nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒11‒21
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. How do firms innovate in Latin America? By Vargas, Fernando
  2. Green Start-ups and the Role of Founder Personality By Chapman, Gary; Hottenrott, Hanna
  3. The Ossified Economy: The Case of Germany, 1870-2020 By Naudé, Wim; Nagler, Paula
  4. Do Innovative Firms Pay Higher Wages ? Micro-Level Evidence from Brazil By Cirera,Xavier; Soares Martins Neto,Antonio
  5. Measuring the Biases, Burdens, and Barriers Women Entrepreneurs Endure in Myanmar By Dall'Aglio,Chiara; Hayati,Fayavar; Lee,David James
  6. Green Technological Diversification and Local Recombinant Capabilities: The Role of Technological Novelty and Academic Inventors. By Author-Name: Orsatti, Gianluca; Quatraro,Francesco; Scandura, Alessandra
  7. Endogenous Innovation Scale and Patent Policy in a Monetary Schumpeterian Growth Model By Yu, Po-yang; Lai, Ching-Chong
  8. Bank Local Specialization By Anne Duquerroy; Clément Mazet-Sonilhac; Jean-Stéphane Mésonnier; Daniel Paravisini
  9. Unmasking the Impact of COVID-19 on Businesses : Firm Level Evidence from Across the World By Apedo Amah,Marie Christine; Avdiu,Besart; Cirera,Xavier; Vargas Da Cruz,Marcio Jose; Davies,Elwyn Adriaan Robin; Grover,Arti Goswami; Iacovone,Leonardo; Kilinc,Umut; Medvedev,Denis; Maduko,Franklin Okechukwu; Poupakis,Stavros; Torres Coronado,Jesica; Tran,Trang Thu
  10. Improving Workers’ Performance in Small Firms : A Randomized Experiment on Goal Setting in Ghana By Cettolin, Elena; Cole, Kym; Dalton, Patricio
  11. The development of digital sustainability technologies by top R&D investors By JINDRA Björn; LEUSIN Matheus
  12. Stayin’ alive? Government support measures in Portugal during the Covid-19 pandemic By Márcio Mateus; Katja Neugebauer
  13. Using Deep Learning to Find the Next Unicorn: A Practical Synthesis By Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz
  14. The Zombification of the Economy? Assessing the Effectiveness of French Government Support During COVID-19 Lockdown By Mattia Guerini; Lionel Nesta; Xavier Ragot; Stefano Shiavo

  1. By: Vargas, Fernando
    Abstract: The study of innovation in Latin American firms has concentrated almost exclusively on the determinants and impacts of innovation investments and outputs. Less attention has been paid to how firms innovate. This study applies factor and cluster analysis to a unique dataset of harmonized innovation surveys from Argentina, Chile, Colombia, Ecuador, El Salvador, Paraguay, Peru, and Uruguay, to identify the main innovation practices and strategies performed by Latin American firms. Three of the four identified innovation strategies can be linked to results from similar studies using European firm-level data. However, none of these strategies resembles a strong science or research orientation. An approach to "open management" innovation emerges as idiosyncratic for Latin American firms. These innovation strategies are associated with differences in sales growth and labor productivity. The analysis also shows that firm resources and capabilities drive innovation strategy selection.
    JEL: L20 O12 O14 O30 O32 O33 O54
    Date: 2022–05–23
  2. By: Chapman, Gary; Hottenrott, Hanna
    JEL: G24 L26 O25 O31
    Date: 2022
  3. By: Naudé, Wim (RWTH Aachen University); Nagler, Paula (Erasmus University Rotterdam)
    Abstract: We describe Germany's rise as an industrial power in the late 19th century through radical innovation and entrepreneurship, and contrast this with the post-World War II period. This latter period, although it contained the German economic miracle, was nevertheless a period during which innovation slowed down - a somewhat surprising conclusion, but consistent with the decline in business dynamism noted in a growing number of advanced economies. We document this decline using several innovation indicators, and offer four broad, interrelated explanations in a historical context: (i) the innovation system is locked into incremental innovation, (ii) the diffusion of technology is slowing down, (iii) the education system is subject to weaknesses, and (iv) entrepreneurship is stagnating. Implications for policy are noted. Our paper contributes to the literature on the decline in business dynamism and the "great stagnation", to the literature on the historical forces that determine innovation outcomes, and to the literature that seeks to identify what makes an entrepreneurial state.
