nep-sbm New Economics Papers
on Small Business Management
Issue of 2022‒12‒05
twenty papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Entrepreneurial openness, creativity, and firm growth By zhang, Tao
  2. Online Channels Sales Premia in Times of COVID-19: First Evidence from Germany By Joachim Wagner
  3. The Economic Effects of Immigration Pardons: Evidence from Venezuelan Entrepreneurs By Dany Bahar; Bo Cowgill; Jorge Guzman
  4. Race and Gender in Entrepreneurial Finance By Ewens, Michael
  5. Determinants and Effects of the Use of COVID-19 Business Support Programs in Japan By Honda, Tomohito; Hosono, Kaoru; Miyakawa, Daisuke; Ono, Arito; Uesugi, Iichiro
  6. Innovation and competitiveness: the regional dimension By Milene Simone Tessarin; Carlos Roberto Azzoni; ;
  7. The Role of Nonemployers in Business Dynamism and Aggregate Productivity By Pedro Bento; Diego Restuccia
  8. Which Factors Matter Most? Can Startup Valuation be Micro-Targeted? By Max Berre
  9. Islam and Entrepreneurship: The Role of Islamic Banking By Mohammad Reza Farzanegan; Ahmed M. Badreldin
  10. Organized Labour and R&D: Evidence from Italy By Cetrulo, Armanda; Cirillo, Valeria; Landini, Fabio
  11. Give Me a Pass: Flexible Credit for Entrepreneurs in Colombia By Lasse Brune; Xavier Giné; Dean Karlan
  12. An Assessment of the U.S. Small Business Innovation Research (SBIR) Program: A Study of Project Failure By Link, Albert; Swann, Christopher; van Hasselt, Martijn
  13. Crowdsourcing innovation challenges: How participants react when their ideas are rejected By Cyrielle Vellera; Elodie Jouny-Rivier; Aurélie Hemonnet-Goujot
  14. Does a Financial Crisis Impair Corporate Innovation? By Masami Imai; Michiru Sawada
  15. "Trains of Thought: High-Speed Rail and Innovation in China". By Georgios Tsiachtsiras; Deyun Yin; Ernest Miguelez; Rosina Moreno
  16. Knowledge spillovers, related variety and firm heterogeneity By Cainelli, Giulio; Ganau, Roberto
  17. What Drives entrepreneurial aspiration among members of Self-help group? Evidence from JEEViKA By Kumar, Naveen; Raj, Vishal; Kumar, Sonu
  18. The valorisation of research of small and medium-sized universities within an innovation system By Vanessa Casadella; Sofiane Tahi
  19. The Role of Immigrants, Emigrants, and Locals in the Historical Formation of Knowledge Agglomerations By Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
  20. Small Business under the COVID-19 Crisis: Expected Short- and Medium-Run Effects of Anti-Contagion and Economic Policies By Kawaguchi, Kohei; Kodama, Naomi; Tanaka, Mari

  1. By: zhang, Tao
    Abstract: Entrepreneurs play a key role in economic growth by creating new jobs, fostering innovation, and facilitating structural transformation. The growth and success of entrepreneurs are often linked to their creativity because creativity enables them to identify and capitalize on new opportunities. As a result, exploring influential factors on entrepreneurs’ creativity has been an important research direction.
    Date: 2022–11–07
  2. By: Joachim Wagner (Leuphana University Lüneburg and Kiel, Institute for the Word Economy)
    Abstract: Presence on the web tends to be important for firms. Empirical studies show that firms with a better performance along various dimensions, and firms that are more internationally active, tend to have a website. Furthermore, a website helped firms to survive in times of the COVID-19 pandemic. An open question that is not discussed in this literature is how the use of online channels for sales is related to various dimensions of firm performance. This note contributes to the literature by using a unique recently released set of firm level data from Germany to investigate for the first time the links between online channels sales and firm characteristics.
