nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒09‒19
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Research Joint Ventures: The Role of Financial Constraints By Philipp Brunner; Igor Letina; Armin Schmutzler
  2. Disruptive innovation and spatial inequality By Kemeny, Tom; Petralia, Sergio; Storper, Michael
  3. COVID-19 and Corporate Finance By Marco Pagano; Josef Zechner
  4. Patent collateral and access to debt By Bracht, Felix; Czarnitzki, Dirk
  5. Theory and Evidence of Firm-to-firm Transaction Network Dynamics By KAWAKUBO Takafumi; SUZUKI Takafumi
  6. Testing the knowledge-capital model of foreign direct investment: New evidence By Kox, Henk L.M.
  8. Language Barriers and the Speed of Knowledge Diffusion By Kyle HIGHAM; NAGAOKA Sadao
  9. Green & non-green relatedness: challenges and diversification opportunities for regional economies in Argentina By Belmartino, Andrea
  10. The role of the financial constraint in STW policy success during and after the Great Recession By Nathan Vieira
  11. Invention Value, Inventive Capability and the Large Firm Advantage By Ashish Arora; Wesley M. Cohen; Honggi Lee; Divya Sebastian
  12. The effects of joining multinational supply chains: new evidence from firm-to-firm linkages By Alfaro-Ureña, Alonso; Manelici, Isabela; Vasquez Carvajal, Jose
  13. Public and dynamic action of cooperatives in Morocco By Khalid Didi; Hicham Attouch
  14. Managerial innovation in public hospitals: a nursing empowerment perspective. By Corinne Rochette; Murrim Ceccato
  15. Procedures for technological updates on machines through technological changes with case study By Brara Farid
  16. How Worker Productivity and Wages Grow with Tenure and Experience: The Firm Perspective By Andrew Caplin; Minjoon Lee; Søren Leth-Petersen; Johan Saeverud; Matthew D. Shapiro
  17. SME Credit Conditions in the Pandemic Recovery By Durante, Elena; McGeever, Niall
  18. Regional diversification and intra-regional wage inequality in the Netherlands By Nicola Cortinovis; Dongmiao Zhang; Ron Boschma
  19. Sustainable Food System in Southeast Asia Under and Beyond COVID-19 Policy Evidence and Call for Action a Conference Synthesis By Bhadrakom, Chayada; Boughton, Duncan; Kitchaicharoen, Jirawan; Napasintuwong, Orachos; Saiyut, Pakapon; Satsue, Palakorn; Punjatewakupt, Piyawong; Suebpongsang, Pornsiri; Yotapakdee, Teeka; Satimanon, Thasanee
  20. Migration and Firm-Level Productivity By Fabling, Richard; Maré, David C.; Stevens, Philip

  1. By: Philipp Brunner; Igor Letina; Armin Schmutzler
    Abstract: This paper provides a novel theory of research joint ventures for financially constrained firms. When firms choose R&D portfolios, an RJV can help to coordinate research efforts, reducing investments in duplicate projects. This can free up resources, increase the variety of pursued projects and thereby increase the probability of discovering the innovation. RJVs improve innovation outcomes when market competition is weak and external financing conditions are bad. An RJV may increase the innovation probability and nevertheless lower total R&D costs. RJVs that increase innovation tend to be profitable, but innovation-reducing RJVs also exist. Finally, we compare RJVs to innovation-enhancing mergers.
    Keywords: Innovation, Research Joint Ventures, Financial Constraints, Mergers, Intensity of Competition, Licensing
    JEL: L13 L24 O31
    Date: 2022–07
  2. By: Kemeny, Tom; Petralia, Sergio; Storper, Michael
    Abstract: Although technological change is widely credited as driving the last 200 years of economic growth, its role in shaping patterns of inequality remains under-explored. Drawing parallels across two industrial revolutions in the United States, this paper provides new evidence of a relationship between highly disruptive forms of innovation and spatial inequality. Using the universe of patents granted between 1920 and 2010 by the US Patent and Trademark Office (USPTO), we identify disruptive innovations through their rapid growth, complementarity with other innovations and widespread use. We then assign more and less disruptive innovations to subnational regions in the geography of the United States. We document three findings that are new to the literature. First, disruptive innovations exhibit distinctive spatial clustering in phases understood to be those in which industrial revolutions reshape the economy; they are increasingly dispersed in other periods. Second, we discover that the ranks of locations that capture the most disruptive innovation are relatively unstable across industrial revolutions. Third, regression estimates suggest a role for disruptive innovation in regulating overall patterns of spatial output and income inequality.
