nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒06‒12
fourteen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Specialisation precedes diversification: R&D productivity effects By Foreman-Peck, James; Zhou, Peng
  2. Does Green Transition promote Green Innovation and Technological Acquisitions? By Martinez Cillero, Maria; Gregori, Wildmer Daniel; Bose, Udichibarna
  3. Political institutions, financial liberalisation, and access to finance: firm-level empirical evidence By Olayinka Oyekola; Sofia Johan; Rilwan Sakariyahu; Oluwatoyin Esther Dosumu; Shima Amini
  4. Firm Exit and Liquidity: Evidence from the Great Recession By Fernando Leibovici; David Wiczer
  5. Early Joiners and Startup Performance By Joonkyu Choi; Nathan Goldschlag; John Haltiwanger; J. Daniel Kim
  6. Seizing the window of opportunity? The Swedish public innovation system’s support to private business in the early Covid-19 pandemic By Fridholm, Tobias
  7. Informing Innovation Management: Linking Leading R&D Firms and Emerging Technologies By Xian Gong; Claire McFarland; Paul McCarthy; Colin Griffith; Marian-Andrei Rizoiu
  8. Family Firms: In All Shapes and Sizes By Gunnarsson, Emma; Kärnä, Anders; Olsson, Martin; Persson, Lars
  9. Innovation in Artificial Intelligence and the Catalyst of Open Data Sharing: Literature Review and Policy implications By Dam, John; Rickon, Henry
  10. Understanding the use of digital technologies in entrepreneurial start-up settings and growth-oriented firms By Maria Balta; Konstantina Spanaki; Thanos Papadopoulos; M.N. Ravishankar
  11. Government Procurement and Access to Credit: Firm Dynamics and Aggregate Implications By Julian di Giovanni; Manuel García-Santana; Priit Jeenas; Enrique Moral-Benitoz; Josep Pijoan-Mas
  12. Functional Public Procurement and Innovation – The Concepts By Edquist, Charles
  13. Schumpeter meets goldilocks: the scarring effects of firm destruction By Beatriz González; Enrique Moral-Benito; Isabel Soler
  14. Exploring resource seeking in a scientific collaboration network and its effect on scientists' knowledge creation By Revet, Karine; Bodas-Freitas, Isabel Maria; Chollet, Barthélemy; D'Este, Pablo

  1. By: Foreman-Peck, James (Cardiff Business School); Zhou, Peng (Cardiff Business School)
    Abstract: We model how R&D enters the innovation system in four ways (intramural, extramural, cooperative, and spillover). Despite measuring three different spillovers together, for a very large sample of European enterprises we conclude that the productivity effects of spillovers were at best smaller than intramural R&D productivity effects. We also find that building on the greater skills and experience of enterprises already undertaking R&D (intensity) raised labour productivity more than providing support for those beginning R&D (extensity). Optimal extramural R&D intensity was higher than the actual level; sample firms could boost productivity either by abandoning extramural R&D or by doing much more. There were substantial differences in our sample between enterprises and countries in terms of R&D spillovers. Greater multinational corporation incidence in new EU members accounted for these countries’ high direct R&D intensity productivity, regardless of their generally low overall labour productivity. Absorptive capacity made little difference to the utilisation of spillovers.
    Keywords: R&D; innovation; knowledge spillover
    JEL: L53 L21 H71 H25
    Date: 2023–05
  2. By: Martinez Cillero, Maria (European Commission); Gregori, Wildmer Daniel (Banco de Portugal); Bose, Udichibarna (University of Essex)
    Abstract: This analysis explores the implications of technological shifts towards greener and sustainable innovations on acquisition propensity between firms with different technological capacities. Using a dataset of completed control acquisition deals over the period of 2009-2020 from 23 OECD countries, we find that innovative firms are more likely to acquire innovative target companies. We also find that green acquirors (i.e., firms with green patents) are more inclined to enter into acquisition deals with green firms, possibly due to their technological proximity and informational advantages which further enhances their post-acquisition green innovation performances. Our results also show an increase in green acquisitions after the Paris Agreement by non-green acquiror firms, and these are more pronounced for acquirors in climate policy-relevant sectors and countries with low environmental standards than their counterparts. However, green acquisitions after the Paris Agreement do not show any significant impact on their post-acquisition innovation performances, raising concerns related to greenwashing behaviour by investing firms.
