nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒09‒11
sixteen papers chosen by
João Carlos Correia Leitão, Universidade da Beira Interior

  1. Regional incidence and persistence of high-growth firms: Testing ideas from the Entrepreneurial Ecosystems literature By Alex Coad; Clemens Domnick; Pietro Santoleri; Stjepan Srhoj
  2. What drives university-industry collaboration? Research excellence or firm collaboration strategy? By Atta-Owusu, Kwadwo; Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
  3. Business groups, institutions, and firm performance By Cainelli, Giulio; Ganau, Roberto; Giunta, Anna
  4. Accelerating Innovation Ecosystems: The Promise and Challenges of Regional Innovation Engines By Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
  5. Firm-level Determinants of Cross-border Data Flows: An econometric analysis based on a variable selection technique By ITO Banri; TOMIURA Eiichi
  6. Research and/or Development? Financial Frictions and Innovation Investment By Filippo Mezzanotti; Timothy Simcoe
  7. How entrepreneurs achieve purpose beyond profit: the case of women entrepreneurs By Barkema, Harry G.; Bindl, Uta; Tanveer, Lamees
  8. The Commercial Pathway Methodology By Durkin, Patrick; Keogh, Colin
  10. The Impact of Digital Transformation on Productivity and Resource Reallocation within Firms (Japanese) By FUKAO Kyoji; INUI Tomohiko; KIM Young Gak; KWON Hyeog Ug; IKEUCHI Kenta
  12. Information frictions and the two margins of trade: Evidence from Slovenian manufacturing By Zaurino, Elena; Polanec, Sašo
  14. Entrepreneurial dimension of Public Universities in the Philippines' Zamboanga Peninsula Region: Best practices and controversies By Sulasula, Josephine
  15. Entrepreneurial Resilience: Gleaning Valuable Insights from Start-up Failures for a Path to Success By Amoa-Gyarteng, Karikari
  16. Why Machines Will Not Replace Entrepreneurs. On the Inevitable Limitations of Artificial Intelligence in Economic Life. By Van Den Hauwe, Ludwig

  1. By: Alex Coad (Waseda University); Clemens Domnick (European Commission - JRC); Pietro Santoleri (European Commission - JRC); Stjepan Srhoj (University of Split)
    Abstract: Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not normally be considered Europe’s foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support path-dependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.
    Keywords: Entrepreneurial Ecosystems, High-Growth Firms, Persistence, Firm Growth, Entrepreneurship Policy, Regional Policy
    Date: 2023–07
  2. By: Atta-Owusu, Kwadwo; Fitjar, Rune Dahl; Rodríguez-Pose, Andrés
    Abstract: Research and innovation policy aims to boost research output and university-industry collaboration (UIC) in part to allow firms access to leading scientific knowledge. As part of their mission, universities in many countries are expected to contribute to innovation in their regions. However, the relationship between research output and UIC is unclear: research-intensive universities can produce frontier research, which is attractive to firms, but may simultaneously suffer from a gap between the research produced and the needs of local firms, as well as mission overload. This may hinder local firms’ ability to cooperate with universities altogether or force them to look beyond the region for other suitable universities to interact with. This paper investigates the relationship between the research output of local universities and firms’ participation in UICs across different geographical scales. It uses Community Innovation Survey (CIS) data for Norwegian firms and Scopus data on Norwegian universities’ research output across various disciplines. The results demonstrate that local university research intensity and quality are negatively associated with firm participation in UICs at the local level. Firm characteristics, in particular the firm's general strategy towards cooperation and its geography, turn out to be much more important than university characteristics in explaining UICs. Notably, firms’ cooperation with other external partners at the same scale is a strong predictor of UICs.
    Keywords: Firms; Norway; Research; Universities; University-industry collaboration; 209761
    JEL: R14 J01
    Date: 2021–12–01
  3. By: Cainelli, Giulio; Ganau, Roberto; Giunta, Anna
    Abstract: The aim of this paper is twofold. First, we analyze whether firms affiliated to national and international business groups outperform independent firms. Second, we investigate whether any potential performance premium associated with national and international business group membership depends on the quality of sub-national, regional institutions. Using data on Italian and Spanish manufacturing firms, we find a short-run growth premium for international business group members - while not for national business group members - with respect to independent firms. We also find that the growth premium associated with international business group membership is detected in low-quality regional institutional environments only.
