nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒04‒03
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Why Big Data Can Make Creative Destruction More Creative – But Less Destructive By Norbäck, Pehr-Johan; Persson, Lars
  2. External Financing and Firm Growth: Evidence from Micro, Small, and Medium Enterprises in Iran By Iman Cheratian; Saleh Goltabar; Hassan Gholipour Fereidouni; Mohammad Reza Farzanegan
  3. The Impact of Foreign Acquisition on Japanese Firms (Japanese) By TANAKA Kiyoyasu
  4. How does public support for innovation affect cooperation between firms? Evidence from Uruguay By Flavia Roldán; Santiago Acerenza; Martín Pereyra; Liliana Gelabert
  5. Institutional reforms and the employment effects of spatially targeted investment grants: The case of Germany's GRW By Bj\"orn Alecke; Timo Mitze
  6. The role of product digitization for productivity By Schubert, Torben; Ashouri, Sajad; Deschryvere, Matthias; Jäger, Angela; Visentin, Fabiana; Cunningham, Scott; Hajikhani, Arash; Pukelis, Lukas; Suominen, Arho
  7. University study programmes and students dynamics By L. Ciucci; C. Detotto; B. Biagi; M. Pulina
  8. Foreign Affiliates versus Domestic Firms in the Information and Communication Services Sector in Central and Eastern Europe By Svilena Mihaylova
  9. Industrial Policy in Uruguay: Which are the effects? By Adriana Peluffo; Mauricio Suárez; Alvaro Brunini
  10. Startup Growth and Conditioning Factors: A conceptual framework for a survey-based study By HAMAGUCHI Nobuaki; João Carlos FERRAZ
  11. The Economic Costs of the Russia-Ukraine War: A Synthetic Control Study of (Lost) Entrepreneurship By David Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara
  12. Financial Distress Prediction For Small And Medium Enterprises Using Machine Learning Techniques By Yuan Gao; Biao Jiang; Jietong Zhou
  13. Marketing of SMEs in the digital age: Challenges and issues By Saida Filali; Nassima Faraj
  14. Rethinking MSME Finance in Asia and the Pacific - A Policy Agenda: Post COVID-19 Crisis By Masato Abe; Nick Freeman; Mike Troilo

  1. By: Norbäck, Pehr-Johan (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: The application of machine learning (ML) to big data has become increasingly important. We propose a model where firms have access to the same ML, but incumbents have access to historical data. We show that big data raises entrepreneurial barriers making the creative destruction process less destructive (less business-stealing) if the entrepreneur has weak access to the incumbent’s data. It is also shown that this induces entrepreneurs to take on more risk and be more creative. Policies making data generally available may therefore be suboptimal. Supporting entrepreneurs’ access to ML might be preferable since it stimulates creative entrepreneurship.
    Keywords: Machine Learning; Big Data; Creative Destruction; Entrepreneurship; Operational Data
    JEL: L10 L20 M13 O30
    Date: 2023–02–22
  2. By: Iman Cheratian (Tarbiat Modares University); Saleh Goltabar (Tarbiat Modares University); Hassan Gholipour Fereidouni (Western Sydney University); Mohammad Reza Farzanegan (Marburg University)
    Abstract: This study examines the relationship between access to finance and growth in sales for Micro, Small, and Medium Enterprises (MSMEs) in Iran. Using data from 486 firms in five provinces, our findings indicate that external financing positively impacts sales growth for MSMEs. The results suggest that financing for research and development expenditures, production diversification, new employment and advertising can significantly contribute to increased sales growth. We also find that spending on intellectual property, labor training and land and building acquisition have a negative moderating effect on the relationship between finance and sales growth.
