nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒07‒31
twelve papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Science and productivity in European Firms: How do regional innovation modes matter? By Natália Barbosa; Ana Paula Faria
  2. Unregistered Firms, Financial Access and Innovation By Sam Z. Njinyah; Simplice A. Asongu
  3. R&D tax credits and the acquisition of startups By McShane, William; Sevilir, Merih
  4. How does Regional Entrepreneurship Transfer over Time? The Role of Household Size and Economic Success By Michael Wyrwich; Michael Fritsch
  5. Business activity of small and medium-sized enterprises in Russia in the context of sanctions By Barinova Vera; Zemtsov Stepan; Demidova Ksenia; Levakov P.
  6. Employment versus Efficiency: Which Firms Should R&D Tax Credits Target? By Anna Bernard; Rahim Lila; Joana Silva
  7. R&D subsidies and Portuguese firms’ performance: A longitudinal firm-level study By Inês Teixeira; Aurora Teixeira; Luís Santos
  8. Repeated Innovations and Excessive Spin-Offs By Mella-Barral, P.; Sabourian, H.
  9. Beyond Trading: Knowledge Spillovers and learning-by-exporting in Global Value Chains By Holger Graf; Hoda Mohamed
  10. Immigration Enforcement, Entrepreneurship, and Firm Entry/Exit By Shrestha, Samyam; Sant'Anna, Hugo
  11. Start-up Acquisitions, Venture Capital and Innovation: A Comparative Study of Google, Apple, Facebook, Amazon and Microsoft By Klaus Gugler; Florian Szücs; Ulrich Wohak
  12. Which Employers Share Rents? A firm-level analysis for Japan By IKEUCHI Kenta; FUKAO Kyoji; Cristiano PERUGINI; Fabrizio POMPEI

  1. By: Natália Barbosa; Ana Paula Faria (Department of Economics and NIPE, University of Minho; Department of Economics and NIPE, University of Minho,)
    Abstract: Productivity disparities in the European regions tend to persist. In order to understand the underlying sources of this phenomenon we assess the importance of science and regional innovation modes on firms’ productivity growth on a sample of 150, 712 firms across 161 NUTSII European regions, over the period 2012-2017. We find that science is a major source of firms’ productivity growth, and it has been particularly important to firms located in Southern Europe and, to less extent, in Eastern EU regions, indicating that a science-push convergence process is at work in the EU peripheral regions. Our findings also show that the fast-growing productivity firms are those who benefit more from external knowledge and innovation. Growth by imitation seems to be a viable strategy restricted to the slow-growing productivity firms. These results help to conciliate contentious evidence regarding firms’ benefits from spillovers, namely from scientific knowledge.
    Keywords: Territorial innovation patterns, Firm productivity, Europe, Quantile regression
    JEL: O33 O38 L25 R11
    Date: 2023–07
  2. By: Sam Z. Njinyah (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: The purpose of this paper was to examine the relationship between a firm starting operation informally and its future innovation and whether this relation is moderated by institutional support (having access to finance from financial institutions to run their business).Data from the World Bank Enterprise Survey on 30 Eastern European and Central Asian countries were analysed using probit regression analysis. The findings show that there is a positive significant relationship between firms that start operation informally and the firm’s innovation and that such effect persists overtime. The study found that this relationship is stronger if the firms can gain access to finance to expand their business activities. Finally, the results show that such a relationship is based on the type of innovation being pursued by the firm. By examining the moderation effect of access to finance on starting a business informally, the study provides an alternative explanation to policymakers on how to deal with informal firms to benefit from their contribution to growth.
    Keywords: Informality/unregistered firms, innovation, institutions, Eastern European and Central Asian countries
    Date: 2023–01
  3. By: McShane, William; Sevilir, Merih
    Abstract: We propose a novel mechanism through which established firms contribute to the startup ecosystem: the allocation of R&D tax credits to startups via the M&A channel. We show that when established firms become eligible for R&D tax credits, they increase their R&D and M&A activity. In particular, they acquire more venture capital (VC)-backed startups, but not non-VC-backed firms. Moreover, the impact of R&D tax credits on firms' R&D is increasing with their acquisition of VC-backed startups. The results suggest that established firms respond to R&D tax credits by acquiring startups rather than solely focusing on increasing their R&D intensity in-house. We also highlight evidence that startups do not appear to benefit from R&D tax credits directly, perhaps because they typically lack the taxable income necessary to directly benefit from the tax credits. In this context, established firms can play an intermediary role by acquiring startups and reallocating R&D tax credits, effectively relaxing the financial constraints faced by startups.
