nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒05‒15
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. The role of localised, recombinant and exogenous technological change in European regions By Mario A. Maggioni; Emanuela Marrocu; Teodora Erika Uberti; Stefano Usai
  2. Digitalization, Innovation and Productivity in South African Micro and Small Enterprises By Cyrielle Gaglio; Erika Kraemer-Mbula; Edward Lorenz
  3. How does the knowledge accumulation process affect Vietnamese entrepreneurs’ success likelihood? By Nguyen, Minh-Hoang; Quang-Loc, Nguyen; Nguyen, Loan; Le, Tam-Tri; Phi, Xuan-Tuan; Vuong, Quan-Hoang
  4. Theory and Evidence of Firm-to-firm Transaction Network Dynamics By Takafumi Kawakubo; Takafumi Suzuki
  5. Cultural Configurations for International Innovativeness: A review and theoretical proposal By Yingying Zhang Zhang; Sylvia Rohlfer
  6. M&A and Technological Expansion By Ginger Zhe Jin; Mario Leccese; Liad Wagman
  7. Proactive regional policy: What a new policy to avoid socio-economic disruptions could look like By Jens Suedekum
  8. Export Experience and the Choice of Invoice Currency: Evidence from a questionnaire survey of Japanese SMEs By GOTO Mizuki; HAYAKAWA Kazunobu; KOIBUCHI Satoshi; YOSHIMI Taiyo
  9. Ownership concentration and firm risk: the moderating role of mid-sized blockholders By Silvia Rossetto; Nassima Selmane; Raffaele Stagliano
  10. The Zombification of the Economy? Assessing the Effectiveness of French Government Support During COVID-19 Lockdown By Mattia Guerini; Lionel Nesta; Xavier Ragot; Stefano Schiavo
  11. Simple model of market structure evolution of service-providing firms By Joseph Hickey
  12. Do Entrepreneurs Want Control? And Should They Get What They Want? A Historical and Theoretical Exploration By Naomi R. Lamoreaux; Jean-Laurent Rosenthal
  13. The signaling value of legal form in debt financing By Felix Bracht; Jeroen Mahieu; Steven Vanhaverbeke
  14. Financial Distress in European Vineyards and Olive Groves By Mário S. Céu; Raquel M. Gaspar

  1. By: Mario A. Maggioni; Emanuela Marrocu; Teodora Erika Uberti; Stefano Usai
    Abstract: How do regions develop and evolve along their productive and technological path is a central question. Within an evolutionary perspective, a given region is likely to develop new technologies closer to its pre-existing specialization. We adopt the approach of Hidalgo et al. (2007) to map the regional European technology/knowledge space to investigate the pattern and the evolution of regional specialisation in the most innovative EU countries. These dynamics depend on the interaction of three factors: (i) localised technological change, (ii) endogenous processes of knowledge recombination, and (iii) exogenous technological paradigm shifts while accounting for spatial and technological spillovers. Our paper maps the technological trajectories of 198 EU regions over the period 1986-2010 by using data on 121 patent sectors at the NUTS2 level for the 11 most innovative European countries, plus Switzerland and Norway. The results show that regional technological specialization is mainly shaped by localised technological change and exogenous technological paradigm shifts, whereas recombinant innovation contributes to a lower extent and that these effects largely depends on the increasing, decreasing or stable regional dynamics.
    JEL: C23 O14 O31 O33 O52 R11 R12
    Date: 2023
  2. By: Cyrielle Gaglio (University of Helsinki; Sciences Po, OFCE, France); Erika Kraemer-Mbula (University of Johannesburg); Edward Lorenz (Université Côte d'Azur, France; GREDEG CNRS)
    Abstract: This paper aims to study the links between the use of digital communication technologies, innovation performance and productivity for a sample of micro and small enterprises (MSEs) in a middle-income country, South Africa. Based on the results of an original survey carried out in 2019, we investigate these links for a sample of 711 manufacturing MSEs located in Johannesburg. We estimate the relations sequentially, first estimating the relation between digitalization and innovation, and secondly the relation between innovation and productivity. Our results show that selected digital communication technologies including the use of social media and the use of a business mobile phone for browsing the internet have a positive effect on innovation, and that innovation conditional on the use of these technologies has a positive impact on labor productivity.