    Keywords: Finance-sale growth nexus; Micro, Small, and Medium Enterprises (MSMEs); Iranian economy; External financing
    JEL: G21 G32 G38 O16 O53
    Date: 2023
  3. By: TANAKA Kiyoyasu
    Abstract: Inward foreign direct investment can contribute to the Japanese economy. However, there remains a question as to whether mergers and acquisitions (M&A) by foreign firms can improve business conditions for the acquired Japanese firms. To estimate the causal impact of foreign M&A on Japanese firms, this paper constructs a new panel dataset for the period 2000-2019 by linking the Survey of Trends in Business Activities of Foreign Affiliates with the Basic Survey of Business Structure and Activities. Specifically, this paper examines the impact of foreign M&A on sales, profits, and employment of Japanese firms and investigates the characteristics of acquired Japanese firms. A propensity-score weighting regression is employed to address a selection issue by foreign firms. My panel data include the firms that survived as corporate entities subsequent to the acquisition, but do not cover the firms that are merged by foreign investors and the business divisions that were carved out. The results show that sales, profits, and employment of acquired Japanese firms tend to decrease after foreign M&A. Acquired Japanese firms in non-manufacturing sectors can increase their sales, suggesting that it is crucial to further investigate the underlying conditions for which foreign M&A improves the business conditions.
    Date: 2023–03
  4. By: Flavia Roldán; Santiago Acerenza; Martín Pereyra; Liliana Gelabert
    Abstract: In this paper we estimate the behavioural additionally of public support for innovation activities, on the decision to cooperate. Using Uruguayan data from 2007 to 2015, and controlling for endogeneity, we find that public support for innovation increases the likelihood of different types of cooperation agreements. The empirical evidence suggests that public support leads to organizational changes within supported firms that increase their propensity to cooperate with other firms. The implications of these results are relevant for policy design as they contribute to the understanding of the unintended positive (or negative) impacts of public support for innovation on the behaviour of supported firms. We find that the Average Treatment Effect of public support on cooperation is 0.027. Which means that holding everything else constant, public support increases the probability of cooperating by 0.027.
    JEL: H25 H81 L2 L60 M21 O3
    Date: 2022–11
  5. By: Bj\"orn Alecke; Timo Mitze
    Abstract: Spatially targeted investment grant schemes are a common tool to support firms in lagging regions. We exploit exogenous variations in Germany's main regional policy instrument (GRW) arriving from institutional reforms to analyse local employment effects of investment grants. Findings for reduced-form and IV regressions point to a significant policy channel running from higher funding rates to increased firm-level investments and newly created jobs. When we contrast effects for regions with high but declining funding rates to those with low but rising rates, we find that GRW reforms led to diminishing employment increases. Especially small firms responded to changing funding conditions.
    Date: 2023–02
  6. By: Schubert, Torben; Ashouri, Sajad; Deschryvere, Matthias; Jäger, Angela; Visentin, Fabiana (RS: GSBE other - not theme-related research, Mt Economic Research Inst on Innov/Techn); Cunningham, Scott; Hajikhani, Arash; Pukelis, Lukas; Suominen, Arho
    Abstract: Digitalization is considered an important driver of the unravelling societal and economic transformations. However, holding both promises and challenges, its effects on the performance of individual firms are still underexplored. In this paper, we recognize that digitalization may take many shapes and try isolating the effects specifically of product digitization on firm level labour productivity. Our analyses are based on a large Europe-wide unique dataset combining structured information from ORBIS and PATSTAT with novel web-scraped information on digitalization in firms involved in high-tech manufacturing. We show that digitalization benefits productivity. However, the effect appears to result exclusively from product digitization, while a general digital intensity measure turned out to be insignificant. Moreover, we show that the effects are stronger for firms with higher initial productivity and firms located in countries considered digitally leading. Our results from the European high-tech sector suggest that the digital transformation in Europe is slow paced and scaled-up in only a fraction of the firms.
