nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒02‒20
sixteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Promoting Innovation: The Differential Impact of R&D Subsidies By Fuad Hasanov; Reda Cherif; Christoph Grimpe; Wolfgang Sofka
  2. Debt Maturity and Firm Productivity—The Role of Intangibles By Nakatani, Ryota
  3. An appreciative theorizing approach to gazelle enterprises assisted by the Arica Business Center By Rodrigo Rodrigo Barra Novoa Barra Novoa
  4. Patents with simultaneous innovations: The non-obviousness requirement and the direction of innovation By Fabio M. Manenti; Luca Sandrini
  5. Do Technology Standards Induce Innovation in Environmental Technologies When Coordination is Important? By Myriam Gregoire-Zawilski; David Popp
  6. Risk, Precaution, and Regulation in Chemical Search and Innovation: The Case of the EU REACH Legislation By Gianluca Biggi
  7. Improving the effectiveness of inclusive and social entrepreneurship training schemes By OECD; European Commission
  8. Unpacking Impact of COVID-19 on Vietnamese Firms: Evidence from a Novel Survey By Ms. Yuanyan S Zhang; Anh Thi Ngoc Nguyen; Thuy Dinh Pham; Nga Huong Phi; Duong Thuy Nguyen; Tuan Danh Duong; Ms. Era Dabla-Norris
  9. Digital transformation Strategy for Small and Medium-Sized Enterprises By Cho, Young Sam
  10. The Status of Korean Fabless Firms and Their Cooperation with Set Makers By Shin, Jongwon
  11. Social push and the direction of innovation By Einiö, Elias; Feng, Josh; Jaravel, Xavier
  12. Tools to Promote Productivity in Finland By Koski, Heli; Maliranta, Mika
  13. Inspirational Intuition – Bridge to Future Viability By Müller, Jochem
  14. Nexus between Digital Infrastructure, Productivity, and International Trade Participation: Firm-level evidence from India’s Unorganized Sector MSMEs By Neha Jain; Sugandha Huria
  15. The impact of space procurement on suppliers: Evidence from Italy By Jessica Catalano; Francesco Giffoni; Paolo Castelnovo
  16. Digitalization and Exports: A case of Indian Manufacturing MSMEs By Sugandha Huria; Kriti Sharma; Neha Jain; Ashley Jose

  1. By: Fuad Hasanov; Reda Cherif; Christoph Grimpe; Wolfgang Sofka
    Abstract: We investigate the effect of R&D subsidies on firms’ innovation by ownership, industry, and firm size using German firm-level data. The impact of R&D subsidies is heterogeneous across industries for multinational corporations (MNCs) and domestic firms while it does not differ substantially by firm size. Domestic firms have a larger response in R&D spending in low-tech manufacturing, knowledge-intensive services, and technological services while the response of domestic and foreign MNCs is broadly similar and is greater in medium-tech and high-tech manufacturing. Foreign MNC subsidiaries’ response in terms of patents is greater than that of domestic MNCs in most industries.
    Keywords: Innovation; patents; research and development; R&D; subsidies; multinationals; investment; technology policy; R&D subsidy; high-tech manufacturing; subsidiaries' response; low-tech manufacturing; R&D spending; Transnational corporations; Manufacturing; Services sector; Government subsidies; Investment policy; Global
    Date: 2022–09–23
  2. By: Nakatani, Ryota
    Abstract: Does the maturity of debt matter for productivity? Using data on Italian firms from 1997 to 2015, we study the relationship among debt maturity, productivity, and firm characteristics. We find that productivity is positively associated with short-term debt and negatively associated with long-term debt. This result supports the hypothesis that the less intense monitoring of firm performance and fewer liquidation fears stemming from the long maturity of debt causes a moral hazard, while short-term debt serves as a disciplinary device to improve firm performance in the short run. This effect is evident in small- and medium-sized enterprises and old firms. In contrast, large firms can utilize long-term financing to improve productivity through long-term investments. Firms improve productivity by purchasing intangible assets financed by short-term debt.