    Keywords: industrial revolutions; inequality; innovation; regional development; technological change
    JEL: J31 O30 O33 O51
    Date: 2022–07–20
  3. By: Marco Pagano (University of Naples Federico II, CSEF, EIEF, and CEPR.); Josef Zechner (WU Vienna University of Economics and Business, the Vienna Graduate School of Finance (VGSF), and CEPR.)
    Abstract: We distill evidence about the effects of COVID-19 on companies. Stock price reactions to the shock differed greatly across firms, depending on their resilience to social distancing, financial flexibility, and corporate culture. The same characteristics affected the response of firms’ sales, employment, and asset growth. Despite the shock, firms expanded their balance sheets and liquidity by raising funds from banks, bonds, and equity markets. While listed firms reduced their leverage, unlisted ones, especially small and medium enterprises, increased it. Government support programs helped firms access external funding. We conclude by identifying unexplored research issues regarding the long-run effects of COVID-19 on companies.
    Keywords: COVID-19, pandemic, firm resilience, social distancing, financial flexibility, corporate culture, credit supply, leverage, government support, public loan guarantees, Paycheck Protection Program.
    JEL: G11 G12 G13 G21 G24 G28 G32 G33 G35 G38 H81 H84
    Date: 2022–08–09
  4. By: Bracht, Felix; Czarnitzki, Dirk
    Abstract: We investigate how intangible capital in form of intellectual property, such as patents, might mitigate financing constraints. While scholars have already argued that patents might have a signalling value reducing information asymmetries between borrowers and lenders, we quantify the value of using patents as collateral with regard to capital access. Although this mechanism of patents in financing further R&D is not new, we are the first to provide a treatment effects study of patent collateral and access to capital. We make use of mandatory collateral registry data in Sweden and the Netherlands to construct panels combining firm-level financial data and patent measures. Estimating conditional difference-in-difference regressions on firms' debt allows deducting treatment effects of using patents as collateral. We find that patent pledging enables Swedish (Dutch) firms to borrow about 21% (26%) more than in the counterfactual situation in which no patents would have been used as collateral. We also find that the collateral value of patents is higher than their signalling value, and a back-of-the-envelope scenario calculation shows that Dutch (Swedish) firms could raise more than € 7 (€ 10) billion additional debt capital if the complete patent portfolios would be pledged, all else constant.
    Keywords: Financing Constraints,Collateral,Intangible Assets,Patents,Treatment Effects Estimation
    JEL: O30 O34 G31
    Date: 2022
  5. By: KAWAKUBO Takafumi; SUZUKI Takafumi
    Abstract: How are supply chains formed and restructured over time? This paper investigates firm-to-firm transaction network dynamics from theoretical and empirical perspectives, exploiting large-scale firm-level transaction data from Japan. First, we provide basic facts which show substantial churning in supply chains over time, even after excluding the cases where either supplier or customer firms exit from the market. Second, we empirically find that productivity positive assortative matching between firms exists. Firms are more likely to keep trading with more productive firms and instead stop trading with less productive ones. Alternatively, more productive firms start new transactions with more productive business partners. Lastly, we build a theoretical framework to rationalize these findings. Both supplier and customer firms are heterogeneous and choose their trading partners with a many-to-many matching framework. We derive the implications for supply chain formation and restructuring in response to productivity shocks.
