; Mason, Claire; Hajkowicz, Stefan; Naughtin, Claire; Schleiger, Emma; Sanderson, Conrad; Chen, Caron; Karimi, Sarvnaz
  4. Intangibles and industry concentration: supersize me By Matej Bajgar; Chiara Criscuolo; Jonathan Timmis
  5. High-Growth Enterprises in times of COVID-19: an overview By COAD Alexander; AMARAL-GARCIA Sofia; BAUER Peter; DOMNICK Clemens; HARASZTOSI Peter; PAL Rozalia; TERUEL Mercedes
  6. Performance of Exiting Firms in Japan: An Empirical Analysis Using Exit Mode Data By Yojiro Ito; Daisuke Miyakawa
  7. The impact of regulation on innovation By Philippe Aghion
  8. Partnerships for Regional Innovation (PRI) Playbook By Dimitrios Pontikakis; Ignacio Gonzalez Vazquez; Guia Bianchi; Marina Ranga; Anabela Marques Santos; Ramojus Reimeris; Solange Mifsud; Kevin Morgan; Carmen Madrid; Johan Stierna
  9. Venture Capital (Mis)allocation in the Age of AI By Lyonnet, Victor; Stern, Lea H.
  10. Offshoring, domestic employment and production: Evidence from the German International Sourcing Survey By Kaus, Wolfhard; Zimmermann, Markus
  11. Who wins and who loses from state subsidies? By Du, Jun; Girma, Sourafel; Görg, Holger; Stepanok, Ignat
  12. Socioeconomic effects of collectivist and individualist education: A comparison between North and South Vietnam By Mai, Nhat Chi
  14. Capital Raising and Management of Vietnamese Small and Medium Sized Enterprises after Integrating into Global Economy By Mai, Nhat Chi
  15. Expanding access to finance to boost growth and reduce inequalities in Mexico By Alessandro Maravalle; Alberto González Pandiella
  16. Zombie-Lending in the United States: Prevalence versus Relevance By Maximilian Göbel; Nuno Tavares
  17. Alternative financing and investment in intangibles: evidence from Italian firms By Gabriele Beccari; Francesco Marchionne; Beniamino Pisicoli

  1. By: Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio; Matarrese, Marco Maria
    Abstract: The following article investigates the determinants that lead innovative SMEs to collaborate. Data from 36 European countries is analyzed using Panel Data with Fixed Effects, Panel Data with Random Effects, Pooled OLS, WLS and Dynamic Panel models. The analysis shows that the ability of innovative SMEs to collaborate is positively associated with the following variables: "Linkages", "Share High and Medium high-tech manufacturing", "Finance and Support", "Broadband Penetration", "Non-R&D Innovation Expenditure" and negatively to the following variables: "New Doctorate graduates", "Venture Capital", "Foreign Controlled Enterprises Share of Value Added", "Public-Private Co-Publications", "Population Size", "Private co-funding of Public R&D expenditures". A clustering with k-Means algorithm optimized by the Silhouette coefficient was then performed and four clusters were found. A network analysis was then carried out and the result shows the presence of three composite structures of links between some European countries. Furthermore, a comparison was made between eight different predictive machine learning algorithms and the result shows that the Random Forest Regression algorithm performs better and predicts a reduction in the ability of innovative SMEs to collaborate equal to an average of 4.4%. Later a further comparison is made with augmented data. The results confirm that the best predictive algorithm is Random Forest Regression, the statistical errors of the prediction decrease on average by 73.5%, and the ability of innovative SMEs to collaborate is predicted to growth by 9.2%.
    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: 2022–05–09
  2. By: Patricia Canto-Farachala (Orkestra Basque Institute of Competitiveness); James R. Wilson (Orkestra Basque Institute of Competitiveness); Eskarne Arregui-Pabollet (European Commission - JRC)
    Abstract: This technical report presents the results of a cross-case analysis of the eleven case studies conducted under the Higher Education for Smart Specialisation project during the period 2016-2020. The analysis identifies key themes and innovative practice examples from across case studies, developing a structured typology of innovative practices for higher education engagement in innovation ecosystems in the context of the design and implementation of Smart Specialisation Strategies (S3). More concretely, it contributes to identify: (i) Innovative practices to their regional innovation ecosystems and the design and implementation of S3.(ii) The key features of these practices that have made possible the transformative role of higher education in their regional innovation system, with particular attention on how they integrate education, research and innovation.
