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

  1. Data shaping firms and markets By OECD
  2. Entrepreneurship and Economic Growth: A Cross-Sectional Analysis Perspective By Kim, Jungsuk; Castillejos-Petalcorin, Cynthia; Jinjarak, Yothin; Park, Donghyun; Quising, Pilipinas; Tian, Shu
  3. Small and Medium Sized European Firms and Energy Efficiency Measures: A Probit Analysis By Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo
  4. The Impact of Patent Applications on Technological Innovation in European Countries By Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio
  5. For the rest of our lives: Flexibility and innovation in Italy. By Dughera, Stefano; Quatraro,Francesco; Ricci,Andrea; Vittori,Claudia
  6. Relationship Between Knowledge Management with Cost Leadership and Differentiation Strategies in Sumbawa Weaving SMEs: The Moderating Role of Organizational Design By Probosari, Ninik; Kusmayadi, Andi; Wijayani, Ari; Ardhanariswari, Kartika Ayu; Siregar, Ilham Ramadan Pandu Setia Negara; Viyani, Ari Okta
  7. Does Industry Agglomeration Attract Productive Firms? The role of product markets in adverse selection By René BELDERBOS; FUKAO Kyoji; IKEUCHI Kenta; KIM Young Gak; KWON Hyeog Ug
  8. The Unicorn Puzzle By Daria Davydova; Rüdiger Fahlenbrach; Leandro Sanz; René M. Stulz
  9. What Do R&D Spillovers from Universities and Firms Contribute to Productivity? Plant level productivity and technological and geographic proximity in Japan By René BELDERBOS; IKEUCHI Kenta; FUKAO Kyoji; KIM Young Gak; KWON Hyeog Ug
  10. German Financial State Aid during COVID-19 Pandemic: Higher Impact among Digitalized Self-Employed By Irene Bertschek; Joern Block; Alexander S. Kritikos; Caroline Stiel
  11. The Identification of Time-Invariant Variables in Panel Data Model: Exploring the Role of Science in Firms’ Productivity By Amoroso, Sara; Bruno, Randolph Luca; Magazzini, Laura
  12. R&D and Productivity in Finnish Firms By Valmari, Nelli
  13. Does Corruption Discourage Entrepreneurship? By Park, Donghyun; Shin, Kwanho

  1. By: OECD
    Abstract: Firms are at the forefront of digital transformation and drive production, innovation and the greater deployment of digital technologies into economies and societies. As digital transformation progresses, how firms use data, and how that use affects markets and influences competitive dynamics, has risen to the top of policy agendas. This report highlights that too few firms use data, particularly small and medium-sized enterprises, despite data’s potential to boost productivity, foster innovation and new business models. This report analyses how this uneven use of data affects productivity dispersion, industry concentration and shape competitive dynamics in markets. Finally, the report outlines key policy lessons to increase the ability of the full business population to thrive in the data-driven age and enhance long-term prosperity and welfare.
    Date: 2022–12–14
  2. By: Kim, Jungsuk (Sejong University); Castillejos-Petalcorin, Cynthia (Asian Development Bank); Jinjarak, Yothin (Asian Development Bank); Park, Donghyun (Asian Development Bank); Quising, Pilipinas (Asian Development Bank); Tian, Shu (Asian Development Bank)
    Abstract: Entrepreneurship, or the activity of starting and running a business, is a vital ingredient of economic growth and development. Entrepreneurs contribute to innovation, and they are central to dynamic Schumpeterian competition and broader economic dynamism. In this paper, we contribute to the entrepreneurship literature by performing cross-sectional analysis to examine the link between entrepreneurship and economic growth. We divide total early-stage entrepreneurship into opportunity-driven entrepreneurship versus necessitydriven entrepreneurship, and our sample economies into advanced economies versus developing economies. We do not find evidence of a positive link between aggregate entrepreneurship and economic growth. This is consistent with the hugely heterogenous nature of entrepreneurial activity. At a broader level, our empirical evidence points to the importance of distinguishing between different types of entrepreneurship and different groups of economies. In particular, for developing economies where manufacturing is relatively important, we find that opportunity-driven entrepreneurship is positively linked with growth.