    JEL: O49 C81 O33 D20 O47
    Date: 2023–02–14
  7. By: L. Ciucci; C. Detotto; B. Biagi; M. Pulina
    Abstract: This paper investigates the pull factors that influence the dynamics of first-year undergraduates at university. The focus is devoted to the role of internal supply factors (e.g. course quantity and quality, fees) and external factors related to the structural characteristics of the hosting location. Three main research questions are assessed. (RQ1) Are diversification and divergence of teaching programmes good strategies to increase demand? Do these eff�ects change with (RQ2) the internal characteristics of universities (i.e. size and quality of research) and/or (RQ3) the external characteristics of universities (i.e. geographical location, type of city, proximity of another university)? The empirical analysis employs Italian data over 2013-2019. Based on a panel data approach, the findings reveal a tendency to converge towards the typical national specialisation. Yet diversification, especially for small-sized universities, positively drives demand. Besides, interesting diff�erences are found at a geographical level. Based on the empirical findings, policy implications are drawn.
    Keywords: university;Short run dynamics;diversification;Divergence
    Date: 2023
  8. By: Svilena Mihaylova (University of Economics Ð Varna)
    Abstract: Given the important role of foreign direct investment in Central and Eastern Europe, the paper explores the performance of foreign affiliates versus domestic firms in the information and communication services sector in eleven countries in the region. Based on Eurostat data for the period 2010-2020, the paper conducts descriptive and comparative analysis of foreign-owned and domestic firms in terms of size, productivity and profitability, as well as their dynamics over time. The results reveal that, on average, foreign-owned firms in the sector tend to be bigger and perform better than their local counterparts, but in the same time there are significant variations across countries.
    Keywords: Firm performance; Foreign direct investment; Multinational enterprises
    JEL: L25 F21 F23
    Date: 2023–03
  9. By: Adriana Peluffo; Mauricio Suárez; Alvaro Brunini
    Abstract: In this work we analyze the Temporary Admission Regime (TA) using a panel of Uruguayan firms for the period 2005-2016. We use two techniques panel with fixed effects by firm and matching and difference-in-differences techniques. The latter allows controlling for selectivity into the treatment and selection biases. We find positive effects of TA on export performance, and on total employment.
    JEL: F0
    Date: 2022–11
  10. By: HAMAGUCHI Nobuaki; João Carlos FERRAZ
    Abstract: What accounts for the expansion of high-tech startups? This paper provides a selective but reasonably comprehensive review of studies attempting to answer this question, drawing from the economic and business literature, especially from the resource-based view of the firm. We seek a scholarly foundation to propose a set of hypotheses to guide the design of a questionnaire-based survey of Japanese startup companies. Our basic proposition is that the growth of a startup is a function of predominantly positive interaction among all or a subset of the following elements: the Schumpeterian spirit of the entrepreneur, the existence of a dynamic set of capabilities within the firm, including the capacity to market and explore potential demand, its location within reach of an innovatively dense ecosystem, the availability of adequate financing, and the effectiveness of appropriate public support instruments.
    Date: 2023–02
  11. By: David Audretsch; Paul P. Momtaz; Hanna Motuzenko; Silvio Vismara
    Abstract: This synthetic control study quantifies the economic costs of the Russo-Ukrainian war in terms of foregone entrepreneurial activity in both countries since the invasion of Crimea in 2014. Relative to its synthetic counterfactual, Ukraine's number of self-employed dropped by 675, 000, corresponding to a relative loss of 20%. The number of Ukrainian SMEs temporarily dropped by 71, 000 (14%) and recovered within five years of the conflict. In contrast, Russia had lost more than 1.4 million SMEs (42%) five years into the conflict. The disappearance of Russian SMEs is driven by both fewer new businesses created and more existing business closures.
