nep-sbm New Economics Papers
on Small Business Management
Issue of 2023‒10‒02
25 papers chosen by
João Carlos Correia Leitão, Universidade da Beira Interior

  1. AI Watch: Adoption of Autonomous Machines By CARBALLA SMICHOWSKI Bruno; DE NIGRIS Sarah; DUCH BROWN Nestor; MORENO MARÍA Adrián
  2. Foreign Investment and Local Enterprise: Navigating the Tightrope of FDI Inflows and Homegrown Entrepreneurship By Yeboah, Samuel; Boateng Prempeh, Kwadwo
  3. Small Businesses and Digital Platforms By Nishant Chadha; Viswanath Pingali; Daniel Sokol
  4. Small and Medium Enterprises Amidst the Pandemic and Reopening: Digital Edge and Transformation By Lin William Cong; Xiaohan Yang; Xiaobo Zhang
  5. Agglomeration or Market Access? The Defining Factors of Firms' Location Choice By Dennis Gaus; Georg Hirte
  6. A Study of Business Transition Directions Based on Patent Data: Focusing on the Display and Automotive Industries By Nam, Sanguk; Oh, Seunghwan
  7. Committing to grow: Privatizations and firm dynamics in East Germany By Akcigit, Ufuk; Alp, Harun; Diegmann, André; Serrano-Velarde, Nicolas
  8. At the Right Time:Eliminating Mismatch between Cash Flow and Credit Flow in Microcredit By Sachiko HATA; Yasuo SUGIYAMA
  9. Gender differences in management styles during crisis and the effect on firm performance By Valerija Botric; Sonja Radas; Bruno Skrinjaric
  10. Harnessing the Power of Artificial Intelligence to Forecast Startup Success: An Empirical Evaluation of the SECURE AI Model By Morande, Swapnil; Arshi, Tahseen; Gul, Kanwal; Amini, Mitra
  11. "Unlocking the Global Chessboard: FDI Policies and their Impact on Entrepreneurial Ecosystems" By Yeboah, Samuel
  12. Partial Observability Estimates of Supply and Demand for Trademarks of Start-Ups By Bernadette Power; Gavin C. Reid
  13. The Effect of Bank Recapitalization Policy on Credit Allocation, Investment, and Productivity: Evidence from a Banking Crisis in Japan By Hiroyuki Kasahara; Yasuyuki Sawada; Michio Suzuki
  14. Does training explain innovation in transition economies? By Antonella Biscione; Chiara Burlina; Raul Caruso
  15. Occupational Choice, Human Capital, and Financial Constraints By Rui Castro; Pavel Sevcik
  16. "Unlocking Sustainable Futures: How FDI-Driven Entrepreneurial Ecosystems Power the SDGs" By Asuamah Yeboah, Samuel
  17. Diversify or Not? – The Link between Global Sourcing of ICT Goods and Firm Performance By Alexander Schiersch; Irene Bertschek; Thomas Niebel
  18. Anatomy of Firms’ Margins of Adjustment: Evidence from the COVID Pandemic By Elías Albagli; Andrés Fernández; Juan Guerra-Salas; Federico Huneeus; Pablo Muñoz
  19. "Navigating Global Markets: The Impact of FDI on Startups' Access to Insights, Networks, and Brand Visibility" By Yeboah, Samuel
  20. Timing the climate transition in Sweden: A company’s green innovation journey towards negative emissions Teaching case study By Kugelberg, Susanna; Borrás, Susana
  21. Entrepreneurial Higher Education Education, Knowledge and Wealth Creation By Rahmat Ullah; Rashid Aftab; Saeed Siyal; Kashif Zaheer
  22. Persistent Gender Gaps in Business Profits in Indonesia: Implications for COVID-19 Recovery Policies By Mayra Buvinic; James C. Knowles; Firman Witoelar
  23. "Empowering Communities: A Systematic Review of FDI Initiatives for Skill Development and Local Capacity Building" By Yeboah Asuamah, Samuel
  24. Business Cycle Asymmetry and Input-Output Structure: The Role of Firm-to-Firm Networks By Jorge Miranda-Pinto; Alvaro Silva; Eric R. Young
  25. Startup Employment and Career Trajectories By Gonzalo García-Trujillo; Nathalie González-Prieto; Alvaro Silva

  1. By: CARBALLA SMICHOWSKI Bruno (European Commission - JRC); DE NIGRIS Sarah (European Commission - JRC); DUCH BROWN Nestor (European Commission - JRC); MORENO MARÍA Adrián