    Keywords: entrepreneurship; economic growth; development
    JEL: L26 M13 O47
    Date: 2022–10–11
  3. By: Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo
    Abstract: This paper investigates the factors (such as different sources of financing, energy audits and internal monitoring activities) affecting the propensity of European small and medium sized enterprises (SMEs) to adopt energy efficiency measures (EEMs). For this purpose, a Probit model is estimated using data from the 2017 Flash Eurobarometer survey covering a large sample of European firms. The analysis is carried out for the full sample as well as for clusters based on an environmental performance index (EPI) and on the level of economic development in turn. The results indicate that internal financing always has a positive effect on a firm’s propensity to adopt EEMs. Private external sources of financing appear to be more important for Western European firms as well as for those located in countries with a greater level of environmental awareness; in the latter, when firms combine private financing with energy audits or internal monitoring activities the propensity to adopt EEMs increases further. By contrast, in the Eastern Countries this occurs when firms simultaneously rely on public funds and monitoring activities.
    Keywords: energy efficiency measures, EPI, financing, SMEs
    JEL: G32 O16 Q40
    Date: 2022
  4. By: Leogrande, Angelo; Costantiello, Alberto; Laureti, Lucio
    Abstract: We investigate the innovational determinants of “Patent Applications” in Europe. We use data from the European Innovation Scoreboard-EIS of the European Commission for 36 countries in the period 2010-2019. We use Panel Data with Fixed Effects, Panel Data with Random Effects, Pooled OLS, WLS and Dynamic Panel. We found that the variables that have a deeper positive association with “Patent Applications” are “Human Resources” and “Intellectual Assets”, while the variables that show a more intense negative relation with Patent Applications are “Employment Share in Manufacturing” and “Total Entrepreneurial Activity”. A cluster analysis with the k-Means algorithm optimized with the Silhouette Coefficient has been realized. The results show the presence of two clusters. A network analysis with the distance of Manhattan has been performed and we find three different complex network structures. Finally, a comparison is made among eight machine learning algorithms for the prediction of the future value of the “Patent Applications”. We found that PNN-Probabilistic Neural Network is the best performing algorithm. Using PNN the results show that the mean future value of “Patent Applications” in the estimated countries is expected to decrease of -0.1%.
    Keywords: Innovation, and Invention: Processes and Incentives; Management of Technological Innovation and R&D; Diffusion Processes; Open Innovation.
    JEL: O30 O31 O32 O33 O34
    Date: 2022–11–12
  5. By: Dughera, Stefano; Quatraro,Francesco; Ricci,Andrea; Vittori,Claudia (University of Turin)
    Abstract: We study the effect of temporary workers on innovation both theoretically and empirically. First, we develop a model where a representative firm chooses between different types of projects (routine vs innovative) and different types of labor contracts (temporary vs permanent). In doing so, it considers the effect of these different strategies on the workers’ incentives to invest in firm-specific skills. Our key finding is that firms offering temporary contracts are less likely to invest in innovative projects, and that this is effect is stronger in industries characterized by a “garage-business” innovation regime. Second, we test our hypotheses using firm-level data on employment composition and patent filing. Consistently with our theoretical predictions, we find that temporary workers are detrimental to innovation, and that this effect is mitigated by the concentration of patent-filing at the industry-level.
    Date: 2021–09
  6. By: Probosari, Ninik; Kusmayadi, Andi; Wijayani, Ari; Ardhanariswari, Kartika Ayu; Siregar, Ilham Ramadan Pandu Setia Negara; Viyani, Ari Okta
    Abstract: Small and Medium Enterprises (SMEs) are the main drivers of the economy in developing countries, one of which is Indonesia. Several SMEs still need to be developed in Indonesia, especially for the 3T region (lagging, leading, and outermost). Sumbawa is one of these areas. The majority of SMEs in the Sumbawa area are weaving SMEs. Weaving SMEs in this region still have problems in terms of SME competitiveness, innovation, and SME creativity. Therefore, they have not been able to compete with SMEs outside the 3T area. Thus, the importance of competitive strategy and knowledge management can encourage the management of information into knowledge that can be used for strategic decision-making, especially the competitive strategy of SMEs. This study will examine the application of knowledge management to SMEs in Sumbawa and whether the applied knowledge management can encourage the creation of a competitive strategy for Sumbawa SMEs. The research was conducted by census/saturated sampling to produce accurate results. The results show that the application of knowledge management in Sumbawa SMEs is proven to influence SMEs' competitive strategy. The study also contributes to new research on the role of organizational design that can affect knowledge management's influence on competitive strategy.