    Keywords: Smart specialisation strategies, higher education institutions, universities, territorial development, research and innovation, innovative practices, Northern Netherlands, Centre-Val de Loire, Lower Austria, North-East Romania, North Central Bulgaria, Portugal, Lithuania, Puglia, Lubelskie, Navarre, Eastern Macedonia and Thrace
    Date: 2022–05
  3. By: Bratanova, Alexandra; Pham, Hien; Mason, Claire; Hajkowicz, Stefan; Naughtin, Claire; Schleiger, Emma; Sanderson, Conrad; Chen, Caron; Karimi, Sarvnaz
    Abstract: We demonstrate how cluster analysis underpinned by analysis of revealed technology advantage can be used to differentiate geographic regions with comparative advantage in artificial intelligence (AI). Our analysis uses novel datasets on Australian AI businesses, intellectual property patents and labour markets to explore location, concentration and intensity of AI activities across 333 geographical regions. We find that Australia's AI business and innovation activity is clustered in geographic locations with higher investment in research and development. Through cluster analysis we identify three tiers of AI capability regions that are developing across the economy: ‘AI hotspots’ (10 regions), ‘Emerging AI regions’ (85 regions) and ‘Nascent AI regions’ (238 regions). While the AI hotspots are mainly concentrated in central business district locations, there are examples when they also appear outside CBD in areas where there has been significant investment in innovation and technology hubs. Policy makers can use the results of this study to facilitate and monitor the growth of AI capability to boost economic recovery. Investors may find these results helpful to learn about the current landscape of AI business and innovation activities in Australia.
    Keywords: Artificial intelligence, cluster, revealed technology advantage, regional innovation, Australia
    JEL: O31 O33 O38 R12
    Date: 2022–05–31
  4. By: Matej Bajgar; Chiara Criscuolo; Jonathan Timmis
    Abstract: This paper presents new evidence on the growing scale of big businesses in the United States, Japan and 11 European countries. It documents a broad increase in industry concentration across the majority of countries and sectors over the period 2002 to 2014. The rising concentration is strongly associated with intensive investment in intangibles, particularly innovative assets, software and data, and this relationship is magnified in more globalized and digital-intensive industries. The results are consistent with intangibles disproportionately benefiting large firms and enabling them to scale up and raise their market shares, increasingly over time.
    Keywords: competition, industry and entrepreneurship, innovation
    Date: 2021–10–28
  5. By: COAD Alexander; AMARAL-GARCIA Sofia (European Commission - JRC); BAUER Peter (European Commission - JRC); DOMNICK Clemens (European Commission - JRC); HARASZTOSI Peter; PAL Rozalia; TERUEL Mercedes
    Abstract: This paper contributes to a fast-growing literature on the impact of COVID-19 on the business economy, by focusing on how a particular group of firms - High-Growth Enterprises (HGEs) have been affected by COVID-19 across several dimensions, such as investment expectations, investment priorities, employment decisions, and their post-COVID-19 green and digital transitions. Using the EIB Investment Survey (EIBIS) and relying on descriptive statistics and basic regressions, the results suggest that COVID-19 has had a significant impact on the investment expectations of HGEs, although they continue to invest slightly more than non-HGEs. Preliminary results suggest that HGEs appear to be more optimistic than non-HGEs in a variety of dimensions, such as optimism surrounding the use of digital technologies, and willingness to invest in climate mitigation and adaptation. However, our evidence shows that the HGEs in the 2020 survey wave have still been hit hard by the COVID-19 shock, compared to HGEs in previous years, which suggests that there may be a role for policy for supporting these valuable firms.
