nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒09‒25
nine papers chosen by
João Carlos Correia Leitão, Universidade da Beira Interior

  1. Political Turnover and Firm Innovation in China: The Moderating Role of Innovation and Entrepreneurship Environment By Xing Shi; Ya Zhang; Yanrui Wu; Huaqing Wu
  2. Complementing Business Training with Access to Finance: Evidence from SMEs in Kenya By Anik Ashraf; Elizabeth Lyons
  3. Economic Effects of R&D Supports By Huseyin Emre Sayici; Mehmet Fatih Ulu
  4. Skills shortage and innovation openness By Carioli, Paolo; Czarnitzki, Dirk
  5. Regional Incidence of High-Growth Firms By Alex Coad; Clemens Domnick; Pietro Santoleri; Stjepan Srhoj
  6. Gender Gaps in Time Use and Entrepreneurship By Pedro Bento; Lin Shao; Faisal Sohail
  7. Crowdsourced data indicates broadband has a positive impact on local business creation By Yifeng Philip Chen; Edward J. Oughton; Jakub Zagdanski; Maggie Mo Jia; Peter Tyler
  8. Is Productive Entrepreneurship Getting Scarcer? A Reflection on the Contemporary Relevance of Baumol's Typology By Minniti, Maria; Naudé, Wim; Stam, Erik
  9. The Local Origins of Business Formation By Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova

