nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒09‒05
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Fresh start policies and small business activity: evidence from a natural experiment By Marco Celentani; Miguel García-Posada; Fernando Gómez Pomar
  2. A Lasting Crisis affects R&D decisions of smaller firms: the Greek experience By Ioannis Giotopoulos; Alexander S. Kritikos; Aggelos Tsakanikas
  3. A resource-based analysis of strategic alliances between knowledge intermediaries in regional innovation and entrepreneurial ecosystems By Bäumle, Philipp; Bizer, Kilian
  4. The Influence of Environmental Commitment and Innovation on Export Intensity: Firm-Level Evidence from Tunisia By SDIRI, Hanen
  5. Partisan Entrepreneurship By Joseph Engelberg; Jorge Guzman; Runjing Lu; William Mullins
  6. Distressed firms, zombie firms and zombie lending: a taxonomy By Laura Álvarez; Miguel García-Posada; Sergio Mayordomo
  7. Were Small Businesses More Likely to Permanently Close in the Pandemic? By Fairlie, Robert W.; Fossen, Frank M.; Johnsen, Reid; Droboniku, Gentian
  8. Impact of formal and informal institutional constraints on innovation: firm-level evidence from Tunisia By Sdiri, Hanen
  9. Clicking for Credit: Experiences of Online Lender Applicants from the Small Business Credit Survey By Barbara J. Lipman; Lucas Misera; Ann Marie Wiersch; Kim Wilson
  10. Immigration and Business Dynamics: Evidence from U.S. Firms By Parag Mahajan
  11. Assessing the innovation potential of the furniture industry value chain in Bulgaria By Georgieva, Daniela Ventsislavova; Gateva, Nedka; Georgieva, Teodora; Tsakova, Irina; Jukneviciene, Vita
  12. Agglomeration, Innovation, and Spatial Reallocation: The Aggregate Effects of R&D Tax Credits By Alexandre Sollaci

  1. By: Marco Celentani (Universidad Carlos III); Miguel García-Posada (Banco de España); Fernando Gómez Pomar (Universitat Pompeu Fabra)
    Abstract: There is no consensus in the academic literature on whether personal bankruptcy laws should be creditor-friendly or debtor-friendly in order to promote entrepreneurship and small business activity. This paper contributes to that literature by analyzing the effect of the introduction of a fresh start policy in Spain in 2015 on the performance of micro-firms as a natural experiment, using Spanish non-micro firms and Portuguese firms as control groups. We find that the reform substantially increased both the probability of filing for bankruptcy by Spanish micro-firms in financial distress (arguably to seek discharge of part of the firm owner’s debt) and the probability of these firms exiting the market, as the fresh start policy requires the liquidation of the debtor’s non-exempt assets. In addition, the reform increased investment and turnover in micro-firms but had no effect on their employment. Finally, the reform also promoted the creation of new micro-firms, especially those involved in innovation activities and in sectors with high productivity.
    Keywords: personal bankruptcy, fresh start, micro-firms, entrepreneurship
    JEL: K35 G33 L25 L26
    Date: 2022–03
  2. By: Ioannis Giotopoulos (University of Peloponnese); Alexander S. Kritikos (DIW Berlin, University of Potsdam, IAB Nuremberg, IZA Bonn); Aggelos Tsakanikas (National Technical University of Athens)
    Abstract: We use the prolonged Greek crisis as a case study to understand how a lasting economic shock affects the innovation strategies of firms in economies with moderate innovation activities. Adopting the 3-stage CDM model, we explore the link between R&D, innovation, and productivity for different size groups of Greek manufacturing firms during the prolonged crisis. At the first stage, we find that the continuation of the crisis is harmful for the R&D engagement of smaller firms while it increased the willingness for R&D activities among the larger ones. At the second stage, among smaller firms the knowledge production remains unaffected by R&D investments, while among larger firms the R&D decision is positively correlated with the probability of producing innovation, albeit the relationship is weakened as the crisis continues. At the third stage, innovation output benefits only larger firms in terms of labor productivity, while the innovation-productivity nexus is insignificant for smaller firms during the lasting crisis.
