nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒04‒17
fifteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Overcoming Financial Challenges for Small and Medium Enterprises: Strategies for Entrepreneurial Success By Amoa-Gyarteng, Karikari
  2. Spatial Distribution of Regional Innovation Growth Capability and Policy Responses By Huh, Mungu; Kim, Yunsoo
  3. The Effects of Startup Acquisitions on Innovation and Economic Growth By Christian Fons-Rosen; Pau Roldan-Blanco; Tom Schmitz
  4. How does the regional presence of foreign-owned multinational enterprises affect local start-up performance By Grillitsch, Markus; Martynovich, Mikhail; Nilsson, Magnus; Schubert, Torben
  5. Relatedness, Cross-relatedness and Regional Innovation Specializations: An Analysis of Technology, Design and Market Activities in Europe and the US By Carolina Castaldi; Kyriakos Drivas;
  6. Heterogeneous regional university funding and firm innovation: An empirical analysis of the German excellence initiative By Krieger, Bastian
  7. Government measures to reduce CO2 emissions in freight transport: What are the impacts on SMEs? By Nathalie Touratier-Muller; Karim Machat; Jacques Jaussaud
  8. Determinants of the economic profitability of peasant enterprises in rural areas of Borgou, Benin By Adam MALLA ISSIFOU; Yabi A Jacob
  9. Killer Acquisitions: Evidence from EC Merger Cases in Digital Industries By Ivaldi, Marc; Petit, Nicolas; Unekbas, Selçukhan
  10. Boosting, Sorting, and Complexity – Urban Scaling of Innovation Around the World By Tom Broekel; Louis Knupling; Lars Mewes
  11. Regional favoritism in access to credit: Just believe it By Osei-Tutu, Francis; Weill, Laurent
  12. Information Technology, Firm Size, and Industrial Concentration By Erik Brynjolfsson; Wang Jin; Xiupeng Wang
  13. Strapped for cash: The role of financial constraints for innovating firms By Esther Ann Boler; Andreas Moxnes; Karen Helene Ulltveit-Moe
  14. Situation de l’activité entrepreneuriale en France : Rapport 2021 du Global Entrepreneurship Monitor By Karim Messeghem; Frank Lasch; Justine Valette; Sophie Casanova; Jean-Marie Courrent; Walid Nakara; Sylvie Sammut; Roy Thurik; Olivier Torrès; Dorian Boumedjaoud
  15. Competitive strategies of entrepreneurs in the traditional service sector By Fabien Eymas; Faouzi Bensebaa

  1. By: Amoa-Gyarteng, Karikari
    Abstract: The article discusses the challenges faced by small and medium-sized enterprises (SMEs) in obtaining finance, which is a critical issue for their growth and profitability. It highlights that SMEs often lack collateral and financial history which makes it difficult for them to obtain loans from traditional financial institutions. The article then explores two approaches to entrepreneurship, Effectuation and Bricolage, which focus on internal resourcefulness and making the most of what is available, regardless of long-term returns. The paper lists ten strategies that entrepreneurs can adopt including embracing affordability logic, engaging in networking and collaboration among others. By implementing these strategies, SMEs can overcome funding challenges and achieve sustainable growth.
    Keywords: Financial Challenges; Entrepreneurial Success; Effectuation; Bricolage; Dynamic Capabilities
    JEL: M1
    Date: 2023–03–25
  2. By: Huh, Mungu (Korea Institute for Industrial Economics and Trade); Kim, Yunsoo (Korea Institute for Industrial Economics and Trade)
    Abstract: Concerns are mounting over the potential for weak future growth as the Korean economy faces a wide range of structural issues including an aging society, a crisis in key regional industries, and the COVID-19 pandemic. Due to these concerns, the Korean government has established innovation growth as a national priority. In this essay, we extract regional innovation growth capability indices for 17 municipalities in order to analyze regional variation, spatial distribution, and characteristics of innovation growth capability. Based on this data, we provide recommendations for policy responses that are capable of promoting innovation growth capability. The analysis shows that the polarization in innovation growth capability between the Seoul Capital Area (SCA) and the province of Chungcheong and regions outside the SCA is deepening. This regional disparity in innovation growth capability has the potential to lead to a widening economic divide between regions. In the conclusion of the paper we identify the implications for regional innovation policy carried by the analytical findings.
