nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒09‒18
twenty-one papers chosen by
João Carlos Correia Leitão, Universidade da Beira Interior

  1. Innovative Activity and Ethnic Dynamics: An Exploratory Study of Homophilic Relationships among Minority Entrepreneurs By Link, Albert
  2. Gender and Innovation at the U.S. National Institutes of Health By Chowdhury, Farhat; Link, Albert; Royalty, Anne
  3. Survival, Emergence, and Disappearance of Manufacturing Firms in the First Phase of Regional Revitalization (Japanese) By NAKAMURA Ryohei
  4. Regional participation to Research and Innovation programmes under Next Generation EU: The Portuguese case By MARQUES SANTOS Anabela; CONTE Andrea
  5. Determinants of Adoption of Online Commercial Activities by Moroccan Firms By Adel Ben Youssef
  6. Digitalization and Firm Performance in The Middle East and North Africa: Case Studies of Jordan, Morocco, and Egypt By Nong Zhu; Xubei Luo
  7. Which Firms Are More Digitized? A Comparative Study between Egypt and Jordan By Chahir Zaki
  8. Identifying the Emergence of Academic Entrepreneurship within the Technology Transfer Literature By Hayter, Christopher; Link, Albert; Schaffer, Matthew
  9. How resilient are Irish SMEs to input cost inflation? By Adhikari, Tamanna; McGeever, Niall
  10. Artificial Intelligence and Scientific Discovery: A Model of Prioritized Search By Ajay K. Agrawal; John McHale; Alexander Oettl
  11. Impact of COVID-19 Lockdown Measures on Chinese Startups and Local Government Public Finance: Challenges and Policy Implications By Xin Sun
  12. Going Green – The Growth in Green Mortgage Financing in Ireland By Lambert, Derek; Lyons, Paul; Carroll, James
  13. NFTs and business model innovations By Damiano Cesa Bianchi; Marco Bellucci; Giacomo Manetti; Luca Bagnoli
  14. New wine in old bottle: Exploring the Corruption-inefficiency nexus using endogenous stochastic frontier approach By Finocchiaro Castro , Massimo; Guccio, Calogero
  15. It's not a sprint, it's a marathon: Reviewing governmental R&D support for environmental innovation By Meißner, Leonie; Peterson, Sonja; Semrau, Finn Ole
  16. Does gender equality bargaining reduce child penalty? Evidence from France By Pierre-Jean Messe; Jérémy Tanguy
  17. IDENTIFYING AND PRIORITIZING FACTORS AFFECTING FISH-RELATED BUSINESSES By Mahdi Imani Bashokoh; Morteza Abangah; Amin Ghasemi Sahebi; Samira Gholami
  18. Green Skills in German Manufacturing By Oliver Falck; Akash Kaura
  19. Améliorer l’efficacité des programmes de formation à l’entrepreneuriat inclusif et social By OCDE; Commission européenne
  20. A heterogeneous-firm model of trade and growth with country-specific credit constraints By Ryoji Ohdoi; Kazuo Mino; Yunfang Hu
  21. How institutions shape the economic returns of public investment in European regions By Inmaculada C. Alvarez; Javier Barbero; Luis Orea; Andrés Rodríguez-Pose

  1. By: Link, Albert (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Homophily studies have tended to focus on gender and race. Albeit that these comparisons are important, a focus on ethnic group relationships is conspicuously absent in the literature. In an effort to begin to fill this void, homophilic ethnic relationships among firm owners and publicly funded research project principal investigators is considered in this paper. Using data on Small Business Innovation Research (SBIR) program funded projects and Small Business Technology Transfer (STTR) program-funded projects, we find that the performance enhancing benefit of a homophilic relationship is dependent on the area of technology research. To the extent that the area of technology research is reflected in terms of the federal agency funding the research project, Department of Defense-funded projects are less enhanced by homophilic relationships than are research projects funded by other federal agencies.