    Keywords: indirect effects, innovation, mergers and acquisitions (M&A), research and development (R&D), startups, tax credits
    JEL: G00 G34 H24 M13 O31
    Date: 2023
  4. By: Michael Wyrwich (University of Groningen, and Friedrich Schiller University Jena); Michael Fritsch (Friedrich Schiller University Jena)
    Abstract: Mounting empirical evidence shows that regional differences of entrepreneurship are persistent over long periods of time that may reflect the prevalence of an entrepreneurial culture. We explore three important mechanisms behind the transmission of such an entrepreneurial culture. First, we analyze the role model effects at the household level. We hypothesize that the larger the households of self-employed, the greater the opportunities for role model effects such as an intergenerational transfer of entrepreneurial values and attitudes, and hence the higher the regional start-up rate in later periods. Second, we investigate how the economic success of regional entrepreneurs fuels the role model effects. Third, we analyze if and to what extent the economic success in of regional entrepreneurship stimulates a collective memory of historical entrepreneurship that spurs self-employment in later periods. The analysis of entrepreneurship in German regions over a period of more than 90 years provides support for the significance of all three transfer channels.
    Keywords: Entrepreneurship, intertemporal transfer, regional trajectories
    JEL: L26 R11 O15 J1
    Date: 2023–07–03
  5. By: Barinova Vera (Gaidar Institute for Economic Policy); Zemtsov Stepan (Gaidar Institute for Economic Policy); Demidova Ksenia (Gaidar Institute for Economic Policy); Levakov P. (Gaidar Institute for Economic Policy)
    Abstract: 2022 demonstrated intensification of sanction pressure on the Russian Federation. Consumer demand contracted against the backdrop of inflation coupled with the rising cost of borrowing, many entrepreneurs faced the risk of bankruptcy. Under pressure from unfriendly countries, many large foreign companies left Russia, and established supply chains were severed. The release of jobs, caused by the closure of a number of industries, created the preconditions for the development of forced entrepreneurship, mainly for people who lost their jobs. Small and medium-sized enterprises suffered both from the imposed restrictions and the ensuing decline in consumer demand, and therefore became one of the objects of the anti-crisis state policy.
    Keywords: Russian economy, small businesses, medium-sized enterprises, sanctions
    JEL: C53 E37 I18 I19 L21 L52
    Date: 2023
  6. By: Anna Bernard; Rahim Lila; Joana Silva (Católica School of Business and Economics, Universidade Católica Portuguesa; Charles Rivers Associate; Católica School of Business and Economics, Universidade Católica Portuguesa)
    Abstract: R&D tax credits, by stimulating private sector innovation, can play a key role in promoting employment and firm performance. This paper examines the program impact on the trajectory of firms in terms of technology adoption, firm performance and workforce composition, and the extent to which it depends on the size of the targeted firms. It uses rich longitudinal micro-data on innovation, firms and their workers. Combining matching with a staggered adoption differences-in-differences, we show that tax credits increase investment in R&D-related activities while funds are being received, but not thereafter. Productivity and efficiency (but not employment) increase in large firms. These effects are driven by structural changes, both in terms of the increased share of skilled individuals within the firm (keeping the overall employment level constant) and enhanced technological adoption. In contrast, small firms mostly respond by increasing employment and production scale. Our results suggest that an important trade-off: R&D tax credit programs that target large firms are likely to lead to efficiency and productivity gains, but limited effects on employment of supported firms. In contrast, R&D tax credit programs that mostly benefit small firms may lead to employment gains in supported firms, but limited effects on structural changes in productivity and efficiency.
    Keywords: R&D tax credits, Innovation, SIFIDE, Matching, Differences-in-Differences
    JEL: O31 O38 H25
    Date: 2023–07
  7. By: Inês Teixeira; Aurora Teixeira; Luís Santos (Faculdade de Economia, Universidade do Porto & KU Leuven; CEF.UP, Faculdade de Economia, Universidade do Porto & INESC TEC; Faculdade de Economia, Universidade do Porto)
    Abstract: The present study analyses the impact of subsidies to Research and Development (R&D), more specifically, the impact of QREN (Quadro de Referência Estratégico Nacional)’s Sistema de Incentivos à Investigação e Desenvolvimento Tecnológico nas Empresa (SI I&DT QREN), on the performance of firms. A relatively wide range of studies explores the relationship between subsidies to R&D and firms’ performance. Nevertheless, no consensus has been reached. Furthermore, the literature that analyses the impact of R&D subsidies in non-market-centred and moderate innovative economies like Portugal is quite scarce and limited. The information used in this empirical study concerns the period between 2008-2017, and it was collected from the Operational Competitiveness Programme (COMPETE) included in QREN and complemented with economic and financial data gathered from the Annual System of Iberian Balances (SABI) database. We compared the performance of firms that in 2014 succeeded in obtaining subsidies to R&D with similar firms that did not receive subsidies. Resorting to information on a set of relevant variables in the period before obtaining the subsidy (2008-2013), we established a trustable comparison group using the Propensity Score Matching (PSM). Then, based on the Average Treatment Effect on the Treated (ATT), we compared firms that received subsidies with those that did not use outcome variables of 2017 (three years after the subsidy), most notably employment, labour productivity, operational results, and exports. Results show that firms that received a public subsidy to R&D three years after receiving the subsidy have higher employment levels and export propensity than those that did not. Notwithstanding, no statistically significant differences were encountered in terms of labour productivity or overall financial performance.