    Keywords: Digital communication technologies, Product innovation, Productivity, MSEs, Johannesburg
    JEL: O14 O31 O4
    Date: 2022–06
  3. By: Nguyen, Minh-Hoang; Quang-Loc, Nguyen; Nguyen, Loan; Le, Tam-Tri; Phi, Xuan-Tuan; Vuong, Quan-Hoang
    Abstract: The nationwide economic reform in 1986 transformed Vietnam from a centrally planned economy to a socialist-oriented market economy. Entrepreneurs and entrepreneurial spirits within the populace are suggested to fuel the structural changes. Despite the importance of entrepreneurship in Vietnam’s economy, studies in Vietnam mainly pay attention to the practical aspects of entrepreneurial activities and neglect the cognitive and theoretical aspects of entrepreneurship. Thus, the current study employs the information-processing perspective of the Mindsponge Theory to explore how entrepreneurs’ knowledge accumulation can affect their perceived likelihood of business success. Bayesian analysis indicates that business-related experience positively affects entrepreneurs’ business success likelihood. Greater willingness/readiness to transform thinking, acting, and beliefs can improve the business success of entrepreneurs who study others’ failures carefully. However, for entrepreneurs who perceive learning from others’ failures as unnecessary, higher willingness/readiness to transform diminishes their chance of success. Based on these findings, we recommend Vietnamese entrepreneurs accumulate knowledge through experience, learning, and an open mind for better decision-making and innovation creation capabilities. However, the learning process should be selective.
    Date: 2023–04–04
  4. By: Takafumi Kawakubo; Takafumi Suzuki
    Abstract: How are supply chains formed and restructured over time? This paper investigates firm-to-firm transaction network dynamics from theoretical and empirical perspectives, exploiting large-scale firm-level transaction data from Japan. First, we provide basic facts which show substantial churning in supply chains over time, even after excluding the cases where either supplier or customer firms exit from the market. Second, we empirically find that productivity positive assortative matching between firms exists. Firms are more likely to keep trading with more productive firms and instead stop trading with less productive ones. Alternatively, more productive firms start new transactions with more productive business partners. Lastly, we build a theoretical framework to rationalize these findings. Both supplier and customer firms are heterogeneous and choose their trading partners with many-to-many matching setting. We derive the implications for supply chain formation and restructuring in response to productivity shocks.
    Date: 2023–04
  5. By: Yingying Zhang Zhang (IUJ Research Institute, International University of Japan); Sylvia Rohlfer (CUNEF University)
    Abstract: The accelerated international business context with the multiple sourced dynamic factors such as technology, emerging market rules and COVID-19 alike crisis demands innovativeness to survive and sustain competitive advantages. Culture as a complex construct adds complications to the international business, but may also provide a response as a soft organizational element. In this paper we explore the relationship between two the culture and innovation with systematic literature review to identify cultural configurations in affecting innovation. We deployed quality social science citation indexed journal publications identified in the Web of Science (WoS) database with a set of keywords. The identified search results were reduced to 697 articles from an initial 7, 097 items with inclusion and exclusion criteria. Utilizing Python machine learning tools and PHP language scripting, we clustered 697 items into 7 topic groups with 94 keywords spotted. We further analyze the seven clusters, with a comprehensive theoretical framework to unfold the underlying influences of culture on innovation in an international business context. Research gaps are also recognized for future research directions.