    Keywords: homophily; SBIR; STTR; project R&D; program performance;
    JEL: H41 O22 O31
    Date: 2023–08–22
  2. By: Chowdhury, Farhat (University of North Carolina at Greensboro, Department of Economics); Link, Albert (University of North Carolina at Greensboro, Department of Economics); Royalty, Anne (University of North Carolina at Greensboro, Department of Economics)
    Abstract: This paper presents a systematic empirical study of covariates associated with the success of NIH Phase I SBIR-funded research projects, where success is defined in terms of the small, entrepreneurial firm conducting the Phase I research subsequently receiving a follow-on Phase II research award. We find that women-owned firms are especially disadvantaged in this regard. Our findings suggest that SBIR program managers consider recommendations to overcome these disadvantages. Our recommendations could enhance the rate at which follow-on Phase II research projects are funded and possibly the rate at which the developed technologies are commercialized.
    Keywords: Small Business Innovation Research (SBIR) program; entrepreneurship; gender; program management; public sector; Phase I and Phase II research; technology development
    JEL: L38 O32 O38
    Date: 2023–08–22
  3. By: NAKAMURA Ryohei
    Abstract: In many non-metropolitan municipalities, in addition to the revitalization of existing firms and the birth of new business establishments, attracting manufacturing firms with large shipment volume is still an important measure for regional development. Although the job creation effect is smaller than it used to be, manufacturing plants remain key in rural regions. However, unlike the attraction of heavy and large-scale industries during the high economic growth period, there is a tendency to attract firms that exhibit regional comparative advantages. In this paper, we will identify what kinds of manufacturing firms disappear, withdraw, appear, and survive in what kind of regions during the first phase of regional revitalization, and analyze their factors. Looking at the distribution of value-added productivity in a comparison of manufacturing firms in 2014 and 2019, the labor productivity of manufacturing firms that existed in both 2014 and 2019 was the highest, followed by manufacturing firms that existed in 2019. The lowest was for firms that existed in 2014 but did not exist in 2019. Also, from the results of the logit analysis, it was presumed that there was a tendency to remain viable if productivity was high and the size of the firm was large, and that there was a tendency towards dissolution if the degree of urbanization was high. On the other hand, for newly established manufacturing firms, regression analysis by municipality showed a positive effect for both the agglomeration of the same industry and urban agglomeration measured by population size.
    Date: 2023–08
  4. By: MARQUES SANTOS Anabela (European Commission - JRC); CONTE Andrea (European Commission - JRC)
    Abstract: The paper aims to investigate regional participation in a new Portuguese Research and Innovation (R&I) programme (so-called ‘Agendas for Industrialization’) funded by the European Next Generation EU (NGEU). Using a probit model with sample selection and a novel dataset, we find that the distribution of territorial participation to the NGEU-related programme is more similar to that observed for the European Commission’s R&I Horizon 2020 programme than for the R&I funds under the Cohesion Policy (2014-2020). Results also show a rural-urban divide in regional participation, which is eventually due to a lack of demand for this type of funding due to the sectoral composition of the economy in less developed regions.
    Keywords: R&I funding; Recovery and Resilience Facility; Innovation; Portugal
    Date: 2023–08
  5. By: Adel Ben Youssef (University Côte d’Azur)
    Abstract: E-commerce is a global trend that is having an impact on consumers and businesses. While this trend is increasing, its adoption by Moroccan firms is low and research on this context and topic is limited. This paper tries to redress this by analyzing the determinants of adoption of ecommerce by firms in Morocco. We employ a probit model to identify the main factors affecting adoption of e-commerce by Moroccan firms. The results provide five main findings. First, due to their greater openness to innovation and the change, newer firms are more likely to adopt e-commerce. Second, firms with larger numbers of higher educated workers are more likely to adopt e-commerce. Third, the level of new employees’ digital skills has no effect on the probability of adopting e-commerce. Fourth, listing on digital platforms increases the probability of e-commerce adoption. Fifth, innovation activity has a positive effect on adoption of e-commerce by Moroccan firms. These findings suggest the need for more investment to enable adoption of new organizational practices, reskilling of workforces, and use of new technologies to facilitate effective adoption of e-commerce by firms.