    Keywords: High-Growth Enterprises, COVID-19: investment expectations, green and digital transitions
    Date: 2022–05
  6. By: Yojiro Ito (Economist, Institute for Monetary and Economic Studies (currently, Personnel and Corporate Affairs Department), Bank of Japan (E-mail:; Daisuke Miyakawa (Associate Professor, Hitotsubashi University Business School (E-mail:
    Abstract: Studies on firm performance have found that exiting firms in Japan persistently show better performance than surviving firms, and this persistence adversely affects aggregate productivity. We use the panel data of business enterprises along with unique information on their exit modes (i.e., default, voluntary closure, and merger) to show that a large part of such a "negative exit effect" is attributed to the firms exiting through mergers. Further, we confirm that the causal effect of those mergers results in positive growth in the productivity of merging firms. Given that the size of such a positive causal effect overwhelms the negative exit effect, resource reallocation through mergers positively contributes to the aggregate growth in productivity for Japanese firms.
    Keywords: Productivity dynamics, Exit effects, Mergers
    JEL: D24 G33 G34 O47
    Date: 2022–05
  7. By: Philippe Aghion
    Abstract: It is widely feared that private sector innovation is constrained by 'red tape'. Philippe Aghion and colleagues test that view on data from France, where firms of more than 50 employees face far heavier regulatory obligations. The results suggest that regulations do hamper innovation - but the negative effects are only for incremental innovations, not radical innovations.
    Keywords: innovation, policy, France, regulation, growth
    Date: 2021–06–15
  8. By: Dimitrios Pontikakis (European Commission - JRC); Ignacio Gonzalez Vazquez (European Commission - JRC); Guia Bianchi (European Commission - JRC); Marina Ranga (European Commission - JRC); Anabela Marques Santos (European Commission - JRC); Ramojus Reimeris (European Commission - JRC); Solange Mifsud (European Commission - JRC); Kevin Morgan (Cardiff University); Carmen Madrid (European Commission - JRC); Johan Stierna (European Commission - JRC)
    Abstract: Partnerships for Regional Innovation (PRI) aspires to become a strategic framework for innovation-driven territorial transformation, linking EU priorities with national plans and place-based opportunities and challenges. In its current form, the PRI Playbook presents an initial approach to the construction of this framework developed by the European Commission’s Joint Research Centre, supported by a scientific committee of renowned experts, and is to be further co-created, adapted and tested in a pilot phase with several EU territories. The PRI Playbook is published together with the “Concepts and Rationales for the PRI Playbook”. This document includes the analytical background and the aims of the PRI initiative, by drawing on key academic and grey literatures, as well as the expertise of the scientific committee of PRI. Finally, the Executive summary provides a concise overview of the Playbook main concepts and approaches to co-creating Partnerships for Regional Innovation.
    Keywords: Twin transition, innovation, sustainability, SDGs, European Green Deal
    Date: 2022–05
  9. By: Lyonnet, Victor (Ohio State University); Stern, Lea H. (University of Washington)
    Abstract: We use machine learning to study how venture capitalists (VCs) make investment decisions. Using a large administrative data set on French entrepreneurs that contains VC-backed as well as non-VC-backed firms, we use algorithmic predictions of new ventures’ performance to identify the most promising ventures. We find that VCs invest in some firms that perform predictably poorly and pass on others that perform predictably well. Consistent with models of stereotypical thinking, we show that VCs select entrepreneurs whose characteristics are representative of the most successful entrepreneurs (i.e., characteristics that occur more frequently among the best performing entrepreneurs relative to the other ones). Although VCs rely on accurate stereotypes, they make prediction errors as they exaggerate some representative features of success in their selection of entrepreneurs (e.g., male, highly educated, Paris-based, and high-tech entrepreneurs). Overall, algorithmic decision aids show promise to broaden the scope of VCs’ investments and founder diversity.