    Keywords: innovation, Germany, entrepreneurship, technology
    JEL: N13 N14 O31 O33
    Date: 2022–09
  4. By: Cirera,Xavier; Soares Martins Neto,Antonio
    Abstract: Several studies have documented a positive and causal relationship product or process innovation -- and labor productivity. Given the links between labor productivity and wages, a likely implication of this positive relationship is that innovation is associated with higher wages of more productive firms. This paper explores the relationship between innovation and wages using Brazil's employer-employee census and a novel measure of innovation derived from the share of technical and scientific occupations of workers in the firm. The results show a robust and positive wage premium associated with innovative firms. The decomposition of this innovation-related wage premium suggests a series of important stylized facts: (i) the innovation wage premium is larger for manufacturing but also positive and significant for agriculture and services; (ii) it is larger for large firms, but also positive and significant for all firm size categories including micro firms; and (iii) it is larger for medium- and low-skill occupations, although this depends on the use of firm fixed effects. More importantly, the paper explores the causality between innovation and wages and finds empirical support for the ideas that “self-selection†—firms that innovate already pay higher wages before becoming innovators -- and increases in wages associated with starting innovation activity, which are persistent for three years after firms start innovating.
    Keywords: Labor Markets,Food&Beverage Industry,Plastics&Rubber Industry,Business Cycles and Stabilization Policies,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Common Carriers Industry,Construction Industry,General Manufacturing,Skills Development and Labor Force Training,Food Security
    Date: 2020–10–19
  5. By: Dall'Aglio,Chiara; Hayati,Fayavar; Lee,David James
    Abstract: Entrepreneurs in Myanmar face many challenges to starting and operating a business. As is theexperience globally, women often experience these challenges to a greater extent and face additional socioculturalbarriers, limiting their equal participation in the economy. To develop a better understanding of the dynamics holdingback private sector development, especially for women, this paper uses data from the first-of-a-kind, firm-level data set available in Myanmar. The analysis explores the varianceof experience female-owned micro, small, and medium-size enterprises face compared with their male-ownedcounterparts. The paper assesses the barriers imposed on entrepreneurs and their businesses and identifies firm-levelcharacteristics leading to the use of good business practices. Further, the analysis investigates the adoptionof gender and family-friendly policies, as an outcome and as a determinant of business success. The purpose of the studyis to gain a better understanding of the barriers to gender-inclusive private sector development in Myanmar andprovide tangible recommendations to private- and government-level actors. Overall, the analysis finds themajor constraints for women entrepreneurs are access to finance and sociocultural factors, such as familyresponsibilities and household work.
    Keywords: Gender and Development,International Trade and Trade Rules,Educational Sciences,Financial Sector Policy,Technology Industry,Gender and Poverty,Gender and Economic Policy,Economics and Gender,Gender and Economics,Technology Innovation
    Date: 2020–10–26
  6. By: Author-Name: Orsatti, Gianluca; Quatraro,Francesco; Scandura, Alessandra (University of Turin)
    Abstract: This paper studies the entry of regions in new green technological specializations, specifically investigating the role of local recombinant capabilities and the involvement of academic inventors in patenting activities, as well as the interplay between the two. We test our hypotheses on a dataset of Italian NUTS 3 regions over the period 1998-2009. The results show that both recombinant capabilities and the presence of academic inventors are positively associated to new entries in green technological specializations, and that their interaction provides a compensatory mechanism in regions lacking adequate novel combinatorial capabilities. The findings of this work are relevant for policy makers involved in the elaboration of successful regional specialization strategies in green technological domains.