    Date: 2022–09–19
  7. By: René BELDERBOS; FUKAO Kyoji; IKEUCHI Kenta; KIM Young Gak; KWON Hyeog Ug
    Abstract: Do high or low productivity firms self-select into locations characterized by high industry agglomeration? On the one hand, productive firms may benefit more from the availability of specialized (labour) inputs and they are also more likely to survive heightened competition. On the other hand, productive firms face greater risks of knowledge dissipation to collocated rival firms, as they may contribute more than they receive in terms of knowledge spillovers. We examine location decisions for new plant establishments by firms in Japan with established productivity records (multi-plant firms) at the fine-grained level of towns, wards, and cities where knowledge spillovers are most likely to occur. We find that the adverse selection effects of industry agglomeration–the process of agglomerated areas attracting weaker rather than stronger firms–dominate if knowledge spillovers are most harmful to productive entrants when the focal firm and local incumbent establishments target the same (domestic) product market. We conclude that negative sorting processes do occur, but that these can only be uncovered in a more fine-grained analysis that takes into account ex ante measures of firm heterogeneity and the nature of product markets.
    Date: 2022–11
  8. By: Daria Davydova (Ecole Polytechnique Fédérale de Lausanne); Rüdiger Fahlenbrach (Ecole Polytechnique Fédérale de Lausanne; Swiss Finance Institute; European Corporate Governance Institute (ECGI)); Leandro Sanz (Ohio State University (OSU) - Department of Finance); René M. Stulz (Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI))
    Abstract: From 2010 to 2021, 639 US VC-funded firms achieved unicorn status. We investigate why there are so many unicorns and why controlling shareholders give investors privileges to obtain unicorn status. We show that unicorns rely more than other VC-funded firms on organizational capital as well as network effects and the internet. Unicorn status enables startups to access new sources of capital. With this capital, they can invest more in organizational intangible assets with less expropriation risk than if they were public. As a result, they are more likely to capture the economies of scale that make their business model valuable.
    Keywords: Unicorns, Scale and Scope, Venture Capital, Private vs. Public, Organizational Capital
    JEL: G24 G32 G34
    Date: 2022–10
  9. By: René BELDERBOS; IKEUCHI Kenta; FUKAO Kyoji; KIM Young Gak; KWON Hyeog Ug
    Abstract: We examine the simultaneous effects of spillovers due to R&D by universities and by firms on total factor productivity in a panel of over 20,000 Japanese manufacturing plants. Estimating geographic decay functions based on the location of the universe of manufacturing plants run by R&D conducting firms and public research institutions in Japan, we find a positive influence of both private and public technologically proximate-R&D stocks, which decay in distance and become negligible at around 500 kilometers. Decomposition analyses show that declining R&D spillovers are responsible for a substantial part of the decline in the rate of TFP growth in Japanese manufacturing. The exit of geographically proximate plants operated by R&D intensive firms, which may be associated with a relocation of manufacturing activity overseas, plays a notable role in this process and is an important phenomenon in major industrial agglomerations such as Tokyo and Osaka.