    Date: 2023–04–20
  6. By: Nong Zhu (Institut National de la Recherche Scientifique); Xubei Luo (The World Bank)
    Abstract: In a digitalizing global economy, countries that successfully harness the potential of e-commerce are better placed to take advantage of the access to regional and international markets for sustainable growth, while those that fail to do so may risk falling behind. For the Middle East and North Africa (MENA) region, digitalization of business activities is key to connect producers with customers, support the integration of regional and global value chains (GVCs), and foster the dynamism of private sector to aid productive job creation and inclusive growth. This study aims to examine the relationships between participation in e-commerce and firm performance (measured by production, productivity, export and/or import, and innovation) in MENA, with case studies in Jordan, Morocco, and Egypt. The analyses are based on an original survey at firm-level, carried out by the Economic Research Forum (ERF) in 2022, and data from the World Bank Enterprise Survey. The main findings are as follows: (i) E-commerce participation is relatively low in the three case study countries compared with regional peers or countries with similar development levels. (ii) E-commerce participation varies widely across firms with different characteristics: large firms, young firms, firms in “information and communication” sector, and firms with more educated workers are more likely to participate in e-commerce. (iii) Production is positively associated with e-commerce participation. However, among the three countries, the positive association between e-commerce participation and productivity is significant only in Jordan where e-commerce is most developed. (iv) Participation in e-commerce is also positively associated with firms’ exports and/or imports and innovation activities. (v) Depending on the level of e-commerce development and the structural characteristics, the role of the difference in the attributes between e-firms and non-efirms and the difference in the returns to these attributes in firm performance may vary. (vi) Firms involved in e-commerce are performing better than other firms during the COVID-19 pandemic. Overall, our study finds that e-commerce is positively associated with the viability of enterprises and their ability to maintain the level of sales.
    Date: 2023–04–20
  7. By: Chahir Zaki (Cairo University)
    Abstract: Digitalization refers to the transition from an industrial age characterized by traditional technologies to a new era in which commerce, innovation, and other dimensions are driven by digital technologies. The objective of this paper is twofold: first to examine the characteristics of the firms who adopt digital technologies by focusing on two emerging markets, which are Egyp and Jordan. Second, this paper analyzes the potential explanations behind the under-performance of these two countries compared to other emerging economies. The main findings show that firms having an owner whose education level is university and above and who is a woman are more likely to be digitized, especially in Egypt. Moreover, firms that spend on R& D and operating in the services sector adopt and use different digital platforms. Small and medium firms are generally facing several impediments and are not as digitized as large ones. Numerous bottlenecks hinder digitalization in these countries namely the legal and human infrastructure as well as the general quality of institutions including service restrictions.
    Date: 2023–04–20
  8. By: Hayter, Christopher (Georgia Institute of Technology); Link, Albert (University of North Carolina at Greensboro, Department of Economics); Schaffer, Matthew (Eastern Michigan University)
    Abstract: Though academic entrepreneurship has long been associated with technology transfer and more broadly with the passage of the 1980 Bayh-Dole Act in 1980, we have little understanding of its emergence as a research field. This paper therefore investigates development of the concept of academic entrepreneurship by studying the use of related keywords in the titles of papers published in the Journal of Technology Transfer (JTT) beginning with volume 1 in 1977. We conclude from our empirical findings that the role of universities in technology transfer has been consistently emphasized in the titles of papers published in the JTT over time, with entrepreneurship emerging more recently as a crucial area of scholarly focus.
    Keywords: academic entrepreneurship; entrepreneurial university; technology transfer; project evaluation; research portfolio choices;
    JEL: G11 H40 L26 O33
    Date: 2023–08–22
  9. By: Adhikari, Tamanna (Central Bank of Ireland); McGeever, Niall (Central Bank of Ireland)
    Abstract: The trading performance of Irish small and medium enterprises (SMEs) has thus far proven resilient in the face of significant input cost inflation. Turnover levels increased in 2022, with firms passing on cost increases to customers. Higher prices and exceptionally strong consumer demand broadly allowed most firms to maintain or even increase their profit margins, though a fifth of the firms saw their margins fall. Simulation evidence suggests that profit margins would remain robust in 2023 under baseline projections. Nonetheless, our analysis shows that profit margins would be sensitive to a slump in consumer demand and persistently elevated costs.