    JEL: D02 R12
    Date: 2022–01–31
  4. By: Jorge Guzman; Fiona Murray; Scott Stern; Heidi L. Williams
    Abstract: Motivated by the establishment of major U.S. Federal programs seeking to harness the potential of regional innovation ecosystems, we assess the promise and challenges of place-based innovation policy interventions. Relative to traditional research grants, place-based innovation policy interventions are not directed toward a specific research project but rather aim to reshape interactions among researchers and other stakeholders within a given geographic location. The most recent such policy - the NSF “Engines” program - is designed to enhance the productivity and impact of the investments made within a given regional innovation ecosystem. The impact of such an intervention depends on whether, in its implementation, it induces change in the behavior of individuals and the ways in which knowledge is distributed and translated within that ecosystem. While this logic is straightforward, from it follows an important insight: innovation ecosystem interventions – Engines -- are more likely to succeed when they account for the current state of a given regional ecosystem (latent capacities, current bottlenecks, and economic and institutional constraints) and when they involve extended commitments by multiple stakeholders within that ecosystem. We synthesize the logic, key dependencies, and opportunities for real-time assessment and course correction for these place-based innovation policy interventions.
    JEL: D78 L2 O3
    Date: 2023–08
  5. By: ITO Banri; TOMIURA Eiichi
    Abstract: As digital trade involving data transfer including cross-border e-commerce is expanding, firms are actively collecting and utilizing data. This study examines the dynamics of corporate activities related to cross-border data flows based on our questionnaire surveys in 2019 and 2021 of Japanese firms regarding their data collecting activities. The firm entry and exit figures related to foreign data collection activities are quite extreme. Firms active in data collection overseas tend to be more productive. We further explore the variables that are strongly associated with the entry into data collection activities by using the least absolute shrinkage and selection operator technique for variable selection (LASSO). In addition to productivity and firm size, we found that foreign direct investment stock, skill development expenses, intangible assets, and service trade intensity are especially useful for explaining the firms’ entry into overseas data collection activities.
    Date: 2023–07
  6. By: Filippo Mezzanotti; Timothy Simcoe
    Abstract: Abstract U.S. firms have reduced their investment in scientific research (“R”) compared to product development (“D”), raising questions about the returns to each type of investment, and about the reasons for this shift. We use Census data that disaggregates “R” from “D” to study how US firms adjust their innovation investments in response to an external increase in funding cost. Companies with greater demand for refinancing during the 2008 financial crisis made larger cuts to R&D investment. This reduction in R&D is achieved almost entirely by reducing investments in basic and applied research. Development remains essentially unchanged. Although patenting is more strongly correlated with development than research investments, the impact of the crisis appears in citation-weighted patent output after 3 to 5 years. Finally, we show that if other firms patenting similar technologies are exposed to the crisis, then a focal firm's Development investment declines. We consider several mechanisms that could explain these results, and without ruling out every alternative, conclude that the overall pattern is consistent with an important role for technological competition in R&D financing decisions.
    JEL: G30 L20 O31 O32
    Date: 2023–08
  7. By: Barkema, Harry G.; Bindl, Uta; Tanveer, Lamees
    Abstract: This paper investigates how entrepreneurs achieve a sense of purpose or, more precisely, eudaimonic well-being—the experience of a good and meaningful life. We explore this in the context of women entrepreneurs participating in a business training program in Nigeria. Specifically, we conduct mixed-methods research, starting with an inductive qualitative Study 1 of what eudaimonic well-being means for these entrepreneurs. We find that, in the context of their enterprises, eudaimonic well-being implies opportunities to experience self-cultivation, mastery, social recognition, and to benefit others in the community. Unexpectedly, the women in our study also experience eudaimonic well-being related to their households. These initial insights inform theory in Study 2 on how enterprise-related learning (i.e., acquiring and assimilating knowledge regarding the enterprise) as well as household-related learning (acquiring and assimilating knowledge regarding the household) influence their eudaimonic well-being, itself driven by strong social ties with other women entrepreneurs in the training program. Hypotheses testing through a quantitative study of 484 women entrepreneurs in Nigeria over time corroborates the theory. Our research provides a contextualized perspective of “purpose” in entrepreneurship and how to achieve it: by developing strong social ties, enabling enterprise- and household-related learning, women entrepreneurs in our context initiate greater eudaimonic well-being, beyond improving firm performance
    Keywords: social psychology; organizational learning; structural modelling
    JEL: J50
    Date: 2023–08–16
  8. By: Durkin, Patrick; Keogh, Colin
    Abstract: This paper introduces a novel commercialization methodology, The Commercial Pathway Methodology, tailored specifically for EU funded Research and Development (R&D) projects, integrating the principles of the Lean Startup methodology. Leveraging the unique challenges and opportunities presented by EU funded projects, this approach aims to enhance the commercial viability of R&D outcomes while optimizing resource allocation. By adopting iterative processes, customer-centric validation, and agile market entry strategies, this Commercial Pathway Methodology offers a new perspective on driving innovation from the laboratory to the marketplace within the context of EU R&D initiatives.