    Keywords: Online channels sales; firm performance; COVID-19; Germany 2021, Enterprise Survey Data Set
    JEL: D22 L25
    Date: 2022–11
  3. By: Dany Bahar; Bo Cowgill; Jorge Guzman
    Abstract: This paper shows that providing undocumented immigrants with an immigration pardon, or amnesty, increases their economic activity in the form of higher entrepreneurship. Using administrative census data linked to the complete formal business registry, we study a 2018 policy shift in Colombia that made nearly half a million Venezuelan undocumented migrants eligible for a pardon. Our identification uses quasi-random variation in the amount of time available to get the pardon, introducing a novel regression discontinuity approach to study this policy. Receiving the pardon has small initial effects but raises formal firm formation to close to parity with native Colombians by 2022. This impact is concentrated on individuals active in the labor force, and on sole proprietorships rather than sociedades (limited liability entities). The new firms created include both employer and non-employer firms and are relatively low on assets. In panel data specifications, the effect of the pardon on firm formation is twice the effect of migration. Our heterogeneous effects suggest a mechanism whereby legalization induces greater investments of time in developing new firms.
    JEL: J26 K37 L26
    Date: 2022–11
  4. By: Ewens, Michael (California Institute of Technology)
    Abstract: Economic frictions pervade the founding, financing, growing, and exiting of high-growth entrepreneurial firms. This chapter considers one friction that currently affects a small, but important, set of entrepreneurs: racial and gender discrimination. I first collect facts from a large empirical literature that show clear gender and race gaps in participation and financing of startups. Female founders manage 16-25% of all startups, while Black entrepreneurs rarely exceed 3% of the startup population. Conditioning on startups that successfully raise external finance has little impact on these gaps. The complexity of the entrepreneurial process presents several opportunities for discrimination to manifest itself and produce this gap. The chapter details the major discrimination theories and the empirical methods used to test for their presence. It then provides an extensive review of a growing empirical literature in entrepreneurial finance that tests these models. The pattern of evidence reveals a nuanced and incomplete story about bias, information asymmetry, and differential treatment of underrepresented founders. The chapter ends with an extensive set of research ideas motivated by the gaps in the entrepreneurship literature and recent developments in theory and measurement of discrimination.
    Date: 2022–07–25
  5. By: Honda, Tomohito; Hosono, Kaoru; Miyakawa, Daisuke; Ono, Arito; Uesugi, Iichiro
    Abstract: Using a survey of and financial data for Japanese small- and medium-enterprises (SMEs), this paper examines the determinants of firms’ use of the business support programs provided by the Japanese government during the COVID-19 pandemic and their effect. With respect to the determinants, we obtain the following three findings: First, firms were more likely to have obtained subsidized loans, grants, or subsidies the more their sales had fallen during the pandemic, suggesting that funds flowed to firms that were adversely affected by the pandemic. Second, the likelihood that firms obtained funds was higher if their credit scores were lower or if they were classified as “zombies” and/or “low-return borrowers” before the pandemic, suggesting that the government programs also helped firms that had been under-performing before the pandemic. Third, firms were more likely to receive funds if they had a stronger relationship with their main bank before, suggesting that bank relationships play an important role in firms’ access to government programs. Regarding the causal effects, we obtain the following three findings: First, except for the subsidies for employment adjustment, the support programs increased the cash holdings of user firms. Second, subsidized loans from private financial institutions lowered exit rates, while none of the programs had a significantly positive effect on employment relative to non-users (or in absolute terms). Third, the credit scores and profit-to-sales ratio of firms that used the support programs decreased and the likelihood of such firms being a zombie and/or a low-return borrower increased. Overall, our findings provide a cautionary tale in that the business support programs produced mixed results in that they may have prevented business failures but have also helped to prop up firms that are not viable in the long run.