    Date: 2023–06
  10. By: Ajay K. Agrawal; John McHale; Alexander Oettl
    Abstract: We model a key step in the innovation process, hypothesis generation, as the making of predictions over a vast combinatorial space. Traditionally, scientists and innovators use theory or intuition to guide their search. Increasingly, however, they use artificial intelligence (AI) instead. We model innovation as resulting from sequential search over a combinatorial design space, where the prioritization of costly tests is achieved using a predictive model. We represent the ranked output of the predictive model in the form of a hazard function. We then use discrete survival analysis to obtain the main innovation outcomes of interest – the probability of innovation, expected search duration, and expected profit. We describe conditions under which shifting from the traditional method of hypothesis generation, using theory or intuition, to instead using AI that generates higher fidelity predictions, results in a higher likelihood of successful innovation, shorter search durations, and higher expected profits. We then explore the complementarity between hypothesis generation and hypothesis testing; potential gains from AI may not be realized without significant investment in testing capacity. We discuss the policy implications.
    JEL: O31 O33
    Date: 2023–08
  11. By: Xin Sun
    Abstract: This paper aims to assess the impact of COVID-19 on the public finance of Chinese local governments, with a particular focus on the effect of lockdown measures on startups during the pandemic. The outbreak has placed significant fiscal pressure on local governments, as containment measures have led to declines in revenue and increased expenses related to public health and social welfare. In tandem, startups have faced substantial challenges, including reduced funding and profitability, due to the negative impact of lockdown measures on entrepreneurship. Moreover, the pandemic has generated short- and long-term economic shocks, affecting both employment and economic recovery. To address these challenges, policymakers must balance health concerns with economic development. In this regard, the government should consider implementing more preferential policies that focus on startups to ensure their survival and growth. Such policies may include financial assistance, tax incentives, and regulatory flexibility to foster innovation and entrepreneurship. By and large, the COVID-19 pandemic has had a profound impact on both the public finance of Chinese local governments and the startup ecosystem. Addressing the challenges faced by local governments and startups will require a comprehensive approach that balances health and economic considerations and includes targeted policies to support entrepreneurship and innovation.
    Date: 2023–08
  12. By: Lambert, Derek (Central Bank of Ireland); Lyons, Paul (Central Bank of Ireland); Carroll, James (Central Bank of Ireland)
    Abstract: Green mortgages are a recent financial innovation, being established as a mainstream product in Ireland in 2019. By offering borrowers lower interest rates, green mortgages support wider emissions targets by incentivizing households and businesses to invest in energy efficiency. In this Note, we estimate the growth in green mortgage financing in Ireland and describe the characteristics of green mortgage borrowers and loans. We find that, despite their very recent introduction, green mortgages account for a sizable and growing share of mortgage lending, representing almost thirty per cent of originations in 2022. We also find that first time buyers (FTBs), those switching their mortgage, and borrowers in the Leinster region are the most likely cohorts to avail of green mortgages. Furthermore, green mortgage loan amounts are larger, are associated with higher value properties and are more prevalent in higher income groups, particularly for FTBs. This latter point suggests that there is a risk that the efficiency gap between high and low income groups could widen into the future. We also find evidence that some eligible borrowers have not availed of/received a green mortgage.
    Date: 2023–05
  13. By: Damiano Cesa Bianchi (University of Florence); Marco Bellucci (University of Florence); Giacomo Manetti (University of Florence); Luca Bagnoli (University of Florence)
    Abstract: Nonfungible tokens (NFTs) use blockchain technology to certify the ownership of digital assets. This study aims to understand the opportunities and limits of NFTs in the innovation of business models (BMs) across various sectors, including auction houses, museums, ticketing companies, and online art exchanges. Specifically, we are interested in understanding the role of NFTs in enabling the decentralization and digitalization of BMs owing to new products, services or processes. By adopting a conceptual approach based on the BM framework proposed by Osterwalder and Pigneur, this study uses a qualitative methodology based on multiple case studies to discuss the unique cases of Christie's, OpenSea, Uffizi Gallery, and Ticketmaster. Our findings suggest that despite the opportunities presented by NFTs in terms of revenue streams, customer interface, digital authentication, and decentralization, many limitations remain, including regulatory uncertainty and ethical and environmental concerns.