    Date: 2023–08–11
  9. By: , Jumrah; Sardi, Ahmed (STKIP Darud Da'wah Wal Irsyad Pinrang)
    Abstract: An entrepreneur is usually someone who wants to try their luck in the corporate world when they are tired of working in a company or because someone is just tired of looking for work but never got a call. Entrepreneurs are economic actors, especially activities that can add value to a product or service through change, creativity, innovation and environmental sensitivity. An entrepreneur contributes to economic growth by introducing innovative technologies, products and services. Entrepreneurs also provide new jobs, which in turn help the economy by increasing national income. Entrepreneurship is the overall process of developing, launching and running a business. There are many different types of entrepreneurship. People have different aspirations and visions for the type of business they want to create.
    Date: 2023–08–02
  10. By: FUKAO Kyoji; INUI Tomohiko; KIM Young Gak; KWON Hyeog Ug; IKEUCHI Kenta
    Abstract: Prior studies have pointed out that the Japanese economy has lagged behind in IT and has not fully enjoyed the productivity benefits of IT investments, which has led to a prolonged slump in productivity growth to some extent. The spread of COVID-19 is forcing the Japanese economy to undergo digital transformation (DX), but there has been insufficient prior research in Japan on the impact of DX on corporate performance. This study analyzed the relationship between DX and corporate performance using firm-level data. The main findings are as follows: (1) IT investment is positively correlated with firm productivity, with the main contribution coming from software; (2) the establishment of a concurrent Chief Information Officer (CIO) is positively correlated with firm productivity, but the complementary relationship between CIO and IT investment is not confirmed; (3) there is no direct relationship between the introduction of new devices such as smartphones and tablets into the workplace and firm productivity; (4) there is no significant relationship between the use of big data within a company and productivity improvement; and (5) sharing data with supplier companies is positively related to corporate productivity, while sharing with customers is negatively correlated with firm productivity; and (6) IT investment by the Japanese headquarters has a weak positive correlation with the profit margin of overseas subsidiaries. For this study, we connected and analyzed firm-level data from the "ICT Workplace Survey", the "Basic Survey of Japanese Business Structure and Activities" and the "Basic Survey on Overseas Business Activities" conducted by the Ministry of Economy, Trade and Industry (METI), the "Survey on Big Data Utilization and Innovation in Manufacturing" by RIETI and firm-level data provided by Tokyo Shoko Research (TSR)".
    Date: 2023–08
  11. By: Zhemkova, Alexandra (Жемкова, Александра) (The Russian Presidential Academy of National Economy and Public Administration)
    Abstract: The paper assesses the impact of the expected market size on the stimulation of the technological development of Russian durable goods manufacturing companies. The work is structured as follows: the first chapter examines theoretical foundations of analyzing the impact of demand on the productivity and innovation activity of the companies, and examines the key sources of productivity growth and technological progress. The second chapter presents an analysis of indicators of the market size for durable goods in Russia, as well as data for Russian durable goods producers. The third chapter presents the empirical strategy and the results of the empirical assessment of the influence of market size on productivity and innovation, including for certain sectors of durable goods production. The fourth chapter analyzes the main measures of economic policy in the field of increasing productivity through the market channel. The main conclusions of the study and recommendations are presented at the end of the work.
    Keywords: demand, market size, firm, productivity, labor productivity, TFP, innovation, technological progress
    Date: 2021–11–12
  12. By: Zaurino, Elena (European Commission); Polanec, Sašo (University of Ljubljana)
    Abstract: We empirically investigate whether firms lower information frictions in foreign sourcing through prior exporting. Using a panel of Slovenian manufacturing firms in the period 1996-2011, we estimate the probability of import entry in a new market when the firm is already exporting to the same country and we find a positive and significant relation. To control for the endogeneity of the export decision, we implement an instrumental variable approach exploiting the notion of sequential exporting. Moreover, we rule out productivity growth as being the only predictor of entry in a foreign market through several falsification tests. These findings suggest information frictions play an important role for firms trading in international markets.