    Date: 2021–10
  7. By: Yu, Po-yang; Lai, Ching-Chong
    Abstract: This paper develops a monetary R&D-driven endogenous growth model featuring endogenous innovation scales and the price-marginal cost markup. To endogenize the step size of quality improvement, we propose a trade-off mechanism between the risk of innovation failure and the benefit of innovation success in R&D firms. Several findings emerge from the analysis. First, a rise in the nominal interest rate decreases economic growth; however, its relationship with social welfare is ambiguous. Second, either strengthening patent protection or raising the professional knowledge of R&D firms leads to an ambiguous effect on economic growth. Third, the Friedman rule of a zero nominal interest rate fails to be optimal in view of the social welfare maximum. Finally, our numerical analysis indicates that the extent of patent protection and the level of an R&D firm’s professional knowledge play a crucial role in determining the optimal interest rate.
    Keywords: Intellectual property rights; Economic growth; Endogenous innovation scales; Endogenous markups; Inflation
    JEL: E41 L11 O30 O40
    Date: 2022–10–17
  8. By: Anne Duquerroy (Centre de recherche de la Banque de France - Banque de France); Clément Mazet-Sonilhac (Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Jean-Stéphane Mésonnier (Centre de recherche de la Banque de France - Banque de France, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Daniel Paravisini (LSE - London School of Economics and Political Science, CEPR - Center for Economic Policy Research - CEPR)
    Abstract: Using micro-data of the universe of bank-SME relationships in France, we show that banks specialize locally (at the branch level) by industry, and that this specialization shapes the equilibrium amount of borrowing by small firms. For identification, we exploit the reallocation of local clients from closed down branches to nearby branches of the same bank, which induced quasi-random variation in the match between a firm's industry and the industry of specialization of the lending branch. We show that branch reallocation leads, on average, to a substantial and permanent decline in small firm borrowing. This decline is twice larger for firms whose accounts are reallocated from branches less specialized in their industry than the original one.
    Keywords: Bank specialization,SMEs,Relationship banking,Branch closures
    Date: 2022–02–03
  9. By: Apedo Amah,Marie Christine; Avdiu,Besart; Cirera,Xavier; Vargas Da Cruz,Marcio Jose; Davies,Elwyn Adriaan Robin; Grover,Arti Goswami; Iacovone,Leonardo; Kilinc,Umut; Medvedev,Denis; Maduko,Franklin Okechukwu; Poupakis,Stavros; Torres Coronado,Jesica; Tran,Trang Thu
    Abstract: This paper provides a comprehensive assessment of the short-term impact of the COVID-19 pandemicon businesses worldwide with a focus on developing countries. The results are based on a novel data setcollected by the World Bank Group and several partner institutions in 51 countries covering more than 100,000businesses. The paper provides several stylized facts. First, the COVID-19 shock has been severe and widespreadacross firms, with persistent negative impact on sales. Second, the employmentadjustment has operated mostly along the intensive margin (that is leave of absence and reductionin hours), with a small share of firms laying off workers. Third, smaller firms are disproportionately facing greaterfinancial constraints. Fourth, firms are increasingly relying on digital solutions as a response to the shock.Fifth, there is great uncertainty about the future, especially among firms that have experienced a larger dropin sales, which is associated with job losses. These findings provide a better understanding of the magnitude anddistribution of the shock, the main channels affecting businesses, and how firms are adjusting. The paper concludesby discussing some avenues for future research.