    Keywords: Acquisitions, green patents, firm innovation, Paris agreement, green transition
    JEL: G34 O30 Q54 Q55
    Date: 2023–04
  3. By: Olayinka Oyekola (Department of Economics, University of Exeter); Sofia Johan (College of Business, Florida Atlantic University); Rilwan Sakariyahu (Business School, Edinburgh Napier University); Oluwatoyin Esther Dosumu (Alliance Manchester Business School, University of Manchester); Shima Amini (Department of Finance, University of Leeds)
    Abstract: Worldwide, lack of access to finance has been identified by many firms as the most detrimental obstacle facing business entities. This article studies how political institutions and financial liberalisation alleviate or deepen financial constraints faced by firms. We hypothesise that a complementarity exists between political institutions and financial liberalisation in constructing barriers to firms securing bank financing. Evidence from an international sample of over 63, 000 firms in 75 countries, establishes that political institutions, proxied by democracy level in a country, and financial liberalisation, proxied by entry and participation of foreign banks, are significant factors in explaining cross-country disparities in firm-level credit accessibility. Importantly, we find a strong support for our proposition, documenting a remarkably significant and sizeable positive interaction effect between foreign bank presence and the level of democracy for access to finance. These results are robust against various forms of sensitivity checks. Overall, our study provides fresh insights into the financing effects of foreign bank activities interacted with democracy on firms. We conclude that these results may be of considerable benefit to policymakers, especially within developing, and emerging, economies, who are searching for economic growth, to re-evaluate what are the primary lending obstacles for their small and medium-sized enterprises.
    Keywords: financial liberalisation, foreign banks, political institutions, access to finance, credit constraints, firm-level data
    JEL: G21 G23 G32 O16
    Date: 2023–05–15
  4. By: Fernando Leibovici; David Wiczer
    Abstract: This paper studies the role of credit constraints in accounting for the dynamics of firm exit during the Great Recession. We present novel firm-level evidence on the role of credit constraints on exit behavior during the Great Recession. Firms in financial distress, with tighter access to credit, are more likely to default than firms with more access to credit. This difference widened substantially in the Great Recession while, in contrast, default rates did not vary much by size, age, or productivity. We identify conditions under which standard models of firms subject to financial frictions can be consistent with these facts.
    Keywords: firm exit; credit constraints; financial distress; Great Recession; financial frictions
    JEL: E32 G01 G33 L25
    Date: 2023–05
  5. By: Joonkyu Choi; Nathan Goldschlag; John Haltiwanger; J. Daniel Kim
    Abstract: We show that early joiners---non-founder employees in the first year of a startup---play a critical role in explaining firm performance. We use administrative employee-employer matched data on all US startups and utilize the premature death of workers as a natural experiment exogenously separating talent from young firms. We find that losing an early joiner has a large negative effect on firm size that persists for at least ten years. When compared to that of a founder, losing an early joiner has a smaller effect on firm death but intensive margin effects on firm size are similar in magnitude. We also find that early joiners become relatively more important with the age of the firm. In contrast, losing a later joiner yields only a small and temporary decline in firm performance. We provide evidence that is consistent with the idea that organization capital, an important driver of startup success, is embodied in early joiners.
    Keywords: Founding teams; Premature death; Firm dynamics; Young firm growth; Organization capital
    Date: 2023–02–09
  6. By: Fridholm, Tobias (Jönköping International Business School)
    Abstract: This paper investigates the Swedish public innovation system’s response to the Covid-19 pandemic during 2020 in terms of initiatives targeting private business. It is based on a review of the websites of 181 major national and regional organisations in the Swedish public innovation system. A total of 208 initiatives were observed. The study shows that almost all national agencies and regional councils responded, but among more specialised organisations the response was scattered. The responses were on general rather swift, and most of them concerned short-term crisis management. Initiatives to build long-term strength, e.g. re-skilling or platforms for potentially more radical renewal, were much fewer and often thematically unspecified. There is a moderately strong correlation between region size and response, but also regional differences on other dimensions, for example, regions strong in innovation involved expertise in specialised innovation support organisations to a much higher extent than other. Almost all university response came from ‘young’ universities. The largest and most research-intensive universities are almost absent in the material. Policy implications focus on the need to strengthen the innovation system’s capacity to be agile and initiate support initiatives with long-term perspectives in times of crisis.