    Keywords: regional economics; regional growth; regional innovation; regional policy; COVID-19; demographic change; population aging; population decline; innovation; innovation policy; Korea; regional disparity; regional inequality
    JEL: O11 O15 O18 O21 O25 O30 O33 O38 O47 R10 R11 R12 R13 R23
    Date: 2021–07–24
  3. By: Christian Fons-Rosen (University of California in Merced); Pau Roldan-Blanco (Bank of Spain); Tom Schmitz (Queen Mary University of London and CEPR)
    Abstract: Innovative startups are frequently acquired by large incumbent firms. On the one hand, these acquisitions provide an incentive for startup creation and may transfer ideas to more efficient users. On the other hand, incumbents might acquire startups just to “kill” their ideas, and acquisitions can erode incumbents’ own innovation incentives. Our paper aims to assess the net effect of these forces. To do so, we build an endogenous growth model with heterogeneous firms and acquisitions, and calibrate its parameters by matching micro-level evidence on startup acquisitions and patenting in the United States. Our calibrated model implies that acquisitions raise the startup rate, but lower incumbents’ own innovation as well as the percentage of implemented startup ideas. The negative forces are slightly stronger. Therefore, a ban on startup acquisitions would increase growth by 0.03 percentage points per year, and raise welfare by 1.8%.
    Keywords: Keywords: Acquisitions, Innovation, Productivity growth, Firm dynamics.
    JEL: O30 O41 E22
    Date: 2022–12–09
  4. By: Grillitsch, Markus (CIRCLE, Lund University); Martynovich, Mikhail (CIRCLE, Lund University); Nilsson, Magnus (CIRCLE, Lund University); Schubert, Torben (CIRCLE, Lund University)
    Abstract: This paper analyses how the presence of foreign-owned multinational enterprises (MNEs) affects the performance of start-ups in the same region. Focusing on the population of Swedish start-ups and MNEs between 2007 and 2015, we investigate the relationship between start-up productivity and regional share of MNE employment. We find effects that differ by sectoral belonging of start-ups and MNEs. Notably, while the effects of the local presence of foreign-owned MNEs are negative when start-ups and local MNEs belong to the same sector, they are positive for the local presence of MNEs in related and (to some weaker extent) unrelated sectors. Moreover, we find that as start-ups mature the effect of the local presence of foreign-owned MNEs on start-up productivity increases, irrespective of their sectoral belonging. We interpret this as evidence of age-dependent processes of learning, legitimacy building, and resource accumulaton allowing start-ups to reap the benefits while mitigating negative effects of MNE proximity. Interestingly, we show that the documented effects are more pronounced for service firms, particularly in the knowledge-intensive sectors.
    Keywords: Productivity; start-ups; MNE
    JEL: M13 M16 R11
    Date: 2023–03–27
  5. By: Carolina Castaldi; Kyriakos Drivas;
    Abstract: This paper examines how regions develop new innovation specializations, covering different activities in the whole process from technological invention to commercialization. We develop a conceptual framework anchored in two building blocks: first, the conceptualization of innovation as a process spanning technology, design and market activities; second, the application and extension of the principle of relatedness to understand developments within and between the different innovation activities. We offer an empirical investigation where we operationalize the different innovation activities using three intellectual property rights (IPRs): patents, industrial designs and trademarks. We provide two separate analyses of how relatedness and cross-relatedness matter for the emergence of new specializations: for 259 NUTS-2 European regions and for 363 MSAs of the US. While relatedness is significantly associated with new regional specializations for all three innovation activities, cross-relatedness between activities also plays a significant role. Our study has important policy implications for developing and monitoring Smart Specialization regional strategies.
    Keywords: innovation, relatedness, regional specialization, patents, trademarks, designs, NUTS-2 regions, Metropolitan Statistical Areas.
    JEL: O34 O38 R11
    Date: 2023–03
  6. By: Krieger, Bastian
    Abstract: This paper estimates the effect of heterogeneous university funding stemming from the German Excellence Initiative on a regional firm's probability to innovate by using a multi-valued two-way fixed effects difference-in-differences model. The estimations show that funding an additional Excellence Cluster focused on internationally competitive research within a labor market region increases a regional firm's probability to innovate between 0.3 and 0.9 percentage points. This effect is driven by firms within labor market regions receiving a high number of Excellence Clusters. There is no statistically significant effect for receiving a low number of Excellence Clusters. Moreover, we find no consistent statistically significant effect of funding Graduate Schools concentrating on training scientists nor of funding University Strategies promoting the overall long-term plan of a university.