  1. By: Xing Shi (School of Economics, Hefei University of Technology, Hefei, China); Ya Zhang (School of Economics, Hefei University of Technology, Hefei, China); Yanrui Wu (Business School, The University of Western Australia); Huaqing Wu (School of Economics, Hefei University of Technology, Hefei, China)
    Abstract: The empirical work in this paper is based on an analysis of the data of China's listed companies, the innovation and entrepreneurship index, and local official turnover data at the city level. It shows that policy uncertainty caused by local political turnover in local governments significantly reduces firm innovation. However, improvement in local innovation and entrepreneurship environment can lessen this negative impact. This moderating effect is especially relevant among non-high-tech or financially constrained firms. The robustness of these findings is checked through a series of alternative analyses such as dealing with endogeneity, optional measures of the dependent variable and subsamples.
    Keywords: Political turnover, Policy uncertainty, Innovation and entrepreneurship environment, Firm innovation, China
    JEL: L25 O31
    Date: 2023
  2. By: Anik Ashraf; Elizabeth Lyons
    Abstract: This paper investigates the complementarity between business training and access to financial capital for small and medium enterprises (SMEs) in Kenya. All participants in a business training program are offered training. One-third of participants are offered loans immediately after training (Concurrent Loan group), one-third are offered loans six weeks after training (Delayed Loan group), and the remaining third are offered loans after another four weeks (Control group). While a long time lag may reduce knowledge retention and application by SMEs, concurrent access to loans and associated business spending may crowd out the entrepreneurs’ attention from improving business practices. We find evidence for the latter in both intention-to-treat and treatment-on-the-treated estimates. While SMEs in both Control and Delayed Loan groups improve their business practices, SMEs in the Concurrent Loan group who take loans do not improve their practices at all. Moreover, entrepreneurs who take loans spend less time on their businesses and their business revenue falls. Our evidence is consistent with the entrepreneurs in our study using loans to substitute for their income.
    Keywords: business training, access to finance
    JEL: O12 L26 M53
    Date: 2023
  3. By: Huseyin Emre Sayici (Fisher College of Business, Ohio State University); Mehmet Fatih Ulu (College of Administrative Sciences and Economics, Koç University)
    Abstract: This study examines the economic effects of research and development (R&D) supports in the context of a program implemented in Türkiye between 2006-2019. Firms receiving the support differ positively from other firms in key economic indicators. Results indicate a 6% rise in patent registrations, 9% growth in value-added, 26% surge in total wages, 17% increase in per capita wages, 9% expansion in employment, 10% boost in productivity, 11% rise in exported product diversity, and 4% uptick in sales due to the support. Nonetheless, the effects on productivity and sales are statistically weaker than other impacts. The average impact of patents is also modest. Large-scale firms exhibit significant benefits, with a 33% rise in patent numbers and a 13% growth in sales. These firms effectively leverage support to commercialize R&D investments and innovations. Small-sized firms experience stronger productivity effects. Productivity gains grow with scale among SMEs, but large firms do not see positive productivity effects.
    Keywords: R&D supports, TEYDEB, innovation, matching.
    JEL: O31 O32 O38
    Date: 2023–09
  4. By: Carioli, Paolo; Czarnitzki, Dirk
    Abstract: Skills shortage has become a key policy issue in highly developed and innovation-oriented economies, with non-negligible consequences on firms' innovation activities. We investigate the effect of skills shortage on firms' innovation openness, which is considered to be one of the key drivers of innovation performance. We hypothesize that scarcity of personnel causes firms to cooperate more broadly with external partners. Using cross-sectional data from the German contribution to the Community Innovation Survey (CIS), and exploiting detailed information on the extent to which firms could fill their job vacancies, we find that, on average, a one standard deviation increase in skills shortage more than doubles a firm's cooperation breadth. We contribute to the literature on human capital in relation to open innovation by characterizing the necessity of openness as a way to mitigate the scarcity of skills.
    Keywords: open innovation, R&D collaboration, skills shortage
    JEL: O36 J63
    Date: 2023
  5. By: Alex Coad (Waseda Business School, Japan); Clemens Domnick (European Commission - JRC); Pietro Santoleri (European Commission - JRC); Stjepan Srhoj (University of Split, Croatia)
    Abstract: Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics. We test whether more developed regions, which presumably feature superior entrepreneurial ecosystems (EE), have a higher incidence of HGFs. Empirical evidence suggests that the highest shares of HGFs in Europe are found in peripheral regions, which goes against common assumptions and popular theories. The results call for i) a more nuanced interpretation of regional HGF shares, including a better understanding of their nature and drivers as well as ii) a refinement of the theoretical EE framework.
    Keywords: high-growth firms, regional policy, regional economic development
    JEL: R11 L26
    Date: 2023–07
  6. By: Pedro Bento (Texas A&M University, Department of Economics); Lin Shao (Bank of Canada); Faisal Sohail (University of Melbourne, Department of Economics)
    Abstract: The prevalence of entrepreneurs, particularly low-productivity non-employers, declines as economies develop. This decline is more pronounced for women. Relative to men, they are more likely to be entrepreneurs in poor economies but less likely in rich economies. We investigate whether gender gaps in time dedicated to non-market activities, which narrow with development, can account for this pattern. We develop a quantitative framework in which selection into occupations depends on one's ability and time, and features gender-specific distortions and social norms around market work. When calibrated to match cross-country data, we find that differences in social norms are almost entirely responsible for the patterns of gender gaps in both time use and entrepreneurship. Through these channels, social norms account for a substantial part of cross-country differences in output per worker and firm size, and have significant welfare implications for women.
    Keywords: entrepreneurship, time use, gender, development, firm size.
    JEL: J2 L2 O1
    Date: 2023–09–01
  7. By: Yifeng Philip Chen; Edward J. Oughton; Jakub Zagdanski; Maggie Mo Jia; Peter Tyler
    Abstract: Broadband connectivity is regarded as generally having a positive macroeconomic effect, but we lack evidence as to how it affects key economic activity metrics, such as firm creation, at a very local level. This analysis models the impact of broadband Next Generation Access (NGA) on new business creation at the local level over the 2011-2015 period in England, United Kingdom, using high-resolution panel data. After controlling for a range of factors, we find that faster broadband speeds brought by NGA technologies have a positive effect on the rate of business growth. We find that in England between 2011-2015, on average a one percentage increase in download speeds is associated with a 0.0574 percentage point increase in the annual growth rate of business establishments. The primary hypothesised mechanism behind the estimated relationship is the enabling effect that faster broadband speeds have on innovative business models based on new digital technologies and services. Entrepreneurs either sought appropriate locations that offer high quality broadband infrastructure (contributing to new business establishment growth), or potentially enjoyed a competitive advantage (resulting in a higher survival rate). The findings of this study suggest that aspiring to reach universal high capacity broadband connectivity is economically desirable, especially as the costs of delivering such service decline.
    Date: 2023–08
  8. By: Minniti, Maria (SMU Cox School of Business); Naudé, Wim (RWTH Aachen University); Stam, Erik (Utrecht University)
    Abstract: We review Baumol's typology of productive, unproductive and destructive entrepreneurship. We argue that the typology is relevant for explaining the secular decline in business dynamics. To the existing explanations for this decline, we put forward the thesis that entrepreneurship has become less productive, due to the unintended effects of entrepreneurship policies adopted widely in Western economies. These have straight-jacketed, distracted and zombified entrepreneurship. Removing these constraints on productive entrepreneurship would require that the decline in level-two institutions, such as democracy and science, be halted and reversed.
    Keywords: entrepreneurship, economic growth, economic development, institutions, Baumol
    JEL: L26 L21 L53 O40
    Date: 2023–08
  9. By: Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova
    Abstract: What locations generate more business ideas, and where are ideas more likely to turn into businesses? Using comprehensive administrative data on business applications, we analyze the spatial disparity in the creation of business ideas and the formation of new employer startups from these ideas. Startups per capita exhibit enormous variation across granular units of geography. We decompose this variation into variation in ideas per capita and in their rate of transition to startups, and we find that both components matter. Observable local demographic, economic, financial, and business conditions account for a significant fraction of the variation in startups per capita—and more so for the variation in ideas per capita than in transition rate. Income, education, age, and foreign-born share are generally strong positive correlates of both idea generation and transition. Overall, the relationship of local conditions with ideas differs from that with transition rate in magnitude and, sometimes, in sign: certain conditions (notably, the African American share of the population) are positively associated with ideas but negatively with transition rates. We also find a close correspondence between the actual rank of locations in terms of startups per capita and the predicted rank based only on observable local conditions—a result useful for characterizing locations with high startup activity.
    Keywords: entrepreneurship; firm entry; business formation; business dynamism; economic geography
    JEL: L26 R12 R23
    Date: 2023–08–02

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