    JEL: D8 D83 G11 G24 G41 M13
    Date: 2022–02
  10. By: Kaus, Wolfhard; Zimmermann, Markus
    Abstract: This paper analyses the effect of offshoring (i.e., the relocation of activities previously performed in-house to foreign countries) on various firm outcomes (domestic employment, production, and productivity). It uses data from the International Sourcing Survey (ISS) 2017 for Germany, linked to other firm level data such as business register and ITGS data. First, we find that offshoring is a rare event: In the sample of firms with 50 or more persons employed, only about 3% of manufacturing firms and 1% of business service firms have performed offshoring in the period 2014-2016. Second, difference-in-differences propensity score matching estimates reveal a negative effect of offshoring on domestic employment and production. Most of this negative effect is not because the offshoring firms shrink, but rather because they don't grow as fast as the non-offshoring firms. We further decompose the underlying employment dynamics by using direct survey evidence on how many jobs the firms destroyed/created due to offshoring. Moreover, we do not find an effect on labour productivity, since the negative effect on domestic employment and production are more or less of the same size. Third, the German data confirm previous findings for Denmark that offshoring is associated with an increase in the share of 'produced goods imports', i.e. offshoring firms increase their imports for the same goods they continue to produce domestically. In contrast, it is not the case that offshoring firms increase the share of intermediate goods imports (a commonly used proxy for offshoring), as defined by the BEC Rev. 5 classification.
    Keywords: international sourcing,offshoring,productivity
    JEL: D24 L60 O30
    Date: 2022
  11. By: Du, Jun; Girma, Sourafel; Görg, Holger; Stepanok, Ignat
    Abstract: China is perceived to rely on subsidizing firms in targeted industries to improve their performance and stay competitive. We implement an approach that allows for the joint estimation of direct and indirect effects of subsidies on subsidized and non-subsidized firms. We find that firms that receive subsidies experience a boost for productivity. However, our approach highlights the importance of indirect effects, which are generally neglected in the literature. We find that, in general but not always, non-subsidized firms experience reductions in their productivity growth if they operate in a cluster where other firms are subsidized. These negative externalities depend on the share of firms that receive subsidies in the cluster. Aggregating direct and indirect effects into a (weighted) total effect shows that this negative indirect effect tends to dominate. We interpret our results in the light of a simple heterogenous firm type model, which highlights that subsidization, in a competitive environment of firms, may potentially harm non-subsidized firms.
    Keywords: Subsidies,Firm performance,Treatment effects,Externalities,China
    JEL: H25 H32 L25
    Date: 2022
  12. By: Mai, Nhat Chi
    Abstract: This working paper analyses the socioeconomic effects of education in two different political systems by investigating whether individuals educated in a collectivist education system are less likely to become entrepreneurs than individuals educated in an individualist system. It exploits the separation of Vietnam into a communist northern and a capitalist southern part between 1954 and 1975 to identify education in the respective systems, keeping factors such as national culture or historical background fixed. A Probit regression using survey data on 1,164 individuals suggests that being educated in the North makes it 8.6 percent less likely to become an entrepreneur than being educated in the South. This demonstrates that education in different systems may have an effect on entrepreneurial activity, although challenges such as necessitydriven entrepreneurship remain unresolved.
    Date: 2022–05–07
  13. By: Mai, Nhat Chi
    Abstract: Together with the development of the entire global economy, the economy of Vietnam is now being affected significantly by the globalization. Small and medium-sized, as a very sensitive sector, had some first negative signs. The number of bankruptcy of the enterprises in years 2014 set up a new record with more than 67800 enterprises. As the motive force for the economy of Vietnam, SMEs sector has a very important role to decide whether the economy is successful. The thesis aims to provide a general view of small and medium-sized enterprises in Vietnam market. Strength and weakness will be analyzed to provide a general view of the situation of Vietnam market. A questionnaire and interview combined with traditional SWOT analysis were conducted to give recommendations to improve the competitive ability of SMEs sector.