    Keywords: Sourcing, Import entry, Information Frictions, Sunk costs
    JEL: F14 L20 D22 D83
    Date: 2023–06
  13. By: Abdelkbir Elouidani (Université Ibn Zohr [Agadir]); Karim Hajar (Université Ibn Zohr [Agadir]); Jamila EZ-ZAOUINE (Université Ibn Zohr [Agadir])
    Abstract: Technological innovation is often approached in research work as a relevant support for companies to adapt to changes in their environment. In this study, we focused on checking whether the adoption of a technological innovation within companies affects their level of multidimensional involvement in CSR. Analysis of data collected from a questionnaire administered to forty-six companies in Morocco allowed us to identify significant relationships between technological innovation and socially responsible behavior of the companies in our sample.
    Abstract: L'innovation technologique est souvent abordée dans les travaux de recherche comme un support pertinent aux entreprises pour s'adapter aux évolutions que connaît leur environnement. Dans le cadre de cette étude, nous vérifions si l'adoption d'une innovation technologique au sein des entreprises affecte leur niveau d'implication multidimensionnelle en matière de RSE. L'analyse des données collectées d'un questionnaire administré à quarante-six entreprises du Maroc nous a permis d'identifier des relations significatives entre l'innovation technologique et le comportement socialement responsable des entreprises de notre échantillon.
    Keywords: Technological innovation, CSR approach, Moroccan companies, CSR, RSE, Innovation technologique, Démarche RSE, Entreprises du Maroc CSR
    Date: 2022–03
  14. By: Sulasula, Josephine
    Abstract: This research explores the entrepreneurial dimension of public universities in the Zamboanga Peninsula Region of the Philippines, focusing on identifying best practices and addressing associated controversies. Utilizing a mixed-methods approach, the findings reveal that several public universities in the region have embraced entrepreneurial practices to enhance their financial sustainability and academic quality. These practices include forging partnerships with the private sector to establish research and innovation centers, developing market-driven academic programs, and engaging in income-generating projects. Consequently, these institutions have experienced increased revenue streams and improved reputations, while simultaneously fostering stronger ties with local industries and addressing socio-economic challenges. However, the study also uncovers controversies related to the entrepreneurial approach. Critics argue that overemphasis on revenue generation may compromise the universities' social mission, resulting in potential conflicts of interest and erosion of academic integrity. Furthermore, concerns about accessibility and affordability of education for marginalized populations have been raised. In conclusion, this study highlights the diverse entrepreneurial practices adopted by public universities in the Zamboanga Peninsula Region, emphasizing the need for balanced approaches that align financial sustainability with social responsibility. The findings contribute to the ongoing discourse on the role of public higher education institutions in the Philippines' development landscape.
    Keywords: Entrepreneurial dimension, public universities, Zamboanga Peninsula Region, Best practices, Controversies
    JEL: A10 H7 L0 L3 L32 L38 L8 L80 L88 M0 M00 M1 M10 M2 M21 Z1 Z18
    Date: 2023–04–06
  15. By: Amoa-Gyarteng, Karikari
    Abstract: This essay highlights key lessons for start-up success gleaned from the failures of other start-ups. It emphasizes the importance of conducting thorough market research, building a strong team and leadership, embracing adaptability, listening to customer feedback, and learning from failure. Through a commitment to excellence and a willingness to learn and adapt, entrepreneurs can navigate the road to start-up success and create a strong foundation for growth and sustainability. Ultimately, it is entrepreneurial resilience that sets successful start-ups apart from those that fall by the wayside.
    Keywords: Resilience, Start-Up
    Date: 2023
  16. By: Van Den Hauwe, Ludwig
    Abstract: This paper critically explores some supposed implications of the development of artificial intelligence (AI), particularly also machine learning (ML), for how we conceive of the role of entrepreneurship in the economy. The question of the impact of AI and ML is examined by hypothesizing a decentralized market-based system and raising the question of whether entrepreneurs will someday likely be replaced by machines. The answer turns out to be highly skeptical. Not only does the materialist worldview behind the ambitions of much AI research cast serious doubts upon the chances of success of any attempts to emulate entrepreneurship algorithmically with the help of computers, the very possibility of artificial general intelligence (AGI) can also be ruled out on purely scientific grounds. The paper concludes that human entrepreneurs will remain the driving force of the market.
    Keywords: Artificial Intelligence, Entrepreneurship, Creativity
    JEL: A12 M0 O3
    Date: 2023–08–10

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