    Keywords: Debt maturity; Productivity; SMEs; Firm size; Firm age; Intangibles
    JEL: D22 D24 G32 O16 O34
    Date: 2023–01–28
  3. By: Rodrigo Rodrigo Barra Novoa Barra Novoa (UCJC - Universidad Camilo José Cela)
    Abstract: The role played by gazelles in economic development processes is a topic of growing interest in the scientific and business community. Empirical evidence agrees that gazelles and fast-growing firms are innovative, transformative economic structures with capabilities to promote economic growth. This paper examines the role of a group of gazelle firms assisted in Arica that positively weigh the cost-benefit ratio of the Business Center program in Chile. This path poses an exercise in "appreciative theorizing" —as Richard Nelson (2018) calls it— and examines various factors of growth that cannot be explained by economic models in equilibrium.
    Keywords: Business centers economic growth gazelle firms innovation appreciative theorizing B21 Microeconomics D22 Firm behavior J18 Public policy O43 Institutions and growth R11 Regional economic activity Centros de negocios crecimiento económico firmas gacelas innovación teorización apreciativa, Business centers, economic growth, gazelle firms, innovation, appreciative theorizing B21 Microeconomics, D22 Firm behavior, J18 Public policy O43 Institutions and growth R11 Regional economic activity Centros de negocios, crecimiento económico, firmas gacelas, innovación, teorización apreciativa
    Date: 2022–10–11
  4. By: Fabio M. Manenti (Department of Economics and Management M. Fanno, University of Padova); Luca Sandrini (Research Centre of Quantitative Social and Management Sciences, Budapest University of Technology and Economics)
    Abstract: We model a three-stage duopolistic game where firms first simultaneously choose the technological direction of their innovation, then invest in the chosen direction, and finally, compete. Investments can be in competing or non-competing innovations and their outcome is uncertain. If successful, a firm can be imitated by the rival. Patent protection prevents imitation and is granted to non-obvious innovations. We show that compared to a regime where negligible innovations are patentable, strengthening the non-obviousness requirement for patentability can increase market efficiency. Importantly, we also show that the level of the requirement may affect the direction of firms' R&D trajectories. While in a mild patent regime firms tend to invest in competing technologies, a stricter non-obviousness requirement may induce firms to operate in different technological areas, and this increases social welfare and consumer surplus. We illustrate our general theory through a stylised model of Cournot competition with process innovations.
    Keywords: patents, R&D, non-obviousness, direction of innovation
    JEL: L13 O31 O34
    Date: 2023–02
  5. By: Myriam Gregoire-Zawilski; David Popp
    Abstract: If further decarbonization of electricity systems is to continue, a next generation of innovation in transformative grid modernization and renewables integration technologies will be needed. Few studies have investigated the policy determinants of innovation in this sector to glean insights on how government may support the development and deployment of these technologies. We argue that policies that were successful at supporting the first wave of renewables innovation may not be sufficient to produce similar results in the next wave of green innovation since those face higher coordination bottlenecks. We investigate the effects of interoperability standards - an instrument that may facilitate coordination - on patenting using smart grid as an example of a technology that has high interoperability requirements. We find that standards decrease patenting at the extensive and intensive margins, but these results vary across types of firms. We find that this negative effect is driven by large firms, whereas standards increase entry by firms without prior smart grid innovation experience. We interpret this result as an information effect: standards provide useful information to new entrants and may help diversify the range of players innovating in this space.