    Abstract: This report provides an empirical analysis of the drivers of and barriers to adoption of autonomous machines (AM) technologies by European companies. It also analyses the impact of adopting this technology on firm productivity. Using 2020 survey data from 9 640 firms located in EU27, Norway, Iceland and the UK, we show that AM adoption is driven by several factors and has heterogeneous effects on companies depending on their characteristics. Regarding the drivers of adoption, we find that firm size, employee knowledge of artificial intelligence (AI) and the joint adoption of AM with complementary technologies increase a firm’s probability of adopting AM. Concerning barriers to adoption, we make three main findings. First, the most relevant barriers (cost of adoption and, to a lesser extent, lack of skills and data access) are different for large firms. For the latter, liability and reputation risks, as well as data access, are the most important obstacles. Second, certain types of obstacles (namely liability and reputation risks, data access and lack of funding) are more likely to be present in certain sectors of activity. Third, the more complementary technologies a firm adopts, the lower its probability of facing obstacles to AM adoption. Finally, we find that AM adoption boosts firm productivity. This effect is higher for firms that start out with lower productivity, which suggests that there is a decreasing marginal return to AM adoption in terms of productivity.
    Date: 2023–08
  2. By: Yeboah, Samuel; Boateng Prempeh, Kwadwo
    Abstract: This systematic review explores the multifaceted challenges and opportunities presented by Foreign Direct Investment (FDI) inflows for local entrepreneurial development. FDI is known to bring both potential benefits and pitfalls for local startups, and understanding this delicate balance is crucial for sustainable economic growth. Firstly, FDI often ushers in increased competition as well-funded foreign firms enter local markets. While this can hinder local startups' market share, it can also stimulate innovation and efficiency. Secondly, local entrepreneurs relying heavily on FDI face dependency risks, as shifts in foreign investors' priorities or sudden exits can disrupt their operations. Thirdly, FDI can transfer technology and knowledge but also poses the risk of technology leakage, potentially stifling local startups' independent capabilities. Fourthly, asymmetrical power dynamics between foreign investors and local startups can result in unequal partnerships. Lastly, FDI might lead to market fragmentation, overshadowing local players and limiting diversity and competition. Furthermore, cultural differences in corporate cultures and management styles can create collaboration challenges between foreign corporations and local startups. In navigating these challenges, local startups must adopt strategies to differentiate themselves from foreign competitors, negotiate fair partnerships, and foster cross-cultural collaboration. Policymakers also play a crucial role in balancing the benefits and costs of FDI through measures that prevent or mitigate market fragmentation and promote interoperability and harmonization across industries. Understanding the nuanced interplay between FDI and local entrepreneurship is essential for achieving sustainable economic growth and fostering innovation in a globalized world.
    Keywords: Foreign Direct Investment (FDI); Local Entrepreneurship; Challenges; Opportunities; Competition; Dependency Risks; Technology Leakage; Power Dynamics; Market Fragmentation; Cultural Challenges; Economic Growth; Innovation; Sustainable Development; Cross-Cultural Collaboration; Market Share
    JEL: D22 F21 F23 L20 L26 L53 M21 O16 O33 O57
    Date: 2023–07–14
  3. By: Nishant Chadha; Viswanath Pingali; Daniel Sokol
    Abstract: We investigate strategies of small businesses’ usage of digital platforms for advertising and sales. We rely on primary data from a quantitative survey of small business startups, and a few in-depth interviews of small business owners. We find that small firms prefer digital platforms for advertising and sales over conventional methods. As firms grow, while they continue to rely on digital advertising, their preference for conventional advertising (radio, television, etc.) increases. We find a strong correlation between the geographical spread of small firm sales, including exports, and their propensity to use digital platforms. We also find that small businesses multihome on both advertising and sales platforms. Multihoming occurs across established platforms and between established and nascent platforms. Our results enhance the understanding of how small firms rely on platforms and inform the policy debates on platform regulation.