    Keywords: industrial and innovation policy; public innovation support; regional innovation policy; regional resilience; sustainability transitions
    JEL: O31 O32 O38 R58
    Date: 2023–05–15
  7. By: Xian Gong; Claire McFarland; Paul McCarthy; Colin Griffith; Marian-Andrei Rizoiu
    Abstract: Understanding the relationship between emerging technology and research and development has long been of interest to companies, policy makers and researchers. In this paper new sources of data and tools are combined with a novel technique to construct a model linking a defined set of emerging technologies with the global leading R&D spending companies. The result is a new map of this landscape. This map reveals the proximity of technologies and companies in the knowledge embedded in their corresponding Wikipedia profiles, enabling analysis of the closest associations between the companies and emerging technologies. A significant positive correlation for a related set of patent data validates the approach. Finally, a set of Circular Economy Emerging Technologies are matched to their closest leading R&D spending company, prompting future research ideas in broader or narrower application of the model to specific technology themes, company competitor landscapes and national interest concerns.
    Date: 2023–05
  8. By: Gunnarsson, Emma (Research Institute of Industrial Economics (IFN)); Kärnä, Anders (Research Institute of Industrial Economics (IFN)); Olsson, Martin (Research Institute of Industrial Economics (IFN)); Persson, Lars (Research Institute of Industrial Economics (IFN))
    Abstract: We study the heterogeneity of family firms using registry data on all private firms in Sweden. We restrict our sample to firms with at least one employee, and we define a family firm as a firm where two or more individuals among the owners or the board of directors are related. We focus on the heterogeneity in ownership, employee, and firm characteristics among family firms. We provide several new facts about family firms. The number of family members in family firms varies, consisting predominantly of two relatives, but a substantial share feature four or more. The share of multigenerational family firms has increased over time as has the share of women as owners and CEOs. Family firms employ more old and young workers, have a more compressed wage structure with a lower mean, and have a less compressed tenure distribution with a higher mean. The family firm age distribution is less compressed with a higher mean, and their location distribution is more equally distributed among metropolitan, urban, and rural areas.
    Keywords: Family Firms; Firm Organization; Employee Characteristics
    JEL: D22 D24 L25 L60 M11 M50
    Date: 2023–05–16
  9. By: Dam, John; Rickon, Henry
    Abstract: This literature review aims to elucidate the nuanced relationship between data openness and innovation within the field of Artificial Intelligence (AI). As the significance of AI continues to expand across various sectors, understanding the role of open data in fostering innovation becomes increasingly critical. Through this review, we systematically explore and analyze the wealth of existing literature on the topic. We address key concepts, theoretical perspectives, and empirical findings, shedding light on the multi-dimensional facets of data openness, including accessibility and usability, and their impact on AI innovation. Furthermore, the review highlights the practical implications and potential strategies to leverage data openness in propelling AI innovation. We also identify existing gaps and limitations in current literature, suggesting avenues for future research. This comprehensive review contributes to the evolving discourse in AI studies, offering valuable insights to researchers, data managers, and AI practitioners alike.
    Date: 2023–05–15
  10. By: Maria Balta (Kent Business School, University of Kent); Konstantina Spanaki (Audencia Business School); Thanos Papadopoulos (Kent Business School, University of Kent); M.N. Ravishankar (Queens University Belfast)
    Date: 2023–04
  11. By: Julian di Giovanni (FEDERAL RESERVE BANK OF NEW YORK); Manuel García-Santana (Universitat Pompeu Fabra); Priit Jeenas (Universitat Pompeu Fabra); Enrique Moral-Benitoz (Banco de España); Josep Pijoan-Mas (CEMFI)
    Abstract: We provide a framework to study how different public procurement allocation systems affect firm dynamics and long-run macroeconomic outcomes. We build a new panel dataset of administrative data for Spain that merges credit-register loan data, quasi-census firm-level data and public procurement project data. We find evidence consistent with the hypothesis that procurement contracts provide valuable collateral for firms, and that they do so to a greater extent than private-sector contracts. We then build a model of firm dynamics with both asset-based and earnings-based borrowing constraints and a government that buys goods and services from private-sector firms, and use it to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. We find that policies that promote the participation of small firms have sizeable macroeconomic effects, but their net impact on aggregate output is ambiguous. These policies help small firms grow and overcome financial constraints, which increases output in the long run. However, they also reduce saving incentives for large firms, decreasing output. The relative strength of these two forces and hence which of them dominates crucially depends on the type of financial frictions firms face and the specific way the policy is implemented.