    Keywords: R&D subsidies; firms’ performance; propensity score matching; Portugal
    JEL: C31 L25 O32
    Date: 2023–07
  8. By: Mella-Barral, P.; Sabourian, H.
    Abstract: Firms can voluntarily create independent firms to implement their technologically distant innovations and capture their value through capital markets. We argue that when firms repeatedly compete to make innovations, there is inefficient external implementation of innovations and “excessive†creation of such firms. This inefficiency is most exacerbated in the early stages of an industry, when the number of firms is still limited.
    Keywords: Repeated Innovations, Spin-Offs, Voluntary Firm Creation
    JEL: M13 O31 O33
    Date: 2023–06–30
  9. By: Holger Graf (Friedrich Schiller University Jena, Economics Department); Hoda Mohamed (Friedrich Schiller University Jena, Economics Department)
    Abstract: Does exporting intermediate goods induce learning from importers? In this paper, we examine to what extent learning from German industries can be explained by knowledge spillovers, channeled through the export of intermediate goods. Our study is based on a sample of 27 German trade partners in 14 manufacturing industries for the period 2004 to 2016. Using data on patent citations and trading in intermediate goods, we find support for the widely known “learning-by-exporting†hypothesis. Our analyses reveal that citations to German patents are positively related to exported intermediate goods weighted by German R&D expenditure. The relationship between these spillovers and learning seems to be particularly strong in certain industries. We also show that the level of absorptive capacity of the exporting trade partner, as measured by the number of researchers involved in R&D activities, plays a role in mediating these spillovers.
    Keywords: GVC, trade, intermediate goods, learning-by-exporting, knowledge spillovers
    JEL: F14 O14 O32 O33
    Date: 2023–07–07
  10. By: Shrestha, Samyam; Sant'Anna, Hugo
    Keywords: Labor and Human Capital, Institutional and Behavioral Economics, Agribusiness
    Date: 2023
  11. By: Klaus Gugler (Department of Economics, Vienna University of Economics and Business); Florian Szücs (Department of Economics, Vienna University of Economics and Business); Ulrich Wohak (Department of Economics, Vienna University of Economics and Business)
    Abstract: We evaluate the impact of big-tech acquisitions on the incentives for investment and innovation. Using data on several hundred acquisitions by Google, Apple, Facebook, Amazon and Microsoft (GAFAM), we study the evolution of venture capital investment and patenting relative to control groups. The results show a clear negative impact on investment, while the effect on innovation depends on the acquirer and period. Both outcomes improve over time, as GAFAM firms become more similar in terms of their product and tech-portfolios, increasing competition. Yet, around 10% of acquisitions impact both metrics negatively.
    Keywords: M&A, big-tech, innovation, investment
    JEL: D22 G34 K21 L41
    Date: 2023–07
  12. By: IKEUCHI Kenta; FUKAO Kyoji; Cristiano PERUGINI; Fabrizio POMPEI
    Abstract: The aim of the paper is to contribute to the debate on wage inequality in Japan by looking at the role of rent-sharing. The existing knowledge on rent-sharing drivers and asymmetries in Japan is very limited and we contribute to this research field by exploring the heterogeneity in rent-sharing associated with employers’ characteristics. Namely, we first explore differences in rent-sharing associated with a set of structural and workforce characteristics (firm size, age, share of managers, share of college workers) and with internationalisation processes (exports and FDI). We then focus our attention on the heterogeneity in rent-sharing between firms with high/low intensity of investments in intangible assets and digital technologies. The empirical analysis is based on employer-employee matched data obtained by combining the Basic Survey of Japanese Business Structure and Activities (BSJBSA) and the Basic Survey on Wage Structure (BSWS). The matching allows for the assembly of a large longitudinal firm-level dataset for the period 2005-2018 and for taking advantage of the many features of panel econometric techniques. The empirical methods used (IV models, split sample analysis) allow us to simultaneously shed light on a variety of relevant factors and address the many identification challenges related to endogeneity/reverse causality for key relationships.
    Date: 2023–07

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