    Keywords: University funding, Firm innovation, Knowledge transfer
    JEL: O32 O33 O38
    Date: 2023
  7. By: Nathalie Touratier-Muller (ESC PAU - Ecole Supérieure de Commerce, Pau Business School); Karim Machat (LIREM - Laboratoire de Recherche en Management (LIREM) - UPPA - Université de Pau et des Pays de l'Adour); Jacques Jaussaud (TREE - Transitions Energétiques et Environnementales - UPPA - Université de Pau et des Pays de l'Adour - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This article explores the behaviour of small- and medium-sized enterprises (SMEs) regarding mandatory and voluntary measures established by the French government to reduce carbon dioxide (CO2) emissions generated by freight transport operations. Through semi-structured interviews with fourteen SMEs (five shippers, eight carriers and a consultant) located throughout France, this research examines the integration of sustainable development into organizational and decision-making practices since the introduction of these programmes on the French territory. Our qualitative study suggests that active environmental implications stem mainly from the company's internal dynamics, driven by its management, as well as end customers' expectations. The voluntary policies seem to appeal more to SMEs than the mandatory measures implemented since 2013. This research shows that the carriers surveyed are highly environmentally proactive, regardless of their size. It also sheds light on techniques that could increase the efficiency and widespread adoption of governmental measures, in particular through the increasing use of on-board telematics.
    Abstract: Cet article explore le comportement des petites et moyennes entreprises (PME) suite aux dispositifs obligatoires et volontaires mis en place par le gouvernement français pour réduire les émissions de CO2 générées par le transport de marchandises. Grâce à des entretiens semi-directifs réalisés auprès de quatorze entreprises réparties sur le territoire français (cinq chargeurs, huit transporteurs et un consultant), nous examinons la prise en compte du développement durable dans les pratiques organisationnelles et décisionnelles des PME depuis l'apparition de ces dispositifs. Notre étude qualitative suggère que les implications environnementales actives découlent principalement de la dynamique interne de l'entreprise, pilotée par sa direction, ainsi que des attentes des clients finaux. Ce sont les démarches volontaires qui semblent séduire davantage les PME par rapport aux dispositifs obligatoires mis en place depuis 2013. Nous identifions une forte proactivité environnementale des transporteurs interrogés, quelle que soit leur taille. Notre travail apporte également un éclairage sur les techniques qui permettraient d'accroître l'efficacité et l'adoption des dispositifs gouvernementaux, notamment via une utilisation croissante de la télématique embarquée.
    Keywords: Sustainable transportation, government programmes, freight transport, SME, CO2 emissions reduction, Transport durable, dispositifs gouvernementaux, transport de fret, PME, réduction des émissions de CO2
    Date: 2023–02–17
  8. By: Adam MALLA ISSIFOU (LARDES - Laboratoire d’Analyse et de Recherches sur les Dynamiques Economiques et Sociales - UP - Université de Parakou); Yabi A Jacob (LARDES - Laboratoire d’Analyse et de Recherches sur les Dynamiques Economiques et Sociales (LARDES) - UP - Université de Parakou)
    Abstract: This study of 293 rural farmers in Borgou, aimed primarily at identifying the non-economic and technical factors of the economic profitability of farmers' enterprises, shows that innovation and value creation, and the search for a remunerative market have a positive influence on the economic profitability of farmers. On the other hand, the farmer's attitude to take less risk has a negative influence on his profitability. In other words, the farmers whose enterprises are the most profitable are those who develop the spirit of creativity, search for a remunerative market and take more risks. Individual data collection on socio-demographic variables and the entrepreneurial spirit of rural farmers made it possible to conduct the various statistical analyses that led to these results. These analyses were based on descriptive statistics and the binary probit linear regression model.
    Abstract: Cette étude menée auprès de 293 paysans ruraux dans le Borgou visant principalement à identifier les facteurs non économiques et techniques de la rentabilité économique des entreprises paysannes montre que l'innovation et de création de valeur, la recherche de marché rémunérateur influence positivement la rentabilité économique des paysans. Par contre, l'attitude du paysan à prendre moins de risque a une influence négative sur sa rentabilité. En d'autres termes, les paysans dont les entreprises sont les plus rentables sont ceux qui développent l'esprit de créativité, de recherche de marché rémunérateur et qui prennent plus de risque. Une collecte de données individuelles sur les variables sociodémographiques et de l'esprit entrepreneurial des paysans ruraux a permis de mener les différentes analyses statistiques ayant abouti à ces résultats. Il s'agit des méthodes de statistiques descriptives et celle du modèle de régression de type probit binaire.