    Date: 2022–08
  6. By: Kox, Henk L.M.
    Abstract: The knowledge-capital (KC) model of FDI explains the international distribution of FDI, assuming that firms own proprietary knowledge assets that can at low costs also be exploited in foreign subsidiaries. The model's implication is that countries with much outward FDI should have a relative abundance of proprietary knowledge assets, which has up to now not been adequately tested, partly due to a lack of data. This paper extends the KC model by a module that formalises the encapsulation of public national knowledge assets into proprietary firm-level assets. It provides a way to test the basic tenet of the KC model. We exploit a new dataset (80 indicators, 209 countries, period 2000-2020) to identify the impact and statistical significance of national knowledge assets for explaining outward FDI. Our test confirms the validity of the KC model for explaining patterns of outward FDI. Several robustness tests confirm the stability of our findings.
    Keywords: foreign direct investment; knowledge-capital model; empirical testing; 2000-2020; 209 countries
    JEL: D21 F21 F23
    Date: 2022–08
  7. By: Krupa Mehta
    Abstract: Indian economy is moving from developing to fastest developing economy. Start-ups in India are the new contributing factor in the growth of development. India is a developing south Asian country. It is a most populous and 7th largest country by area. Large population implies a large prospective market in India and puts more pressure for employment in the country. In the present decade, India is undertaking an essential shift towards start-up welcoming policies and a business friendly environment. India is a populated country having increasing demand which is putting a competitive environment forcing to create innovative systems. One of these systems is a start-up ecosystem. This paper is aimed at about the growth and prospects of start-up systems in India. Key words: startups, innovation, technological business incubator, India.
    Date: 2022–06
  8. By: Kyle HIGHAM; NAGAOKA Sadao
    Abstract: While language barriers are well-known obstacles to knowledge diffusion, quantitative research on this topic is sparse. In this work, we attempt to fill this gap by providing causal evidence on their effects on the speed of knowledge diffusion by exploiting the introduction of pre-grant publications by the American Inventors Protection Act (AIPA) in 2000. We find that this policy significantly accelerated, relative to Japanese inventors, US inventors’ use of Japan-originating technical knowledge in their patents. Our analysis controls for biases of patent citations as proxies of knowledge flow, including preference for citing local prior art. Consistent with incentives for translation, this acceleration is much larger for small firms and the firms with little investment in the Japanese market. Consistent with high uncertainty of foreign patents before translation, we see much larger effects of the AIPA on the patent applications with higher quality. Our findings suggest that pre-grant publication provides a significant public good for cumulative innovation through earlier translations of foreign patents.
    Date: 2022–08
  9. By: Belmartino, Andrea
    Abstract: This paper analyzes the role of relatedness in the development of new green specializations for the Argentinean provinces between 2008-2019. The development of products with environmental benefits (called green products) is considered one step towards a sustainable transition. These products present a growing demand that may provide an opportunity in terms of green development. The empirical strategy draws on the evolutionary economic geography through indices that capture knowledge bases in the region. The aim is to analyze the role of green and non-green relatedness in the development of new green specializations and to identify potential diversification opportunities. Empirical results show that the green economy has an uneven spatial distribution across the country, that remains stable over time. Furthermore, the development of a new green specialization is positively related to the productive knowledge bases present in the region (proxied by relatedness density). Both, green and non-green relatedness are relevant to develop new specializations in green products. Potential diversification opportunities are also in favor of wealthier regions. Finally, the results reveal a path dependence process on the development of new specialization in green products.
    Keywords: Diversificación de la Producción; Economía Regional; Economía Verde; Argentina; 2008-2019;
    Date: 2022–07
  10. By: Nathan Vieira (Aix-Marseille Université, AMSE)
    Abstract: Just one year after the subprime crisis, and despite being one of the most impacted countries in the world, Germany displayed the highest GDP growth rate among EU countries and maintained it at its level for two years. Combined with a surprisingly small variation in unemployment rates over this period, some press articles have nicknamed the impressive German economic recovery the "second German miracle". In this presentation, I produce empirical evidence of the role played by short-time work in the "German miracle". By exploiting firm-level data, I show that short-time work programs should target firms facing huge financial constraints and difficult business conditions. To these conditions, short-time work programs can preserve employment during a crisis and allow a greater take-up afterward.