    Keywords: COVID-19 business support programs, zombie firms, low-return borrowers, cash holdings
    JEL: D22 D25 L52
    Date: 2022–11
  6. By: Milene Simone Tessarin; Carlos Roberto Azzoni; ;
    Abstract: This study explores the importance of labour pool and geographical concentration as essential factors that help shape pathways for innovation and influence the speed with which technological change can occur. To do so, we propose an approach based on human capital and the workers’ skills that contribute to innovation. Being able to capture this broader range of professionals is crucial to assess regional innovation in Less Developed Countries, such as Brazil and other Latin American countries, as their productive structure concentrates on lower technological industries and innovative activities not centred on R&D. We created a measure of innovative potential that can be used at different levels of regional disaggregation. We analyze 374 relevant Brazilian Labour Market Areas (LMA), employing data on occupations from the Annual Report of Social Information, from 2003 to 2018. Although innovative activities are heavily concentrated in a few regions, empirical evidence suggests that a shift has occurred since the early 2000s, with lagging regions making progress faster. Nonetheless, our results show that such convergence is still slight, given the distance between the leading and lagging regions’ innovative performance. Factors related to the region’s previous capacities, such as the stock of workers with innovative skills, manufacturing industry share, and the number of large firms have a positive association with innovative activity in a region. Although the convergence in the innovative potential among Brazilian regions, the movement is too slow to indicate a transformation of the country as a whole to levels similar to those of developed nations.
    Keywords: regional innovation, regional inequality, skills of workers, structural change
    JEL: O30 O33 R11 J24 L16
    Date: 2022–10
  7. By: Pedro Bento; Diego Restuccia
    Abstract: The well-documented decline in business dynamism, measured by the net entry rate of employer firms, has been proposed as an explanation for the productivity growth slowdown in the United States. We assess the role of nonemployers, firms without paid employees, in business dynamism and aggregate productivity. Including nonemployers, the total number of firms has instead increased since the early 1980s, which in the context of a standard model of firm dynamics implies an annualized growth of measured aggregate productivity of 0.22%, one-quarter of the productivity growth in the data. Further accounting for time changes in the share of nonemployer firms and in the distribution of employment across firms, we find that productivity growth is even higher (0.47% per year). The productivity growth slowdown is not due to changes in net firm entry.
    Keywords: nonemployers, employer firms, business dynamism, productivity, TFP.
    JEL: O4 O51 E1
    Date: 2022–10–28
  8. By: Max Berre (Audencia Business School)
    Abstract: While startup valuations are influenced by revenues, risks, age, and macroeconomic conditions, specific causality is traditionally a black box. Because valuations are not disclosed, roles played by other factors (industry, geography, and intellectual property) can often only be guessed at. VC valuation research indicates the importance of establishing a factor-hierarchy to better understand startup valuations and their dynamics, suggesting the wisdom of hiring data-scientists for this purpose. Bespoke understanding can be established via construction of hierarchical prediction models based on decision trees and random forests. These have the advantage of understanding which factors matter most. In combination with OLS, the also tell us the circumstances of when specific causalities apply. This study explores the deterministic role of categorical variables on the valuation of start-ups (i.e. the joint-combination geographic, urban, and sectoral denomination-variables), in order to be able to build a generalized valuation scorecard approach. Using a dataset of 1,091 venture-capital investments, containing 1,044 unique EU and EEA, this study examines microeconomic, sectoral, and local-level impacts on startup valuation. In principle, the study relies on Fixedeffects and Joint-fixed-effects regressions as well as the analysis and exploration of divergent micropopulations and fault-lines by means of non-parametric approaches combining econometric and machinelearning techniques.
    Date: 2022–07–07
  9. By: Mohammad Reza Farzanegan (Marburg University); Ahmed M. Badreldin (Marburg University)
    Abstract: Studies on the relationship between religion and Entrepreneurship suggest that Islam discourages entrepreneurship. This is sometimes used to explain the excessively high unemployment figures for Muslim majority countries. However, we argue that studies that support this claim have missed a critical moderating factor, namely the presence of Shariah-compliant financing through Islamic banks. Using a multivariate regression analysis of 69 countries, our research shows empirically that the negative effect of Islam on entrepreneurship only applies in the absence of Shariah-compliant access to finance. This negative effect disappears in the presence of Islamic banks, thus disproving the generalized claim that Islam discourages entrepreneurship and showing that Muslim majority countries with high unemployment would do well to encourage the establishment of Shariah-complaint modes of financing to allow inclusion of religious entrepreneurs who would otherwise be excluded from the economy.