    Keywords: Rural entrepreneurship, Agricultural entrepreneurship, Peasant enterprise, Profitability, Entrepreneuriat rural, Entrepreneuriat agricole, Entreprise paysanne, Rentabilité
    Date: 2023–02–01
  9. By: Ivaldi, Marc; Petit, Nicolas; Unekbas, Selçukhan
    Abstract: Do established firms buy new businesses to take out future competition? Recent works in economics literature use “killer acquisitions” as a graphic concept to describe these transactions. How concerned should competition policy be? The answer to this question hinges on how much the “theory” of killer acquisitions explains. To gain insights on this, the paper studies a sample of past cases composed of all merger transactions reviewed by the European Commission (“EC”) in ICT industries. In line with the predictions of the theory, some of these cases might constitute “killer acquisitions”. Hence, the paper asks: did they lead to a reduction of competition? By focusing on perceptions of the competitors of the acquired entity as reported in financial disclosures, the paper shows that one could not observe a disappearance of the target’s products, a weakening of competing firms, and/or a post-merger lowering or absence of entry and innovation. In other words, the paper finds no factual evidence supporting the killer acquisition theory. Whilst based on small number of observations, the paper’s findings are strong. Indeed the paper’s methodology overcomes the inherent problem of lack of observing the post-merger activities of the target, and addresses the inference problem that stems from the fact that even if the target’s products are discontinued in the buyer’s firm, it is non sequitur to infer from this a post-merger weakening of competition.
    Keywords: Killer Acquisition; Dynamic Competition; Mergers and Acquisitions; Innovation
    JEL: G34 L41 L86 O31
    Date: 2023–03
  10. By: Tom Broekel; Louis Knupling; Lars Mewes
    Abstract: It is widely understood that innovations tend to be concentrated in cities, which is evidenced by innovative output increasing disproportionately with city size. Yet, given the heterogeneity of countries and technologies, few studies explore the relationship between population and innovation numbers. For instance, in the USA, innovative output scaling is substantial and is particularly pronounced for complex technologies. Whether this is a universal pattern of complex technologies and a potential facilitator of scaling, is unknown. Our analysis compared urban scaling in urban areas across 33 countries and 569 technologies. Considerable variation was identified between countries, which is rooted in two fundamental mechanisms (sorting and boosting). The sorting of innovation-intensive technologies is found to drive larger innovation counts among cities. Among most countries, this mechanism contributes to scaling more than city size boosting innovation within specific technologies. While complex technologies are concentrated in large cities and benefit from the advantages of urbanization, their contribution to the urban scaling of innovations is limited.
    Keywords: innovation, urban scaling, complexity, patents, sorting, geography of innovation
    JEL: R12 O33 O18 O57
    Date: 2023–03
  11. By: Osei-Tutu, Francis; Weill, Laurent
    Abstract: We examine the effect of regional favoritism on the access of firms to credit. Using firm-level data on a large sample of 29, 000 firms covering 47 countries, we investigate the hypothesis that firms in the birth regions of national political leaders have better access to credit. Our evidence suggests that firms located in birth regions of political leaders are less likely to be credit constrained. The effect takes place through the demand channel: firms in leader regions face fewer hurdles in applying for loans. We find no evidence, however, of preferential lending from banks to firms in leader regions. Thus, regional favoritism affects access to credit through differences in perceptions of firm managers, not deliberate changes in the allocation of resources by political leaders.
    Keywords: regional favoritism, access to credit, borrower discouragement
    JEL: D72 G21
    Date: 2023
  12. By: Erik Brynjolfsson; Wang Jin; Xiupeng Wang
    Abstract: Information flows, and thus information technology (IT) are central to the structure of firms and markets. Using data from the U.S. Census Bureau, we provide firm-level evidence that increases in IT intensity are associated with increases in firm size and concentration in both employment and sales. Results from instrumental variables and long-difference models suggest that the effect is likely causal. The effect of IT on size is more pronounced for sales than employment, which leads to a decline in the labor share, consistent with the “scale without mass” theory of digitization. Furthermore, we find that IT provides greater benefits to larger firms by increasing their capability to replicate their operations across establishments, markets, and industries. Our findings provide empirical evidence suggesting that the substantial rise in IT investment is one of the main driving forces for the increase in firm size, decline of labor share, the growth of superstar firms, and increased market concentration in recent years.