    JEL: O31 Q40 Q55
    Date: 2023–01
  6. By: Gianluca Biggi
    Abstract: This study investigates the impact of the introduction of the European chemical regulation (the EU REACH legislation) on chemical search and innovation by focusing on the knowledge recombination processes leading to the generation of inventions. Using a novel dataset of patents and chemical structures contained therein over the period 1978-2016, this study readapts established patent indicators to capture the complexity, novelty, and novelty in recombination of the inventive activities as a result of the chemical regulation. The separate effect of the chemical regulation reflected in +39.8% of compounds per patent, +23% of new compounds per patent, and +2% of newer recombinations of compounds per patent is supported by the Propensity Score Matching estimations. The positive and significant effect of chemical regulation on compound patenting supports prior scholarly work on the idea that regulations by altering the search space, influence the rate and intensity of technological search and innovation.
    Keywords: Chemical inventions; Patent data; Regulation; Knowledge recombination.
    Date: 2023–01–25
  7. By: OECD; European Commission
    Abstract: This policy brief on "Improving the effectiveness of inclusive and social entrepreneurship training schemes" was produced by the OECD and the European Commission. It discusses the importance of training schemes and presents an overview of the types of training schemes available. It also analyses the opportunities for governments to strengthen these training schemes and provides guidance on how to design more effective inclusive and social entrepreneurship training schemes.
    Keywords: inclusive entrepreneurship, skills, social entrepreneurship, training
    JEL: L26 M13 L31
    Date: 2023–02–03
  8. By: Ms. Yuanyan S Zhang; Anh Thi Ngoc Nguyen; Thuy Dinh Pham; Nga Huong Phi; Duong Thuy Nguyen; Tuan Danh Duong; Ms. Era Dabla-Norris
    Abstract: Using a unique representative panel survey of Vietnamese enterprises in 2020, we find that the pandemic and associated government support package had a heterogenous impact across firms. The government support package, particularly tax cuts and deferrals, helped alleviate short term stress, but tight ineligibility criteria and cumbersome procedures impacted take-up. Econometric analysis suggests that the likelihood of accessing support was associated with firm size, with larger firms more likely to receive support compared to smaller firms, even after controlling for sector, firm ownership and financial health. Credit support was effective in alleviating liquidity constraints and allaying firm pessimism only for large firms. Interestingly, firms experiencing sales losses and those with lower pre-crisis productivity were more likely to resort to digitalization, suggesting that the pandemic could help narrow productivity gaps.
    Keywords: COVID-19; policy support; firms’ coping strategies; digitalization; coping strategy; government support package; credit support; firm pessimism; self-coping strategy; Credit; Labor costs; Productivity; Europe; Global
    Date: 2022–09–30
  9. By: Cho, Young Sam (Korea Institute for Industrial Economics and Trade)
    Abstract: The majority of SMEs are not ready for successful digital transformation. Among the few SMEs that have sought to embrace digital transformation, their focus is overwhelmingly on maximizing the efficiency of organizational management and working processes. SMEs attempting digital transformation, in other words, are largely focused on gaining short-term benefits. A lack of financing, difficulties in building custom systems tailored to individual enterprises, and the burden of maintenance and upgrades are the major obstacles standing in the way of SMEs’ digital transformation. We must thus discern variations of digital transformation for SMEs in relation to their needs. Decision-makers at the levels of businesses and government alike ought to consider the differences between various types of digital transformations. Policy support is especially needed to enable SMEs to make the necessary strategic investments in digital transformation by minimizing uncertainties over expected benefits. Policy support is also necessary to strengthen SMEs’ own convictions in the benefits of digital transformation. There is a strong correlation between the expected benefits of digital transformation and motivation for investment. The more benefits companies expect from digital transformation, the more likely they are to invest in it. If digital transformation is an important policy concern to the government and occupies a major place in the government’s strategy for advancing and upgrading the industrial ecosystem, policymakers ought to make greater efforts to provide a vision of digital transformation to companies and enhance SMEs’ policy acceptance.