    Keywords: government procurement, financial frictions, capital accumulation, aggregate productivity
    JEL: E22 E23 E62 G32
    Date: 2022–08
  12. By: Edquist, Charles (CIRCLE, Lund University)
    Abstract: The literature on the relations between public procurement and innovation has been growing rapidly during the latest couple of decades. However, there are still conceptual problems and unclarities with regard to key concepts. The purpose of this conceptual paper is to sort out and specify the notions of “innovation”, “public procurement”, “product procurement”, “functional procurement” and “innovation partnerships” – as well as the relations between them. <p> Some findings in this paper are: <p> • The distinction between product specifications and functional specifications is a useful dichotomy when discussions of the relations between public procurement and innovation are pursued and when public procurement is carried out in practice. It can be instrumental in transforming procurement that prevents innovations into procurement that enhances innovations. The development of this dichotomy means that we have changed the conceptual framework needed to understand and explain the relationships between (different kinds of) public procurement on one hand and innovation on the other hand. <p> • Functional procurement is not only allowed by the EU procurement directives. It is strongly encouraged “and should be used as widely as possible”, according to the EU directives. <p> • “Innovation partnership” is a new procedure in the EU procurement directives. It is intended to also address R&D results and innovations as outcomes of public procurement processes. However, this procedure has not been used very much. One reason is that the directive needs a much higher specificity to become operatively useful. This procedure should also be related to functional public procurement.
    Keywords: Innovation; System of innovation; Innovation policy; Holistic innovation policy; Linear view; Research Policy
    JEL: O30 O38 O49 O52
    Date: 2023–05–08
  13. By: Beatriz González (Banco de España); Enrique Moral-Benito (Banco de España); Isabel Soler (Banco de España)
    Abstract: The COVID-19 shock impacted firms severely all over the world. Governments were swift to implement policy measures to aid these firms, but these are coming to an end in the midst of a highly uncertain macroeconomic environment as a result of the war in Ukraine and the surge in energy prices. In this context, policymakers are worried about the potential increase in firm destruction after support policies are lifted, and what its macroeconomic consequences could be. Using data for Spain, we uncover an inverted U-shaped relationship between firm destruction and total factor productivity (TFP) growth: at low levels of firm exit, Schumpeterian cleansing effects dominate and the effect of firm destruction on TFP is positive, but when exit rates are very high, this effect turns negative. In order to rationalize this finding, we build on Asturias et al. (2017) and develop a model of firm dynamics with exit spillovers calibrated to match the non-linearity found in the data. This reduced-form spillover captures amplification effects from very high destruction rates that might force viable firms to exit, for example, due to disruptions in the production network and a generalised contraction in credit supply. Armed with the calibrated model, we perform counterfactual scenarios depending on the severity of the shock to firm exit. We find that when the shock is mild and firm destruction rates upon impact are similar to those observed during the Global Financial Crisis (GFC), TFP growth increases, and the recovery is faster. However, when the shock is severe and firm exit is well above that of the GFC, TFP growth decreases, since high efficiency firms are forced out of the market, which makes the recovery much slower. Overall, our results point to the importance of keeping exit rates low to avoid long term scarring effects.
    Keywords: firm exit, productivity
    JEL: E22 G33 M21 O47
    Date: 2022–08
  14. By: Revet, Karine; Bodas-Freitas, Isabel Maria; Chollet, Barthélemy; D'Este, Pablo
    Abstract: Scientists display heterogeneous profiles regarding the focus of their knowledge production activities, their collaboration strategies and their outcomes. Despite increasing interests on research collaboration, little is known about how scientists mobilize their research network. In their knowledge creation efforts, scientists collaborate with colleagues from both academia and industry. These collaborations, leading or not to co-authorship, allow scientists to access to a number of research resources. The objective of this study is to explore whether and how knowledge production across the four Stokesâ quadrants (different focus on fundamental understandings and on immediate industrial and social application) is associated with specific modes of mobilizing research resources. This study examines empirically the relationship between scientific knowledge production, research resources and collaboration networks, using bibliometric and survey data on 116 scientists active in biotechnology in the Netherlands. Our results suggest that different knowledge creation objectives and outcomes are associated with particular ways of activating the network, and mobilize it to access specific research resources.
    JEL: M10 O30
    Date: 2023–05–25

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