    Date: 2022–08–01
  11. By: Ashish Arora; Wesley M. Cohen; Honggi Lee; Divya Sebastian
    Abstract: Do large firms produce more valuable inventions, and if so, why? After confirming that large firms indeed produce more valuable inventions, we consider two possible sources: a superior ability to invent, or a superior ability to extract value from their inventions. We develop a simple model that discriminates between the two explanations. Using a sample of 2,786 public corporations, and measures of both patent quality and patent value, we find that, while average invention value rises with size, average invention quality declines, suggesting, per our model, that the large firm advantage is not due to superior inventive capability, but due to the superior ability to extract value. We provide evidence suggesting that this superior ability to extract value is due to greater commercialization capabilities of larger firms.
    JEL: O31 O32 O33 O34
    Date: 2022–08
  12. By: Alfaro-Ureña, Alonso; Manelici, Isabela; Vasquez Carvajal, Jose
    Abstract: We study the effects of becoming a supplier to multinational corporations (MNCs) using tax data tracking firm-to-firm transactions in Costa Rica. Event-study estimates reveal that domestic firms experience strong and persistent gains in performance after supplying to a first MNC buyer. Four years after, domestic firms employ 26% more workers and have a 4 to 9% higher total factor productivity (TFP). These effects are unlikely to be explained by demand effects or changes in tax compliance. Moreover, suppliers experience a large drop in their sales to all other buyers except the first MNC buyer in the year of the event, followed by a gradual recovery. The dynamics of adjustment in sales to others suggests that firms face short-run capacity constraints that relax over time. Four years later, the sales to others grow by 20%. Most of this growth comes from the acquisition of new buyers, which tend to be “better buyers” (e.g., larger and with more stable supplier relationships). Finally, we collected survey data from domestic firms and MNCs to provide further insights into the wide-ranging benefits of supplying to MNCs. According to our surveys, these benefits range from better managerial practices to a better reputation.
    JEL: F14 F23 O12 D24
    Date: 2021–11–16
  13. By: Khalid Didi (Université Mohammed V); Hicham Attouch (Université Mohammed V)
    Abstract: In Morocco, the state public action has long been a lever for the promotion of cooperative entrepreneurship and the creation of conducive environment to the development of the Moroccan cooperative sector. As a result, several support and accompaniment measures have been taken by the public authorities to boost the dynamics of this sector. This research work consists of analyzing the impact of state public action on the dynamics of cooperatives in Morocco. Our methodology is based on the mapping of the various programs and sector strategies that have greatly contributed to the dynamics of the cooperative sector. The results of this analysis have enabled to demonstrate the importance of supporting the State in revitalizing cooperatives, by giving it not only demographic performance, but also an entrepreneurial and participatory dynamic in development. On the other hand, several shortcomings have been identified which negatively impact the performance of cooperatives, in particular: the lack of convergence between the various public programs and the limitations of the financial and technical resources dedicated to the proximity support of cooperatives.
    Abstract: Au Maroc, l'action publique de l'État a constitué depuis longtemps un levier pour la promotion de l'entrepreneuriat coopératif et la création d'un environnement propice au développement du secteur coopératif marocain. De ce fait, plusieurs mesures d'appui et d'accompagnement ont été prises par les pouvoirs publics pour booster la dynamique de ce secteur. Ce travail de recherche consiste à analyser l'impact de l'action publique de l'État sur la dynamique des coopératives au Maroc. Notre méthodologie s'est basée sur la cartographie des différents programmes et stratégies sectoriels ayant fortement contribué à la dynamique du secteur coopératif. Les résultats de cette analyse a permis de démontrer l'importance de l'accompagnant de l'Etat dans la redynamisation des coopératives, en lui donnant non seulement une performance démographique, mais aussi une dynamique entrepreneuriale et participative au développement. En revanche plusieurs insuffisances ont été identifiées impactent négativement la performance des coopératives, notamment : le manque de convergence entre les différents programmes publics et les limites des moyens financiers et techniques dédiés à l'appui de proximité des coopératives.