    Keywords: Public Health Promotion,Health Care Services Industry,Bankruptcy and Resolution of Financial Distress,Financial Sector Policy
    Date: 2020–10–09
  10. By: Cettolin, Elena (Tilburg University, Center For Economic Research); Cole, Kym; Dalton, Patricio (Tilburg University, Center For Economic Research)
    Keywords: Behavioral Constraints; Goals setting; Management Practices; Small firms; Informal Businesses
    Date: 2022
  11. By: JINDRA Björn; LEUSIN Matheus
    Abstract: The report offers a novel approach to identify patents associated with digital sustainability technologies, which combine components of digital technologies with technologies that are relevant for climate change mitigation or adaption. We propose an identification strategy based upon six search modules, which combine specialists’ opinion, keywords and classification-based approaches. We generate two datasets. For the first, we use PATSTAT 2019a to identify 319,243 patents associated with digital sustainability technologies. We use this dataset to evaluate the accuracy of the proposed strategy in finding technologies that combine both a digital and a sustainable aspect. We find an accuracy above 95.5% for all search modules implemented in the proposed strategy. For the second dataset, we implement the proposed strategy to update the results using PATSTAT 2021b. To make the results more comparable to the EU climate neutrality report 2021 edition, we focus on the period from 2016 to 2018 and filter priority patents using the IP5 strategy. We link the retrieved patents to R&D Scoreboard companies using the JRC-OECD COR&DIP© v.3 dataset. We identify for all R&D Scoreboard companies 325,508 patents in total, from which 5,057 are digital sustainability patents.
    Keywords: sustainability, R&D
    Date: 2022–09
  12. By: Márcio Mateus; Katja Neugebauer
    Abstract: During the Covid-19 crisis, the Portuguese government has provided a plethora of different support measures for firms. These included state-guaranteed loans and a public moratorium for existing loans. This paper examines the access to and uptake of these measures. What were the characteristics of firms being granted state-guaranteed loans? Were they different for firms accessing the moratorium? Did state-guaranteed loans potentially lead to an increase in zombie lending? We try to answer these questions using highly granular bank-, firm- and loan-level data for Portugal. We find that guaranteed loans went mostly to firms operating in the sectors most severely hit by the pandemic and to firms that previously had a credit relation and/or benefitted from a state guarantee. Furthermore, the Portuguese public guarantee scheme seems to mainly have supported lower-credit-risk firms. In addition to that, riskier firms also paid higher interest rates and obtained smaller guaranteed loans than more viable firms. However, in contrast to our results for the state guarantees, we find that riskier firms were more likely to benefit from the public moratorium.
    JEL: G21 G30 G38
    Date: 2022
  13. By: Lele Cao; Vilhelm von Ehrenheim; Sebastian Krakowski; Xiaoxue Li; Alexandra Lutz
    Abstract: Startups often represent newly established business models associated with disruptive innovation and high scalability. They are commonly regarded as powerful engines for economic and social development. Meanwhile, startups are heavily constrained by many factors such as limited financial funding and human resources. Therefore the chance for a startup to eventually succeed is as rare as ``spotting a unicorn in the wild''. Venture Capital (VC) strives to identify and invest in unicorn startups during their early stages, hoping to gain a high return. To avoid entirely relying on human domain expertise and intuition, investors usually employ data-driven approaches to forecast the success probability of startups. Over the past two decades, the industry has gone through a paradigm shift moving from conventional statistical approaches towards becoming machine-learning (ML) based. Notably, the rapid growth of data volume and variety is quickly ushering in deep learning (DL), a subset of ML, as a potentially superior approach in terms capacity and expressivity. In this work, we carry out a literature review and synthesis on DL-based approaches, covering the entire DL life cycle. The objective is a) to obtain a thorough and in-depth understanding of the methodologies for startup evaluation using DL, and b) to distil valuable and actionable learning for practitioners. To the best of our knowledge, our work is the first of this kind.
    Date: 2022–10
  14. By: Mattia Guerini (University of Trento [Trento]); Lionel Nesta (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Xavier Ragot (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po); Stefano Shiavo (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)
    Abstract: This paper evaluates the risk of zombification of the French economy during the sanitary crisis, as a result of the unconditional financial support provided to firms by public authorities. We develop a simple theoretical framework based on a partialequilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support measures. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a "zombification effect", as government support has not disproportionately benefited less productive companies.
    Keywords: Covid-19,zombie firms,job-retention schemes,microsimulation,policy evaluation
    Date: 2022–07–15

This nep-sbm issue is ©2022 by João Carlos Correia Leitão. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.