    Keywords: Islam, Entrepreneurship, Islamic Finance, Islamic Banking, Financial development, New Business Formation, Shariah
    Date: 2022
  10. By: Cetrulo, Armanda; Cirillo, Valeria; Landini, Fabio
    Abstract: This paper investigates the impact of firm-level collective bargaining on firms' investment in intangible assets and, specifically R&D. While standard hold-up theories predict a negative effect of organized labour on intangible investments, the inclusion of pay-for-performance schemes in complementary negotiation can actually invert the prediction. Moreover, the industrial relation literature suggests that, in presence of asymmetric power relations, firm-level collective bargaining can allow workers to make their voice heard and induce management to invest in assets that drive competition away from wages, including R&D. We exploit a rich and representative survey on Italian non-agricultural companies conducted by the National Institute for the Analysis of Public Policies (INAPP) to test these predictions. Baseline estimates suggest that the presence of second-level collective bargaining is associated with higher investments in R&D and that power relation is the main mechanism driving this result. These findings are confirmed also in a robustness check where we exploit size contingent legislation governing the creation of employee representative bodies involved in firm-level bargaining in a regression discontinuity design (RDD) framework. The implications for the design of innovation policy are discussed.
    Keywords: R&D,Intangibles,Unions,Collective Bargaining,Complementary Negotiation
    JEL: J50 O32 O33
    Date: 2022
  11. By: Lasse Brune; Xavier Giné; Dean Karlan
    Abstract: Microcredit promised business growth for small firms lacking access to banking loans. Yet while reaching millions, recent randomized evaluations suggest limited average business impacts. Critics often blame contract rigidity, specifically the fixed and frequent installments, for the lack of productive risk-taking. But such rigidity may instill borrower discipline. We partnered with a Colombian lender that offered first-time borrowers a flexible loan that permitted delaying up to three monthly repayments. We find null effects for revenue and profits but increases in loan defaults. The evidence thus aligns with established microlender practice of offering rigid contracts to first-time borrowers.
    JEL: G21 O21
    Date: 2022–11
  12. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics); Swann, Christopher (University of North Carolina at Greensboro, Department of Economics); van Hasselt, Martijn (University of North Carolina at Greensboro, Department of Economics)
    Abstract: In 2000 and again in 2012, the U.S. Congress charged the National Research Council (NRC) within the U.S. National Academies of Sciences, Engineering, and Medicine to study how the Small Business Innovation Research (SBIR) program has stimulated technological innovation and used small businesses to meet Federal research and development needs, and to make recommendations for improvements in the SBIR program. Using project data collected by the NRC, we assert that an important assessment metric not previously considered by the NRC in its reports to Congress relates to the failure rate of funded Phase II research projects. Our paper identifies a number of covariates associated with project failure, and we make a recommendation that program managers might decrease the likelihood of project failure if funded firms can be given relevant information about how to contact angel investors, venture capitalists, and private investors, and how to present to them a proposal to obtain additional research investment dollars.
    Keywords: Small Business Innovation Research (SBIR); project failure; R&D; program assessment;
    JEL: O22 O31 O32 O38
    Date: 2022–08–24
  13. By: Cyrielle Vellera (TSM - Toulouse School of Management Research - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées - CNRS - Centre National de la Recherche Scientifique - TSM - Toulouse School of Management - UT1 - Université Toulouse 1 Capitole - Université Fédérale Toulouse Midi-Pyrénées); Elodie Jouny-Rivier (ESSCA School of Management, France, ESSCA Research Lab - ESSCA - Ecole Supérieure des Sciences Commerciales d'Angers); Aurélie Hemonnet-Goujot (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence - AMU - Aix Marseille Université)
    Abstract: Although crowdsourcing challenges as tools for generating high levels of innovation have received much attention, little research has investigated the impact on participants when their submissions are rejected. This research is aimed at gaining a better understanding of the consequences of rejection for participants' relationships with the brand engaged in the crowdsourcing activity. To investigate these issues, two quantitative studies were carried out with participants whose challenge proposals had not been selected. The results highlight positive effects on participant–brand relationships, especially on brand attachment, proselytism, brand commitment and brand loyalty. A confirmatory, interview-based qualitative study then identifies managerial perspectives and marketing strategies for brands and crowdsourcing platforms following the announcement of challenge results. This paper contributes to both the co-creation and crowdsourcing literature by extending academic knowledge and provides opportunities for further research.