    Keywords: Nonfungible tokens, NFTs, case study, business model, digitalization, decentralization
    JEL: G30 M10 M41
    Date: 2023
  14. By: Finocchiaro Castro , Massimo; Guccio, Calogero
    Abstract: A large body of literature has analyzed the relationship between factors affecting institutional quality at local level and the efficiency of firms with a particular focus on the role of corruption. However, due to reverse causality, the endogeneity problem makes it difficult to identify the real effect of institutional factors at local level on firms’ efficiency. This paper adopts a novel stochastic frontier methodology to examine the relationship between the quality of local institutions and production efficiency, under the arrangement that endogeneity is well addressed. Specifically, we use a panel stochastic frontier analysis that endogenizes production efficiency and allows us to robustly assess the effect of corruption at local level on firms’ technical efficiency. For this purpose, the paper employs a large panel of Italian firms operating in the building sector from 2013 to 2019. The empirical findings reported in the paper indicate that the factor affecting the quality of local institutions affect firms’ performance, with a preeminent role played by the rule of law and the control of corruption. Moreover, when controlling for endogeneity, the magnitude of the effects of institutional quality factors at local level increase significantly. Our findings are robust to alternative IV strategies, alternative specifications of the production function, and inclusion of other factors that may affect firms’ efficiency.
    Keywords: Corruption, Firms, Production efficiency, Stochastic frontier analysis, Endogeneity
    JEL: D24 D73 L25 C23 C26
    Date: 2023
  15. By: Meißner, Leonie; Peterson, Sonja; Semrau, Finn Ole
    Abstract: In a race against excessive global warming, the world must accelerate the development and adoption of environmental innovations (EIs). EIs are crucial in decarbonizing the economy and meeting the netzero targets. In this literature review, we delve into the role of governments in promoting EIs across stages of maturity and the likeliness of such support to reduce emissions and mitigation costs. Various theoretical justifications, such as knowledge externalities, dynamic increasing returns, path dependency and incomplete information, highlight the necessity to promote EI through governmental Research and Development (R&D) support. While emission pricing remains the most cost-efficient climate policy, it fails as a stand-alone instrument to sufficiently encourage EI. Accordingly, the optimal approach is a policy mix complementing emission pricing with governmental R&D support. The theoretical finding is backed by empirical studies on the development and deployment of renewable energies, which also show that investment in R&D can effectively reduce emissions and mitigation costs. By combining theoretical and empirical research, the review concludes by examining two pivotal policy actions aimed at accelerating the take-off of EIs: The US Inflation Reduction Act and the European Green New Deal Industrial Plan. We evaluate their specific aspects and limitations to effectively and efficiently contribute to decarbonization.
    Date: 2023
  16. By: Pierre-Jean Messe (Nantes Université); Jérémy Tanguy (Université Savoie Mont Blanc)
    Abstract: This presentation investigates the effects of firm-level gender equality bargaining on the motherhood penalty using French administrative data. To tackle the endogeneity issue, we exploit the 2010 reform that introduced financial penalties for firms with 50 employees or more not complying with their obligation of negotiating on gender equality. This change led to a strong acceleration of gender equality bargaining after 2010 but only for firms with 50 employees or more. Thus, women who had their first child in concerned firms after 2010 are more likely to be employed in firms covered by a text related to gender equality. Controlling for firms' size effect and time trends as well as a set of other individuals' and firms' characteristics, we identify the causal effect of gender equality bargaining on earnings impact of motherhood. Our estimates show that forcing firms to promote measures related to gender equality has reinforced the motherhood penalty. While the causal effect of this reform is close to zero just after the first child's birth, it turns out to be significantly negative five years after. Our results suggest that some measures mentioned in texts related to gender equality, especially those favoring work–life balance, may act as an indirect discrimination towards mothers.