    Keywords: Public action,Cooperative,Social Entrepreneurship,Human Development,Action publique,Coopérative,Entrepreneurial social,Développement humain
    Date: 2021
  14. By: Corinne Rochette (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne, IAE - UCA - Institut d'Administration des Entreprises - Clermont-Auvergne - UCA - Université Clermont Auvergne); Murrim Ceccato (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA - Université Clermont Auvergne)
    Abstract: Organisational innovation in the health sector has until now been the result of top-down approaches driven by the supervisory authorities and has mainly concerned the meso level. In a context where hospitals are under severe pressure on resources, particularly human resources, the ability of staff, particularly nurses, to produce managerial innovation is a promise and a little-explored avenue for transforming practices in these complex structures. This requires the empowerment of these staff members, who have long been relegated to the rank of simple executors. Through the analysis of the discourse of 19 hospital staff (10 nurses and 9 managers from the nursing sector) working in three French hospitals, we identify some markers of local organisational innovations and a nursing leadership that has yet to be built due to a lack of empowerment.
    Abstract: I L'innovation organisationnelle dans le secteur de la santé était jusqu'alors le résultat de démarches top down impulsées par les autorités de tutelle et concerne essentiellement un niveau méso. Dans un contexte où l'hôpital connait de fortes tensions sur les ressources, en particulier humaines, la capacité des personnels, en particulier infirmier, à produire une innovation managériale constitue une promesse et une voie encore peu explorée de transformation des pratiques dans ces structures complexes. Celle-ci exige un empowerment de ces personnels longtemps relégués au rang de simples exécutants. A travers l'analyse du discours de 19 personnels hospitaliers (10 infirmiers et 9 managers issus de la filière infirmière) exerçant leurs fonctions dans trois hôpitaux, nous identifions des marqueurs d'innovations organisationnelles locales et un leadership infirmier qui reste à construire faute d'un empowerment suffisant.
    Keywords: Managerial innovation,structural empowerment,magnet hospitals,nurse leadership,Innovation managériale,empowerment structurel,hôpitaux magnétiques,leadership infirmier
    Date: 2022
  15. By: Brara Farid (UMBB - Université M'Hamed Bougara Boumerdes)
    Abstract: The renewal policy is one of the policies that companies resort to enforce after a period of starting their activity.We note that the rapid technological advancements in machine design are preparing many enterprises to improve their performance and develop production in a better and more advantageous form.And our study makes it possible to develop a rational policy for the acquisition of machines in an industrial installation.
    Keywords: change,environment,Productivity,flexibility,Process.,innovation,changement,environnement,Productivité,flexibilité,Processus
    Date: 2022
  16. By: Andrew Caplin; Minjoon Lee; Søren Leth-Petersen; Johan Saeverud; Matthew D. Shapiro
    Abstract: How worker productivity evolves with tenure and experience is central to economics, shaping, for example, life-cycle earnings and the losses from involuntary job separation. Yet, worker-level productivity is hard to identify from observational data. This paper introduces direct measurement of worker productivity in a firm survey designed to separate the role of on-the-job tenure from total experience in determining productivity growth. Several findings emerge concerning the initial period on the job. (1) On-the-job productivity growth exceeds wage growth, consistent with wages not being allocative period-by-period. (2) Previous experience is a substitute, but a far less than perfect one, for on-the-job tenure. (3) There is substantial heterogeneity across jobs in the extent to which previous experience substitutes for tenure. The survey makes use of administrative data to construct a representative sample of firms, check for selective non-response, validate survey measures with administrative measures, and calibrate parameters not measured in the survey.
    JEL: J24 J30
    Date: 2022–08
  17. By: Durante, Elena (Central Bank of Ireland); McGeever, Niall (Central Bank of Ireland)
    Abstract: We analyse the credit conditions facing Irish SMEs in the context of the pandemic recovery. SME trading performance has continued to improve, with turnover and profitability indicators rebounding significantly from pandemic lows. Government policy supports have been large and composed mainly of grants. These supports have provided extensive liquidity support to firms and mitigated debt overhang risks, while also likely weighing on demand in the formal credit market. New bank lending to SMEs has fallen moderately and this has been mainly driven by declines in lending to pandemic-affected sectors. SME demand for credit remains low. Credit supply indicators show little sign of stress, with loan application rejection rates remaining steady. The tapering of government supports to businesses may result in a rise in credit demand over the coming months.