    Keywords: SMEs; SMEs’ Policy; SMEs’ Digital Transformation
    JEL: L25 L53
    Date: 2022–01–28
  10. By: Shin, Jongwon (Korea Institute for Industrial Economics and Trade)
    Abstract: In 2019, the Moon Jae-in administration promulgated its System Semiconductor Vision as a new growth engine for the sustainable growth of Korea. To achieve this goal, fabless SMEs and a competitive semiconductor ecosystem are regarded as key elements in fostering the system semiconductor industry in Korea, and new policy directions and alternative policy measures need to be addressed. The Korean government’s vision for making Korea a semiconductor powerhouse by 2030 is aimed at achieving the largest market share in foundry services and securing 10 percent market share in the fabless sector while maintaining Korea’s leadership position in the memory semiconductor market. Unfortunately, in the extant literature, there is a dearth of discussion on fabless SMEs in Korea owing to a lack of accurate data. This paper discusses the current status of Korean fabless SMEs and their cooperation with set makers using unique survey data collected from 81 fabless firms.
    Keywords: fabless; fabless industry; fabless semicondcutors; semiconductors; chipmaking; foundry; SMEs; small and medium-sized enterprises; system semiconductors; memory semiconductors; semiconductor industry; Korea; R&D
    JEL: L25 L63
    Date: 2022–06–01
  11. By: Einiö, Elias; Feng, Josh; Jaravel, Xavier
    Abstract: Innovators are intrinsically-motivated individuals who use ideas to create new goods and services. This raises the possibility that their social backgrounds may affect the direction of their innovative activity. Consistent with this "social push" channel, we document that innovators create products that are more likely to be purchased by customers similar to them along observable dimensions including gender, age, and socioeconomic status, both across and within detailed industries. Next, we provide causal evidence that social experience affects the direction of a person's innovative activity. Specifically, being exposed to peers from a lower-income group increases an entrepreneur's propensity to create necessity products, without affecting her rates of entrepreneurship and entrepreneurial income. We incorporate this channel into a general equilibrium model to assess its implications for cost-of-living inequality and long-run growth when there is unequal access to the innovation system.
    Keywords: innovators social background; social push
    JEL: R14 J01 L81 J1
    Date: 2022–07–13
  12. By: Koski, Heli; Maliranta, Mika
    Abstract: Abstract We present an overview of the recent productivity development in Finland. In particular, we focus on what distinguishes companies at the frontier of productivity from other companies. The measures needed to support the development of Finnish companies into high-productivity companies are assessed. Innovation policy measures that promote the creation of innovations that benefit society at large and the dissemination of knowledge in the economy have an exceptionally high national economic productivity growth potential. Such actions include: 1. Allocation of public R&D subsidies i) to companies that have the highest capabilities to produce radical innovation that benefit society more broadly and ii) to projects that require cooperation between companies and universities. 2. Allocation of public funding to the R&D projects taking place in the centers of expertise. 3. Strengthening funding aimed at quantitative and qualitative improvements of basic research and teaching in higher education institutions. 4. Promotion of work-based immigration (accelerating permit processes, financial incentives for skilled immigrants). 5. Ensuring that the product and labor markets are well-functioning and provide an operating environment that encourages companies to make R&D investments and other intangible investments.
    Keywords: Productivity, Economic growth, R&D, Innovation policy
    JEL: L16 O3 O4
    Date: 2023–02–08
  13. By: Müller, Jochem
    Abstract: The management of companies should recognize the important role of the intuitive competence of employees and make it available for knowledge generation. There is a special role and relevance of Inspirational Knowledge Imagination, for creating inventions and innovations, as a source of competitive advantage and future viability. A newly developed inventory for self-estimation of intuitive competence helps to unlock these competitive advantages. Based on a selective analysis of relevant literature research and studies, a ten-question questionnaire was created using a Likert scale for the self-estimating Inspirational Knowledge Imagination Inventory (IKII-10). The originally designed questionnaire was tested and extractable principal components were found, using Principal Component Analysis. This is done to describe Inspirational Intuition in more detail so that it could be further approached in terms of content. Possible applications of the intuitive, inspirational competence in the innovative business context, will give the management suggestions for professional use of the intuitive abilities and their targeted development. Intuitive competence, in the sense of an inspirational knowledge imagination, can promote the development of new knowledge and build an intuitive bridge to an imaginary and divined world.