    Date: 2023–03
  12. By: Yuan Gao; Biao Jiang; Jietong Zhou
    Abstract: Financial Distress Prediction plays a crucial role in the economy by accurately forecasting the number and probability of failing structures, providing insight into the growth and stability of a country's economy. However, predicting financial distress for Small and Medium Enterprises is challenging due to their inherent ambiguity, leading to increased funding costs and decreased chances of receiving funds. While several strategies have been developed for effective FCP, their implementation, accuracy, and data security fall short of practical applications. Additionally, many of these strategies perform well for a portion of the dataset but are not adaptable to various datasets. As a result, there is a need to develop a productive prediction model for better order execution and adaptability to different datasets. In this review, we propose a feature selection algorithm for FCP based on element credits and data source collection. Current financial distress prediction models rely mainly on financial statements and disregard the timeliness of organization tests. Therefore, we propose a corporate FCP model that better aligns with industry practice and incorporates the gathering of thin-head component analysis of financial data, corporate governance qualities, and market exchange data with a Relevant Vector Machine. Experimental results demonstrate that this strategy can improve the forecast efficiency of financial distress with fewer characteristic factors.
    Date: 2023–02
  13. By: Saida Filali (Université Mohamed 1 Oujda MAROC); Nassima Faraj (Université Mohamed 1 Oujda MAROC)
    Abstract: Digital marketing is revolutionizing organizational structures including businesses, especially Moroccan SMEs, offering a set of opportunities to improve the traditional way of operating while building a more authentic relationship with customers. Indeed, digital marketing brings forward important characteristics for SMEs in search of efficiency and performance, and it is considered as an interesting alternative to traditional approaches. To this end, the interest of our study is to show the main issues and challenges that the digitalization of the marketing function can have on Moroccan SMEs. In this context, the problematic we will try to answer is an original one aiming to explore the impact of the introduction of digital within the marketing function by taking the case of SMEs. To this end, we opted for a sample of 4 consultants to respond to the exploratory phase and 41 respondents for the confirmatory phase. The results have shown that digital marketing is a double-edged sword in that it can have different impacts on SME structures. With respect to the contributions of the study, we first point out the results will be beneficial for SMEs which constitute a large part of the Moroccan economic fabric, and a concise methodology based on the triangulation between the qualitative and quantitative approach. As for the limitations, we mention that the number of respondents is somewhat limited.
    Keywords: Digital marketing SME challenges issues Morocco. JEL Classification : M31 Paper type : Empirical research, Digital marketing, SME, challenges, issues, Morocco. JEL Classification : M31 Paper type : Empirical research
    Date: 2022–11–30
  14. By: Masato Abe (Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific); Nick Freeman (Consultant, Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific); Mike Troilo (Consultant, Macroeconomic Policy and Financing for Development Division, United Nations Economic and Social Commission for Asia and the Pacific)
    Abstract: The COVID-19 pandemic is a global catastrophe, with no region spared including Asia and the Pacific. The cost has been considerable, whether measured in terms of public health or economic fallout. In a bid to constrain the spread of the coronavirus, national and local governments were obliged to lock down public spaces, forbade business transactions in person, restricted travel, and otherwise interdicted the flow of people, goods, and services globally. The consequences for business have been acute (ESCAP, 2021). Micro, small, and medium-sized enterprises (MSMEs) naturally suffered more than large firms, given their limited human and financial resources, and heavier reliance on cash flows. The exogenous shock of the sudden, dramatic curtailment of business was a blow that ended an unknown number of MSMEs across the region. Access to finance, already a major constraint to MSME development prior to the pandemic, has worsened considerably, even in cases where governments have had sufficient resources to enact emergency policies aimed at keeping their MSME sectors afloat (ESCAP, 2021). The environment remains difficult. Despite these challenges, the pandemic represents an opportunity for MSME finance in the region. Policymakers can build back better to enable MSME finance to be more sustainable, efficient, and resilient. This will require dramatic changes in how policymakers and all stakeholders, including members of the international development community such as ESCAP, view MSME finance: its provision and related services. In this policy brief, we propose a holistic framework to capture this new thinking.
    Date: 2021–09

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