    Keywords: Small firms, Large firms, R&D, Innovation, Productivity, Long-term Crisis
    JEL: L25 L60 O31 O33
    Date: 2022–08
  3. By: Bäumle, Philipp; Bizer, Kilian
    Abstract: Notwithstanding a recent upsurge in interest in knowledge intermediaries and their roles in innovation and entrepreneurial ecosystems, we know little about the interplay between the activities of academia driven intermediaries and their publicly financed counterparts. Building upon a combination of principles derived from the resource based theory and the entrepreneurial ecosystems literature, this paper investigates the potentials of cooperation between different knowledge intermediaries. Therefore, we analyze the alignment of financial, knowledge, market and network resources in politically funded regional alliances between university internal and university external intermediaries by the means of a qualitative approach. We find that while knowledge intermediaries can benefit from access to additional ecosystem specific resources, the urge to improve the own position within the ecosystem hampers the will for cooperation and can lead to non performing resource alignments. This paper contributes to current scholarly discussions by suggesting and testing a theoretical foundation for analyzing the cooperative behavior of knowledge intermediaries in innovation and entrepreneurial ecosystems.
    Keywords: resource-based view,strategic alliances,knowledge intermediaries,innovation and entrepreneurial ecosystems,qualitative case study
    JEL: I29 O31 O39
    Date: 2022
  4. By: SDIRI, Hanen
    Abstract: This study utilizes structural equation modeling (SEM) to analyze the extent to which environmental commitment and innovation increase the export intensity of Tunisian firms. Relying on firm-level data from the World Bank Enterprise Survey conducted in 2020, we empirically test how environmental commitment increases export intensity through innovation. This study distinguishes between two types of innovation; product innovation and process innovation. We show that environmental commitment is useful in stimulating both product and process innovation. We find that environmental commitment and product innovation drive exports. Yet, process innovation does not affect exports. Moreover, our results highlight that quality certification interacts with the relationship between environmental commitment and process innovation. The results can help decision-makers understand how environmental commitment represents an important strategy for companies to be more innovative and oriented towards export.
    Keywords: Product innovation. Process innovation. Environmental Commitment. Export intensity. Quality certification. Tunisian firms.
    JEL: F23 F63 F64 O3
    Date: 2022–07–01
  5. By: Joseph Engelberg; Jorge Guzman; Runjing Lu; William Mullins
    Abstract: Republicans start more firms than Democrats. In 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.
    JEL: G41 G51 L26 M13
    Date: 2022–07
  6. By: Laura Álvarez (Banco de España); Miguel García-Posada (Banco de España); Sergio Mayordomo (Banco de España)
    Abstract: This papers develops a taxonomy of financially distressed and zombie firms using a rich dataset that combines detailed firm-level and bank-firm level information in Spain. A distressed firm exhibits both cash-flow and balance-sheet insolvency whereas a zombie firm is a distressed company that has received new credit. We carry out several analyses to test the validity of these definitions. For instance, we find that being distressed is negatively correlated with the probability of receiving new credit. However, the main bank of a distressed firm is more reluctant to restrict the supply of credit to such firm than a bank with no previous exposure to the company, which may reflect the incentives of the former to engage in loan evergreening. This financial support contributes to keeping zombie firms afloat for a longer period than distressed firms. Moreover, the contraction in capital, employment and sales is much larger in distressed firms than in zombie firms.
    Keywords: taxonomy of firms, distressed firms, zombie firms, credit supply, loan evergreening, real effects
    JEL: G21 G32 G33 L25
    Date: 2022–05
  7. By: Fairlie, Robert W. (University of California, Santa Cruz); Fossen, Frank M. (University of Nevada, Reno); Johnsen, Reid (California Department of Tax and Finance Administration); Droboniku, Gentian (California Department of Tax and Finance Administration)
    Abstract: Previous estimates indicate that COVID-19 led to a large drop in the number of operating businesses operating early in the pandemic, but surprisingly little is known on whether these shutdowns turned into permanent closures and whether small businesses were disproportionately hit. This paper provides the first analysis of permanent business closures using confidential administrative firm-level panel data covering the universe of businesses filing sales taxes from the California Department of Tax and Fee Administration. We find large increases in closures rates in the first two quarters of 2020, but a strong reversal of this trend in the third quarter of 2020. The increase in closures rates in the first two quarters of the pandemic was substantially larger for small businesses than large businesses, but the rebound in the third quarter was also larger. The disproportionate closing of small businesses led to a sharp concentration of market share among larger businesses as indicated by the Herfindahl-Hirschman Index with only a partial reversal after the initial increase. The findings highlight the fragility of small businesses during a large adverse shock and the consequences for the competitiveness of markets.