    JEL: L10 O3 O30
    Date: 2023–03
  13. By: Esther Ann Boler; Andreas Moxnes; Karen Helene Ulltveit-Moe
    Abstract: This paper makes use of a reform that allowed firms to use patents as stand-alone collateral, to estimate the magnitude of collateral constraints and to quantify the aggregate impact of these constraints on misallocation and productivity. Using matched firm-bank data for Norway, we find that bank borrowing increased for firms affected by the reform relative to the control group. We also find an increase in the capital stock, employment and innovation as well as equity funding. We interpret the results through the lens of a model of monopolistic competition with potentially collateral constrained heterogeneous firms. Parameterizing the model using well-identified moments from the reduced form exercise, we find quantitatively large gains in output per worker in the sectors in the economy dominated by constrained (and intangible-intensive) firms. The gains are primarily driven by capital deepening, whereas within-industry misallocation plays a smaller role.
    Keywords: intangible capital, patents, credit constraints, misallocation, productivity
    Date: 2023–03–14
  14. By: Karim Messeghem (UM - Université de Montpellier); Frank Lasch (Montpellier Business School - Montpellier Business School); Justine Valette (UM - Université de Montpellier); Sophie Casanova (UM - Université de Montpellier); Jean-Marie Courrent (UM - Université de Montpellier); Walid Nakara (Montpellier Business School); Sylvie Sammut (UM - Université de Montpellier); Roy Thurik (Montpellier Business School); Olivier Torrès (UM - Université de Montpellier, Montpellier Business School); Dorian Boumedjaoud (EDC - EDC Paris Business School)
    Abstract: The Global Entrepreneurship Monitor report highlights the situation of entrepreneurial activity in France, in particular in comparison with the G7 countries. This study is based on two data collections, one from the population aged 18-64 and the other from a panel of experts. The results make it possible to understand entrepreneurial activity through its determinants and its effects, and to characterize the entrepreneurial ecosystem. This report leads to useful proposals for political and economic decision-makers in connection with entrepreneurial education, women's entrepreneurship or entrepreneurial health.
    Abstract: Le rapport du Global Entrepreneurship Monitor met en lumière la situation de l'activité entrepreneuriale de la France en comparaison notamment avec les pays du G7. Cette étude est basée sur deux collectes de données, l'une auprès de la population des 18-64 ans et l'autre auprès d'un panel d'experts. Les résultats permettent de comprendre l'activité entrepreneurial à travers ses déterminants et ses conséquences, et de caractériser l'écosystème entrepreneurial. Ce rapport aboutit sur des propositions utiles aux décideurs politiques et économiques en lien avec l'éducation entrepreneuriale, l'entrepreneuriat féminin ou encore la santé entrepreneuriale.
    Keywords: Entrepreneuriat, intention, motivations, écosystème entrepreneurial
    Date: 2022–10–03
  15. By: Fabien Eymas (Université de Haute-Alsace (UHA) - Université de Haute-Alsace (UHA) Mulhouse - Colmar); Faouzi Bensebaa (UP8 - Université Paris 8 Vincennes-Saint-Denis)
    Abstract: This article aims better to understand the competitive behaviour of entrepreneurs in the traditional service sector. Based on the theoretical framework of competitive dynamics, this research has uncovered the existence of six competitive behaviours depending on these everyday entrepreneurs' focus of attention. Their behaviours vary according to whether the focus is on the exploitation of the entrepreneurs' resources, their interactions with their competitors, customers or suppliers. Thus, the drivers of the competitive strategies of entrepreneurs in the traditional service sector appear similar to those of large companies, apart from the importance traditionally given to rivalry, which appears to be less important.
    Abstract: Cet article vise à mieux comprendre le comportement concurrentiel des entrepreneurs du secteur des services traditionnels. En s'appuyant sur le cadre théorique de la dynamique concurrentielle, cette recherche a mis au jour l'existence de six comportements concurrentiels types selon la focalisation de l'attention de ces entrepreneurs ordinaires. Leurs comportements varient selon que l'accent soit mis sur l'exploitation des ressources des entrepreneurs, leurs interactions avec leurs clients, concurrents ou fournisseurs. Aussi les ressorts des stratégies concurrentielles des entrepreneurs du secteur des services traditionnels apparaissent-ils semblables à ceux des grandes entreprises, en dehors de l'importance traditionnellement donnée à la rivalité qui apparaît moindre.
    Keywords: Competitive behaviour, Competitive dynamics, Competitive strategies, Everyday enrtepreneurship, Interpretative phenomenological analysis, Analyse phénménologique interprétative, Comportement concurrentiel, Dynamique concurrentielle, Entrepreneurs ordinaires, Stratégies concurrentielles
    Date: 2021–12–17

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