    Keywords: Brand relationship,Crowdsourcing
    Date: 2022
  14. By: Masami Imai (Department of Economics, Wesleyan University); Michiru Sawada (Department of Economics, Nihon University)
    Abstract: We examine whether a financial crisis impairs corporate innovation in the context of the 1997- 1998 crisis in Japan which features a sharp decline in bank credit, the collapse of multiple major banks, and the economy’s failure to revert back the pre-crisis growth trend. In order to explore causal mechanisms, we link together three separate pieces of firm-level longitudinal data sets: (1) patent counts from 1994-2003 as well as the number of future patent citations up until 2018 to measure the quantity and quality of innovation output, (2) dependence on intermediated funds, (3) financing relationships with the failed banks. We show that innovative outputs of firms that rely more heavily on bank finance fell more, and that bank dependence matters more for small firms. In addition, as compared to otherwise similar firms, a group of small firms which had long-term relationships with the failed banks exhibited a large, persistent decline in innovative outputs. Taken together, the results are consistent with the view that crisis-induced disruptions in the provision of intermediated funds have long-term effects on innovative capacity of the opaque, bank dependent firms.
    Date: 2022–10
  15. By: Georgios Tsiachtsiras (University of Bristol and University of Bath, United Kingdom.); Deyun Yin (School of Economics and Management, Harbin Institute of Technology, Shenzhen, Guangdong Province, China.); Ernest Miguelez (Univ. Bordeaux, CNRS, BSE, UMR 6060, Avenue Léon Duguit, 33608 Pessac, France and AQR-IREA, University of Barcelona, Spain.); Rosina Moreno (AQR-IREA, University of Barcelona, Barcelona, Spain.)
    Abstract: This paper explores the e?ect of the High Speed Rail (HSR) network expansion on local innovation in China during the period 2008-2016. Using exogenous variation arising from a novel instrument - courier’s stations during the Ming dynasty, we ?nd solid evidence that the opening of a HSR station increases cities’ innovation activity. We also explore the role of inter-city technology di?usion as being behind the surge of local innovation. To do it, we compute least-cost paths between city-pairs, over time, based on the opening and speed of each HSR line, and obtain that an increase in a city’s connectivity to other cities specialized in a speci?c technological ?eld, through the HSR network, increases the probability for the city to specialize in that same technological ?eld. We interpret it as evidence of knowledge di?usion.
    Keywords: High speed rail, Innovation, Technology Di?usion, Patents, Specialization. JEL classification: R40, O18, O30, O33.
    Date: 2022–11
  16. By: Cainelli, Giulio; Ganau, Roberto
    Abstract: Economic geographers and regional economists have traditionally analysed the mechanisms driving learning processes and the diffusion of knowledge among local economic actors. During the past decade, the concept of «related variety» has been frequently used to denote an agglomeration force able to explain knowledge-related advantages for firms and geographically bounded productive systems, and which arises from the heterogeneity of local industries. Besides this concept, more recent studies have emphasised the role of firm heterogeneity as an alternative – but not substitute – mecha-nism for knowledge creation and diffusion. This paper discusses the factors driving the emergence of knowledge spillovers within agglomerative spaces, and conducts a critical comparison between the concepts of industrial related variety and firm heterogeneity as two potential sources of local knowledge externalities, and, thus, of local economic development.