    Date: 2023–08–11
  17. By: Mahdi Imani Bashokoh; Morteza Abangah; Amin Ghasemi Sahebi; Samira Gholami
    Abstract: In this period of the global economy, aquaculture and related jobs have become very important. Therefore, one must work hard to manage and improve the business environment to succeed in this economic and essential business. This research broadens and deepens our knowledge of how factors influence the success of fish-related businesses. This research showed that the AHP hierarchical analysis method could be used to rank and classify factors affecting the fish business. Based on related articles and background, this research extracted the main factors, which include 45 sub-factors in 9 main categories. Then, to determine the weight and importance of these obstacles, the hierarchical analysis method was used. Also, the statistical population of this research includes experts in the aquaculture business industry who are thoroughly familiar with business issues, then using the Delphi sampling method. The number of 10 experts was identified, and pairwise comparisons of the factors were provided. After answering, integrated comparisons were used. The results showed that among the main criteria, the innovation factor was in the first place and had the most impact, and the behavioral control of perception was in the second place. Furthermore, the third rank is the need for success and self-confidence, which impact the fish business. Key words: business, identification, factors, fish-related businesses
    Date: 2023–06
  18. By: Oliver Falck; Akash Kaura
    Abstract: For all its perennial focus on traditional industries, Germany has done a remarkable job in greening its manufacturing Green skills are quickly gaining prominence Automotive manufacturing is leading the way Germany is still a hotbed of innovation, but cannot afford to become complacent
    Date: 2023
  19. By: OCDE; Commission européenne
    Abstract: Le présent document d’orientation intitulé « Améliorer les programmes de formation à l’entrepreneuriat inclusif et social » a été produit par l’OCDE et la Commission européenne. Il traite de l’importance des programmes de formation et présente une vue d’ensemble des types de programmes de formation disponibles. Il analyse également les possibilités pour les pouvoirs publics de renforcer ces programmes de formation et fournit des conseils sur la manière de concevoir des programmes de formation à l’entrepreneuriat inclusif et social plus efficaces.
    JEL: L26 M13 L31
    Date: 2023–08–31
  20. By: Ryoji Ohdoi (School of Economics, Kwansei Gakuin University); Kazuo Mino (Kyoto Institute of Economic Research, Kyoto University); Yunfang Hu (Graduate School of Economics, Kobe University)
    Abstract: This study constructs a two-country endogenous growth model with heterogeneous firms and asymmetric countries, where the asymmetry lies in the degree of financial frictions. The tradable intermediate goods sector consists of heterogeneous firms and requires specific goods for entry. These goods are produced by heterogeneous entrepreneurs facing credit constraints due to financial frictions. Using this framework, we derive the following results analytically. First, a permanent credit crunch in one country facilitates the exit of intermediate goods firms in that country; meanwhile, it decreases the profitability of exports of the other country’s intermediate goods firms, causing exporters to switch to selling their goods domestically. Second, under no international lending and borrowing, the credit crunch reduces the growth rates of both countries not only in the long run but also during the transition to a new balanced growth path. We also compare the long-run effects under such a financial autarky and financial integration.
    Keywords: Banks; Endogenous growth; Heterogeneous firms; Asymmetric countries; Financial frictions; Country-specific credit crunch
    JEL: F12 F43 O16 O41
    Date: 2023–08
  21. By: Inmaculada C. Alvarez (Universidad Autonoma de Madrid); Javier Barbero (Universidad Autonoma de Madrid); Luis Orea (Universidad de Oviedo); Andrés Rodríguez-Pose (London School of Economics)
    Abstract: In this paper, we examine the impact of institutional quality on the returns on key drivers of economic growth in 230 European Union (EU) NUTS-2 regions from 2009 to 2017. To estimate region-specific elasticities, we employ a latent class modelling approach, considering the quality of government and the degree of authority in each region as mediators. Our findings reveal significant variation in the returns to education, physical capital investment, and innovation across regions. Moreover, we observe that changes in government quality and regional authority influence the ability of EU regions to leverage different types of investment effectively. These results emphasize the importance of considering the government quality in regions where investments are made in order to maximize the returns on European Cohesion investment.
    Keywords: Institutional quality, European funds, public investment, regional development
    JEL: O43 E61 H54 R11
    Date: 2023–08

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