    Date: 2022–04
  18. By: Nicola Cortinovis; Dongmiao Zhang; Ron Boschma
    Abstract: The literature has drawn little attention to the relationship between industrial dynamics (i.e. the rise and fall of industries) and intra-regional wage inequality. This explorative study examines the relationship between industry dynamics and wage inequality in NUTS-3 regions in the Netherlands in the period 2010-2019. While the literature has shown that related diversification in more complex industries enhances economic growth in regions but also inequality between regions, our study shows that related diversification in less complex industries tends to reduce wage inequality within a region. This implies it remains a policy challenge to combine smart and inclusive growth in regions. Our study also showed that there is no significant relationship between exit of industries and regional inequality, with one exception: unrelated low-complex exits tend to increase intra-regional wage inequality. Overall, these findings suggest that related diversification in less complex industries tends to bring benefits in terms of inclusive growth, while unrelated exits in less complex industries tend to do the opposite.
    Keywords: intra-regional inequality, regional inequality, relatedness, structural change, inclusive growth
    JEL: O18 O31 O33 R11
    Date: 2022–08
  19. By: Bhadrakom, Chayada; Boughton, Duncan; Kitchaicharoen, Jirawan; Napasintuwong, Orachos; Saiyut, Pakapon; Satsue, Palakorn; Punjatewakupt, Piyawong; Suebpongsang, Pornsiri; Yotapakdee, Teeka; Satimanon, Thasanee
    Abstract: The conference focused on the key role of research evidence for the design of policy and institutional innovations that accelerate the transformation to healthier, more sustainable, equitable, and resilient food systems. Research offers many important contributions to achieve the SDGs. It generates the basic inputs for innovations, i.e. policy and institutional innovations (incl. social and business innovations) as well as technology-based innovations to catalyze, support, and accelerate food systems transformation. Second, research assesses targets and actions by understanding the impliciations of various development pathways (for instance through quantitative analyses and food systems modeling) as well as assessing impacts ex-post to ensure learning and corrective measures. Taking a food systems approach that draws on expertise and evidence from different research disciplines is necessary to understand how investments and choices in food production, distribution, processing, and consumption determine outcomes related to nutrition, food security, socio-economic welfare, and environmental health. The conference demonstrated that high quality evidence is available even if there are still important gaps that need to be filled. The human and organizational capacity to generate evidence and innovation is also available if we can mobilize the financial resources and regional collaboration to address them. Of course, we must also use evidence to accelerate positive change. This is an important part of the “call to action” of this conference.
    Keywords: Agricultural and Food Policy
    Date: 2022–03–20
  20. By: Fabling, Richard (Independent Researcher); Maré, David C. (Motu Economic and Public Policy Research Trust); Stevens, Philip
    Abstract: We use linked employer-employee microdata for New Zealand to examine the relationship between firm-level productivity, wages and workforce composition. Jointly estimating production functions and firm- level wage bill equations, we compare migrant workers with NZ-born workers, through the lens of a derived "productivity-wage gap" that captures the difference in relative contribution to output and the wage bill. Whether we look at all industries using a common production function, or separately estimate results for the five largest sectors, we find that skilled and long-term migrants make contributions to output that exceed moderately-skilled NZ-born workers, with that higher contribution likely being due to a mix of skill differences and/or effort which is largely reflected in higher wages. Conversely, migrants that are not on skilled visas are associated with lower output and lower wages than moderately-skilled NZ-born, also consistent with a skills/effort narrative. The share of employment for long-term migrants has grown over time (from 2005 to 2019) and we show that their relative contribution to output appears to be increasing over the same period. Finally, we present tentative evidence that high-skilled NZ-born workers make a stronger contribution to output when they work in firms with higher migrant shares, which is suggestive of complementarities between the two groups or, at least, positive mutual sorting of these groups into higher productivity firms.
    Keywords: migrant labour, firm productivity, worker sorting, wage determinants, quality-adjusted labour input
    JEL: D24 J15 J31
    Date: 2022–08

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