    Keywords: agglomeration economies; knowledge spillovers; related variety
    JEL: J1
    Date: 2021–05–01
  17. By: Kumar, Naveen; Raj, Vishal; Kumar, Sonu
    Abstract: This study explores determinants of entrepreneurship aspirations among members of women’s self-help groups. Data were collected using semi-structured interview schedule from 180 members of self-help groups in three districts of Bihar. Considering personality traits entrepreneurial aspirations of women members were measured under seven dimensions using likert scale. Using ANCOVA, results reflect that age of self-help group, family size, frequency of loan and loan amount positively influence the entrepreneurial aspiration of members. In addition to this, members belong to scheduled caste, members with productive assets, primary education, and working experience in the service industry have higher entrepreneurial aspiration. Finding suggests for more impetus of members access of productive assets, skill-based capacity building to members and leaders, and intact membership with self-help group for long will enable and strengthen women workforce as potential entrepreneurs
    Date: 2022–07–11
  18. By: Vanessa Casadella (LEFMI - Laboratoire d’Économie, Finance, Management et Innovation - UR UPJV 4286 - UPJV - Université de Picardie Jules Verne); Sofiane Tahi (LEFMI - Laboratoire d’Économie, Finance, Management et Innovation - UR UPJV 4286 - UPJV - Université de Picardie Jules Verne)
    Abstract: Concept souple et peu récent, le Système d'Innovation (S.I) sert de référence dans l'orientation des politiques d'innovation et/ou de Science et Technologie (S&T). Il a toutefois été moins utilisé dans l'interrelation entre les systèmes productifs et éducatifs. La valorisation de la recherche permet de nouer les liens Université-entreprises en rendant utilisables ou commercialisables les résultats, les connaissances et les compétences de la recherche. Notre article met en évidence la question de la valorisation de la recherche à l'Université Picardie Jules Verne (UPJV) et son impact au sein du système régional d'innovation. Quelles sont les formes de sa valorisation dans le cadre de la Petite et Moyenne Université (P.M.U) française qu'elle représente ? A-t-elle des spécificités liées à sa taille ? En quoi et comment permet-elle de créer et transférer des connaissances avec le secteur productif local et national ? Nous travaillerons sur l'ensemble de ces questions, par une méthodologie reposant à la fois sur des sources secondaires mais surtout sur une enquête quantitative et qualitative réalisée en 2020 auprès des services centraux, VP Recherche et Directeurs de Laboratoire de l'UPJV.
    Date: 2021
  19. By: Viktor Stojkoski; Philipp Koch; Cesar A. Hidalgo;
    Abstract: Did migrants help make Paris a center for the arts and Vienna a beacon of classical music? Or was the rise of these knowledge agglomerations a sole consequence of local actors? Here, we use data on the biographies of more than 22,000 famous historical individuals born between the years 1000 and 2000 to estimate the contribution of famous immigrants, emigrants, and locals to the knowledge specializations of European regions. We find that the probability that a region develops a specialization in a new activity (physics, philosophy, painting, music, etc.) grows with the presence of immigrants with knowledge on that activity and of immigrants specialized in related activities. We also find that the probability that a region loses one of its existing areas of specialization decreases with the presence of immigrants specialized in that activity and in related activities. In contrast, we do not find robust evidence that locals with related knowledge play a statistically significant role in a region entering or exiting a new specialization. These findings advance our understanding of the role of migration in the historical formation of knowledge agglomerations. nations.
    Keywords: migration, knowledge spillovers, relatedness, economic history
    JEL: N13 N93 O15 O33
    Date: 2022–11
  20. By: Kawaguchi, Kohei; Kodama, Naomi; Tanaka, Mari
    Abstract: This study makes a causal inference on the effects of anti-contagion and economic policies on small business by conducting a survey on Japanese small business managers’ expectations about the pandemic, policies, and firm performance. We first find the business suspension request decreased targeted firms’ sales by 10 percentage points on top of the baseline 9 percentage points decline due to COVID-19, even though the Japanese anti-contagion policy was in a form of the government’s request that is not legally enforceable. Second, using a discontinuity in the eligibility criteria, we find lump-sum and prompt subsidies improved firms’ prospects of survival by 19 percentage points. Third, the medium-run recovery of firms’ performance is expected to depend crucially on when infections would end, indicating that the anti-contagion policies could complement longer-run economic goals.
    Date: 2021–05–10

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