    Date: 2022–05–07
  14. By: Mai, Nhat Chi
    Abstract: Since 1986, Vietnam has continued to transform from a centrally-planned to market-oriented economy. Over the past 30 years, Vietnam has enjoyed one of the world’s best performances in terms of both economic growth and poverty reduction. Living standards have improved significantly – remarkable achievements based on the country’s socioeconomics. These results stem from the efforts of hundreds of thousands of small and medium sized enterprises (SMEs), and micro enterprises nationwide. They are considered the ‘backbone’ of the economy, and their development is a key driver of sustainable economic development. In 2007, Vietnam officially became a member of the World Trade Organization (WTO); integration that has delivered substantial benefits, as evidenced by the recent rapid growth in exports, income and employment to develop the economy. In this process, SMEs continue to play an important role in the distribution of income, employment levels, export growth and poverty reduction.
    Date: 2022–05–07
  15. By: Alessandro Maravalle; Alberto González Pandiella
    Abstract: The access to formal financial services in Mexico is particularly low. Access is also significantly unequal across income levels, gender, between rural and urban areas and across regions. SMEs access to bank credit is low, hampering firms’ ability to grow and innovate. The use of cash and informal credit is still widespread, especially in rural areas, where financial infrastructure is underdeveloped. The diffusion of digital financial services is slowly advancing but remains low, hindered by a relatively low level of financial literacy and a digital divide. Expanding access to finance would enable Mexican households to invest in education and health, and better manage income shocks and smooth consumption. It would also enable Mexican firms to invest more, increase productivity and create formal jobs. Low-income households, small firms and more disadvantaged regions would particularly benefit, as it would unlock new economic opportunities for them. Boosting competition in the banking sector would facilitate SMEs access to credit by lowering interest rate margins. Upgrading the regulatory framework of the financial system would help increase competition and quality of financial services. The potential of the fintech sector is yet to be materialised, which would further increase competition and bring financial services to wider segments of the population. Strengthening financial education and digital literacy would facilitate a larger and better use of traditional and digital financial services.
    Keywords: competition, credit, digital, financial education, financial inclusion, FinTech, SMEs
    JEL: D18 G2 G41 G51 G52 G53 O32
    Date: 2022–06–03
  16. By: Maximilian Göbel; Nuno Tavares
    Abstract: Extraordinary fiscal and monetary interventions in response to the COVID-19 pandemic have revived concerns about zombie prevalence in advanced economies. The literature has al- ready linked this phenomenon - observed over the course of the last two decades - to impeding the performance of healthy firms in Japan and Europe. To make the case for the United States, we analyze banks' and capital markets' zombie-lending practices on the basis of a sample of publicly listed U.S. companies. Our results suggest that zombie prevalence and zombie-lending per se are not a defining characteristic of the U.S. economy. Nevertheless, we find evidence for negative spillovers of zombie-lending on productivity, capital-growth, and employment-growth of non-zombies as well as on overall business dynamism. It is predominantly the class of healthy small- and medium-sized companies that is sensitive to zombie-lending activities, with financial constraints further amplifying these effects.
    Keywords: zombie lending; business dynamism; bank credit; non-viable firms; productivity
    JEL: D24 E24 G21 L25 O40
    Date: 2022–05
  17. By: Gabriele Beccari (University of Rome Tor Vergata. Dipartimento di Economia e Finanza); Francesco Marchionne (Indiana University, Kelley School of Business); Beniamino Pisicoli (University of Rome Tor Vergata. Dipartimento di Economia e Finanza)
    Abstract: This paper uses the Italian 2012 reform that introduced minibonds, a financial instrument specifically designed for SMEs, to check whether more accessible market-based finance promotes investment in intangibles. We apply a propensity score matching to address selection bias, run diff-in-diff estimates over 1,454 different samples to test our hypotheses, and use a meta-analysis to summarize the results. We find that minibond-issuing firms increase investments in intangible assets, a component difficult to finance via bank credit, more than other firms and investments in tangibles. Two mechanisms are at work: minibond issuances increase financial resources available to the firm (financial effect) and, above all, signal an improvement in business practices (reputational effect). These effects are more intense for smaller, more opaque, and bank-dependent firms. Our results are not affected by model dependence or endogeneity issues and are robust to different specifications.
    Keywords: intangibles; corporate bonds; bank dependence; minibonds; market-based finance; SMEs; investment
    JEL: G10 G23 G32 O30
    Date: 2022–05

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