    Keywords: small business, entrepreneurship, survival, closures, self-employment, COVID-19, coronavirus, pandemic, shelter-in-place restrictions, social distancing restrictions
    JEL: L26 H25 I18
    Date: 2022–07
  8. By: Sdiri, Hanen
    Abstract: Using data from the 2020 World Bank Enterprise Survey in Tunisia, we analyze the joint impact of formal and informal institutional constraints on the types of firms’ innovation. Moreover, we were interested in estimating the effect of the interaction between the two institutional constraints on the types of innovation. The main results of the econometric analysis show that the government system constraints have a positive and statistically significant effect on the likelihood of being an imitator. Furthermore, we show that the legal system constraints have a negative effect on the likelihood of being an innovator, but a positive effect on the probability of being an innovation pretender. We find a significant negative direct effect of commercial bribery on firm innovation. Moreover, the results show that the positive (negative) effect of the constraints from the government system (of the constraints from the legal system) on the probability of innovation will be alleviated by commercial bribery.
    Keywords: Innovation. Formal Institutions. Informal Institutions. Tunisian firms
    JEL: D73 E2 O12 O3
    Date: 2022–05–10
  9. By: Barbara J. Lipman; Lucas Misera; Ann Marie Wiersch; Kim Wilson
    Abstract: This report presents findings on the experiences of small businesses seeking credit from online lenders, based on data from the 2021 Small Business Credit Survey (SBCS). According to findings, firms that apply to online lenders are more likely to be newer and have fewer employees, lower revenues, and weaker credit scores. In addition, Black- and Hispanic-owned firms are more likely than white- and Asian-owned firms to report that they applied to an online lender. Furthermore, contrary to prior SBCS findings, online-lender applicants were less likely than bank applicants to be approved for the full amount of financing they sought. Generally, online-lender applicants reported lower overall satisfaction with their lenders than did bank applicants. Overall, approved applicants cited fewer challenges with their lender experiences than did applicants that were denied. The only exception was at online lenders, where approved applicants were more likely than denied applicants to cite challenges with high interest rates and unfavorable repayment terms.
    Keywords: small business; lenders
    Date: 2022–08–16
  10. By: Parag Mahajan
    Abstract: Prior literature on the economic impact of immigration has largely ignored changes to the composition of labor demand. In contrast, this paper uses a comprehensive collection of survey and administrative data to show that heterogeneous establishment entry and exit drive immigrant-induced job creation and a rightward shift of the productivity distribution in U.S. local industries. High-productivity establishments are more likely to enter and less likely to exit in high immigration environments, whereas low-productivity establishments are more likely to exit. These dynamics result in productivity growth. A general equilibrium model proposes a mechanism that ties immigrant workers to high-productivity firms and shows how accounting for changes to the employer distribution can yield substantially larger estimates of immigrant-generated economic surplus than canonical models of labor demand.
    Keywords: immigration, business dynamics, productivity, firm heterogeneity
    JEL: J23 J61 L11 F22
    Date: 2022
  11. By: Georgieva, Daniela Ventsislavova; Gateva, Nedka; Georgieva, Teodora; Tsakova, Irina; Jukneviciene, Vita
    Abstract: The dynamic changes in the global environment have a strong impact on value chains in terms of both the economic and innovation performance of individual enterprises and the growth potential of the regions in which they are located. The main goal of the report is to analyse the innovation potential of furniture manufacturing companies in Bulgaria from the perspective of their global value chain (hereinafter GVC) participation. A review of the scientific literature is presented in the first part of the paper, where information regarding the current status, challenges, and opportunities for the innovativeness of the furniture industry is studied. In addition, factors related to the innovation potential of enterprises are outlined, which could have an impact on the GVC by strengthening and expanding their effect to gain new opportunities for national and regional competitiveness. Primary data analysis from a questionnaire survey among furniture manufacturing companies in Bulgaria is presented in the second part of the paper. Emphasis is put on the possibility for adaptation of the innovation potential of furniture manufacturers to the value chains and globalization. These analyses will serve as a basis for further studies on the link between innovativeness and GVC participation in forestry.
    Keywords: global value chain, furniture manufacturers, innovation potential
    JEL: O1 O30 Q0
    Date: 2022–05
  12. By: Alexandre Sollaci
    Abstract: I investigate the aggregate effects of R&D tax credits in the US. Because it subsidizes R&D activity and because credit rates vary between states, this policy has both spatial and dynamic effects on the economy. To address this issue, I construct an endogenous growth model with spatial heterogeneity and agglomeration spillovers in innovation. Aggregate outcomes in this model are thus affected by the spatial distribution of the population in the economy, which is itself endogenous and reacts to policy. I use this framework to identify a set of local R&D subsidies that maximize aggregate welfare.
    Keywords: agglomeration; innovation; R&D tax credits
    Date: 2022–07–01

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