    Keywords: Cultural distance, corporate culture, national culture, innovation, knowledge, R&D, globalization, creativity, new product development, multinationals
    Date: 2023–04
  6. By: Ginger Zhe Jin; Mario Leccese; Liad Wagman
    Abstract: We examine how public firms listed in North American stock exchanges acquire technology companies during 2010-2020. Combining data from S&P, Refinitiv, Compustat, and CRSP, and utilizing a unique S&P taxonomy that classifies tech M&As by tech categories and business verticals, we show that 13.1% of public firms engage in any tech M&A in the S&P data, while only 6.75% of public firms make any (tech or non-tech) M&A in Refinitiv. In both datasets, the acquisitions are widespread across sectors of the economy, but tech acquirers in the S&P data are on average younger, more investment efficient, and more likely to engage in international acquisitions than general acquirers in Refinitiv. Within the S&P data, deals in each M&A-active tech category tend to be led by acquirers from a specific sector; the majority of target companies in tech M&As fall outside the acquirer’s core area of business; and firms are, in part, driven to acquire tech companies because they face increased competition in their core areas.
    JEL: D04 D22 L1
    Date: 2023–04
  7. By: Jens Suedekum (Duesseldorf Institute for Competition Economics (DICE))
    Abstract: Proactive regional policies to aide local transformation processes are in the limelight these days. This paper firstly discusses the big paradigm shift in mainstream economics towards this newly gained prominence of place-based policies. Afterwards, the paper introduces the most voluminous case in Germany, the coal exit. My analysis suggests that the three involved lignite mining areas, which have received unusual amounts for structural support, must realize that they are role models. But a preliminary assessment suggests that the resources will mostly flow into rather conventional spending categories. There is little evidence for moonshot projects or innovative novel paths that only those regions could try out – given the unique circumstances they are in. This misses the chance to experiment how proactive regional policies could exploit their full potential.
    Keywords: proactive regional policy, automobile industry, coal- /lignite-exit, innovative policies
    JEL: L5 L52 L62 L71
    Date: 2022–12
  8. By: GOTO Mizuki; HAYAKAWA Kazunobu; KOIBUCHI Satoshi; YOSHIMI Taiyo
    Abstract: This study examines the determinants of invoice currency with a focus on the effect of export experience, based on a questionnaire survey of Japanese small and medium enterprises (SMEs) in the manufacturing industry. We find that exporters with extensive export experience tend to switch the invoice currency from the Japanese yen to foreign currencies. The interpretation is that export experience mitigates the exchange rate uncertainty faced by firms and enables them to use foreign currency in their exports. This effect persists even if firms intermittently export from their first exports. We also find that the yen is more likely to be chosen as the first export when the age of the exporter is higher, the sales value of the exporter is smaller, the exporter has an initiative to determine the invoice currency, and the exporter started exporting before the global financial crisis in 2007.
    Date: 2023–04
  9. By: Silvia Rossetto (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Nassima Selmane (Unknown); Raffaele Stagliano (Unknown)
    Abstract: This study analyzes the relationship between mid-sized blockholders and firm risk. We show that ownership structure matters for firm risk beyond the first largest blockholder. Firms with multiple blockholders take more risk than firms with just one blockholder, even when controlling for the stake of the largest blockholder. Consistent with the diversification argument, we find that firm risk increases by 22% when the number of blockholders increases from one to two. Our results are robust to controlling for blockholder type and firm characteristics. We carry out various robustness checks to tackle endogeneity issues. More generally, we provide evidence that firms' decisions are affected by mid-sized blockholders and not merely the largest blockholder. This is in line with theoretical predictions.
    Date: 2022–05–31
  10. By: Mattia Guerini (University of Brescia; Fondazione Eni Enrico Mattei, Milan (Italy)); Lionel Nesta (Université Côte d'Azur, France; GREDEG CNRS; OFCE, SciencesPo; SKEMA Business School); Xavier Ragot (Sciences Po, Department of Economics and OFCE, (France)); Stefano Schiavo (University of Trento; OFCE Sciences Po. Paris)
    Abstract: This paper evaluates the risk of zombification of the French economy during the sanitary crisis, as a result of the unconditional financial support provided to firms by public authorities. We develop a simple theoretical framework based on a partialequilibrium model to simulate the liquidity and solvency stress faced by a large panel of French firms and assess the impact of government support measures. Simulation results suggest that those policies helped healthy but illiquid firms to withstand the shock caused by the pandemic. Moreover, the analysis finds no evidence of a “zombification effect†, as government support has not disproportionately benefited less productive companies.