    Keywords: Intuition, Innovation, Inspiration, Knowledge, Imagination, Inventory, Creativity, Competence, Principal Component Analysis, Questionnaire, Leadership, Future Viability
    JEL: A1 M1
    Date: 2023
  14. By: Neha Jain (Indian Institute of Foreign Trade (IIFT), New Delhi); Sugandha Huria (Indian Institute of Foreign Trade (IIFT), New Delhi)
    Abstract: The study investigates whether access to digital ways of conducting a business can enhance the productivity of the unorganized sector MSMEs in India, and hence, foster their participation in international trade. The analysis is conducted using the National Sample Survey’s (NSS) 73rd round on unincorporated non-agricultural Indian enterprises for the year 2015-16, covering approximately 2, 90, 000 firms, and performing separate analysis for both manufacturing and services firms. The key findings are: First, access to ICT infrastructure has a positive impact on firm-level productivity while controlling for firm-level characteristics. Second, the quantile regression analysis confirms the robust impact of digital assets across different levels of productivity. Third, the Probit Regression Model highlights the combined positive and significant impact of digital infrastructure and productivity on the international trade participation of an unorganized sector MSME. These findings can serve as a motivation for accelerating ‘bottom-up approach’ in the policy efforts towards better productivity and digital transformation of these firms, particularly for manufacturing MSMEs.
    Keywords: Digitalization, Productivity, MSMEs, Exports
    JEL: D24 F61 J24 L86 L81 O33
    Date: 2022
  15. By: Jessica Catalano (CSIL Centre for Industrial Studies); Francesco Giffoni (CSIL Centre for Industrial Studies); Paolo Castelnovo (Department of Economics, Management, and Quantitative Methods, University of Milan, Milan, Italy)
    Abstract: This paper investigates the impact of space procurement on supplier firms. We empirically study how public procurement affects several dimensions of firms' performance in the Italian space industry. Our research strategy implies hypothesis-validating interviews, a survey, and an econometric analysis. We found space procurement to generate two outcomes in firms: "intermediate outcomes" - i.e., learning, innovation, and market penetration - and "final outcomes" - i.e., profit and sales, business development, and employment – with the former inducing the latter. Our results offer insights for understanding the role of public procurement from the suppliers’ perspective
    Keywords: Public procurement, innovation, space economy, space industry, buyer-supplier relationships
    JEL: C25 H57 O32 O38
    Date: 2021–12–01
  16. By: Sugandha Huria (Indian Institute of Foreign Trade (IIFT), New Delhi); Kriti Sharma (Indian Institute of Foreign Trade (IIFT), New Delhi); Neha Jain (Indian Institute of Foreign Trade (IIFT), New Delhi); Ashley Jose (Indian Institute of Foreign Trade (IIFT), New Delhi)
    Abstract: Does digitalization promote the export of Indian manufacturing Micro, Small, and Medium Enterprises? We empirically address this under-researched area by using the Centre for Monitoring Indian Economy’s Prowess database consisting of around 800 manufacturing MSMEs for the period 1990-2019. The summary of the findings based on the robust econometric techniques such as the System Generalized Method of Moments and Dynamic Probit Regression Model, and employing three alternative definitions of digitalization, reveals that a higher level of digitalization of an Indian manufacturing MSME increases its exports intensity. Also, a digitalized manufacturing MSME firm is more likely to enter the export market, vis-à-vis a nondigitalized one. In fact, the likelihood further increases if digitalization is complemented with technical knowledge. The findings advocate an urgent need for manufacturing MSMEs to go for digitalization to sustain and strengthen their contribution to the Indian economy, specifically in the post-covid era.
    Keywords: Digitalization, India, MSMEs, Exports, Servicification, firm-level analysis
    JEL: D24 F61 L86 L81 O33
    Date: 2022

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