    Date: 2022–11
  10. By: Irene Bertschek; Joern Block; Alexander S. Kritikos; Caroline Stiel
    Abstract: In response to strong revenue and income losses that a large share of the self-employed faced during the COVID-19 pandemic, the German federal government introduced a €50bn emergency aid program. Based on real-time online-survey data comprising more than 20,000 observations, we analyze the impact of this program on the subjective survival probability. In particular, we investigate how the digitalization level of the self-employed influences the program’s effectiveness. Employing propensity score matching, we find that the emergency aid program had only moderately positive effects on the confidence of the self-employed to survive the crisis. However, the self-employed whose businesses were highly digitalized, benefitted much more from the state aid compared to those whose businesses were less digitalized. This holds true only for those self-employed in advanced digitalization stages, who started the digitalization processes already before the crisis. Moreover, taking a regional perspective, we find suggestive evidence that the quality of the regional broadband infrastructure matters in the sense that it increases the effectiveness of the emergency aid program. Our findings show the interplay between governmental support programs, the digitalization levels of entrepreneurs, and the regional digital infrastructure. The study helps public policy to increase the impact of crisis-related policy instruments.
    Keywords: Self-employment, emergency aid, treatment effects, COVID-19, entrepreneurship, digitalization, resilience
    JEL: C14 H43 L25 L26 J68 O33
    Date: 2022
  11. By: Amoroso, Sara (European Commission, Joint Research Centre); Bruno, Randolph Luca (University College London); Magazzini, Laura (Sant'Anna School of Advanced Studies)
    Abstract: Recent literature has raised the attention on the estimation of time-invariant variables both in a static and a dynmamic framework. In this context, Hausman-Taylor type estimators have been applied, relying crucially on the distinction between exogenous and endogenous variables (in terms of correlation with the time-invariant error component). We show that this provision can be relaxed, and identification can be achieved by relying on the milder assumption that the correlation between the individual effect and the time-varying regressors is homogenous over time. The methodology is applied to identify the role of inputs from "Science" (firm-level publications' stock) on firms' labour productivity, showing that the effect is larger for those firms with higher level of R&D investments. The results further support the dual – direct and indirect – role of R&D.
    Keywords: panel data, time-invariant variables, science, productivity, R&D
    JEL: C23 O32 L20
    Date: 2022–11
  12. By: Valmari, Nelli
    Abstract: Abstract Productivity of the Finnish private sector decreased during the financial crisis of 2008–2009 and, since then, productivity growth has not reached the level preceding the crisis. A key factor underlying productivity growth is R&D. The population of Finnish firms, excluding Nokia, have increased their R&D inputs since the financial crisis. Therefore, it is worthwhile considering whether changes in productivity effects of R&D, instead of changes in volumes of R&D inputs, may explain the slowdown in productivity growth. This paper estimates productivity effects of Finnish firms’ R&D inputs in several industries for the years 2001–2009 and 2010–2018. The estimates are used to find out whether the productivity effects of R&D have decreased after the financial crisis. The empirical strategy (Doraszelski and Jaumandreu, 2013) allows for productivity effects that are nonlinear and heterogeneous across firms. For most of the industries studied, there is no statistical evidence that the productivity effects of R&D are lower for the years 2010–2018 than for the years 2001–2009. Instead, there is evidence that, in some industries, the productivity effects of R&D increased after the financial crisis. In other words, low productivity growth after the financial crisis does not seem to be caused by a decrease in the productivity effects of R&D.
    Keywords: R&D, Productivity, Production function estimation
    JEL: D24 L60 O30
    Date: 2022–11–28
  13. By: Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University)
    Abstract: Although entrepreneurship plays a key role in economic development, it remains largely unknown. The reason is that it is challenging to measure entrepreneurship objectively and identify its determinants. In this paper, we analyze the effect of a particular feature of the institutional landscape, namely corruption, on entrepreneurship. It is expected that corruption discourages entrepreneurship since it undermines fair competition. We employ two proxies for entrepreneurship that are widely used in the literature: (i) nascent entrepreneurship collected from Global Entrepreneurship Monitor; and (ii) entry rate defined as the number of new firms divided by the total number of previous year’s registered businesses, collected from the World Bank Group Entrepreneurship Survey. We find that better control of corruption promotes entrepreneurship. Our findings are preserved when we add other determinants of entrepreneurship which are drawn from the literature. When we use legal origins as instruments for corruption, our results remain essentially the same.
    Keywords: entrepreneurship; corruption; institution; corporate tax; legal origin
    JEL: D22 D53 D73 E02 E60 G38
    Date: 2022–09–02

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