    Keywords: Covid-19, zombie firms, job-retention schemes, microsimulation, policy evaluation
    JEL: H12 H32 J38 G33 L20
    Date: 2022–07
  11. By: Joseph Hickey
    Abstract: Service-providing firms compete for clients, creating market structures ranging from domination by a few giant companies to markets in which there are many small firms. These market structures evolve in time, and may remain stable for many years before experiencing a disruption in which a new firm emerges and rapidly obtains a large market share. We seek the simplest realistic model giving rise to such diverse market structures and dynamics. We focus on markets in which every client adopts a single firm, and can, from time to time, switch to a different firm. The markets of cell phone and Internet service providers are examples. In the model, the size of a particular firm, labelled i, is equal to its current number of clients, ni. In every step of the simulation, a client is chosen at random, and then selects a firm from among the full set of firms with probability pi = (beta + ni^alpha)/K, where K is the normalization factor. Our model thus has two parameters: alpha represents the degree to which firm size is an advantage (alpha > 1) or disadvantage (alpha
    Date: 2023–04
  12. By: Naomi R. Lamoreaux; Jean-Laurent Rosenthal
    Abstract: From Elihu Thomson and Herbert Dow in the late nineteenth century to Steve Jobs a hundred years later, many entrepreneurs have been stymied by their investors. In this paper, we use a simple model to explore how outcomes might have been different if entrepreneurs, instead of the investors, had control of their firms. We also explore the importance of legal rules that enable entrepreneurs to lock in control even when, under one-share-one-vote governance, power would rest with their investors. We find that entrepreneurs take advantage of such rules when the cost of capital is low, as in Britain in the early twentieth century or the US in the early twenty-first century. We also find that firms controlled by entrepreneurs can take on more difficult projects, and thus push the technological frontier out more rapidly, than firms controlled by investors. Such firms are also superior in this way to serial startups.
    JEL: G3 K2 N2 N8 O39
    Date: 2023–04
  13. By: Felix Bracht; Jeroen Mahieu; Steven Vanhaverbeke
    Abstract: We examine if a startup's legal form choice is used as a signal by credit providers to infer its risk to default on a loan. We propose that choosing a legal form with low minimum capital requirements signals higher default risk. Arguably, small relationship banks are more likely to use legal form as a screening device when deciding on a loan. Using data from Orbis and the IAB/ZEW Start-up Panel for a sample of German firms, we find evidence consistent with our hypotheses but inconsistent with predictions of several competing explanations, including differential demand for debt or growth opportunities.
    Keywords: legal form, minimum capital requirements, signaling, access to debt, financial constraint
    Date: 2023–04–17
  14. By: Mário S. Céu; Raquel M. Gaspar
    Abstract: This study focuses on the prediction of financial distress of agricultural firms operating in the vineyards and olive crops sectors in Mediterranean countries, specifically in Portugal, Spain, and Italy, which are considered to be crucial for the production of these crops. The sample size of the study is 5, 057 firms. Twelve models are presented, estimated from subsamples of combinations between countries and crops. Logistic regression is used for the estimation of these models. The accuracy of the models is evaluated, taking into account the importance of misclassification costs. Additionally, the areas under the ROC curves are calculated and compared in a dynamic of possible combinations between crops and countries. The study concludes that there are differences between the two sectors, as well as across countries, and suggests that dedicated models for each country or crop may improve the the models’ accuracy.
    Keywords: agriculture, financial distress, prediction models, ROC curves
    JEL: G24 G33
    Date: 2023–03

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