    Date: 2023–09–18
  4. By: Lin William Cong (Cornell University Johnson Graduate School of Management); Xiaohan Yang (Peking University National School of Development); Xiaobo Zhang (Peking University Guanghua School of Management; International Food Policy Research Institute; Center for Global Development)
    Abstract: Using administrative universal firm registration data as well as primary offline and online surveys of small business owners in China, we examine (i) whether the digitization of business operations helps small and medium enterprises (SMEs) better cope with the pandemic shock, and (ii) if the pandemic has induced digital technology adoption. We identify significant economic benefits of digitization in increasing SMEs’ resilience against such a large shock, as seen through mitigated demand decline, sustainable cash flow, ability to quickly reopen, and positive outlook for growth. After the lockdown in January 2020, firm entries have exhibited a V-shaped pattern, with entries of e-commerce firms experiencing a less pronounced initial drop and a quicker rebound. The COVID-19 pandemic has also accelerated digital technology adoption of existing firms in various dimensions (captured by, e.g., the alteration of operation scope to include e-commerce activities, allowing remote work, and adoption of electronic information system), and the effect persists after one year of full reopening.
    Keywords: SMEs, COVID-19, Digital economy, E-commerce
    Date: 2021–12–10
  5. By: Dennis Gaus; Georg Hirte
    Abstract: As research indicates a gap between complex scientific measures of accessibility and simpler proxies used by firms, this paper analyses the impact of several market access indicators on the location decision of firms. It compares the role of inter- and intra-industry agglomeration as proxies of access with a newly developed gravity-based indicator incorporating transport distances and industry relations. The estimation results of a nested mixed multinomial logit model, based on a sample of 110, 083 German firms, provide evidence that agglomeration effects play an essential role in firms’ location choice, whereas the complex market access measure does not have a significant impact. This outcome holds true for large as well as small and medium sized enterprises and is confirmed in several robustness checks. Thus, the paper provides guidance to further research on companies’ location decisions, highlighting that access indicators should be chosen specifically for the scientific context, as well as to firms to make more efficient location choices from the perspective of market access.
    Keywords: Transportation, accessibility, location choice, agglomeration, market access
    JEL: L14 O18 R12 R32
    Date: 2023
  6. By: Nam, Sanguk (Korea Institute for Industrial Economics and Trade); Oh, Seunghwan (Korea Institute for Industrial Economics and Trade)
    Abstract: When firms anticipate a major change in the business environment or some kind of crisis, they often pursue some kind of business transition in an effort to overcome the challenge and discover new growth momentum. Rapid changes to the industrial environment such as COVID-19, carbon neutrality, and the digital transformation have made business transformation increasingly urgent. However, Korean small medium-sized enterprises (SMEs) have not adequately prepared to meet this challenge. According to a survey by the Korea SMEs and Startups Agency (KOSME), 85.4 percent of SMEs reported that management felt a need to change the structure of the business. Yet only 26.9 percent of firms were found to be making active preparations to do so. The industrial environment of the display and automobile industries in particular is undergoing a rapid change. Display industry manufacturers are switching to organic light-emitting diode (OLED) displays as the competitiveness of liquid-crystal displays (LCD) declines due to increased competition from China, and the automobile industry is rapidly shifting from internal combustion engine (ICE) vehicles to electric vehicles (EVs) due to the promotion of carbon neutrality policies. Domestically, both industries possess world-class technologies thanks to long-term R&D and investment, but they are in danger of losing demand for these technologies due to changes in the industrial environment. It is against backdrop which this study is set. In it, we examine the direction of business transformation based on technological capacity through an analysis of patent data. The dataset in question consists of information on SMEs’ patents in the display and automotive industries.
    Keywords: business transition; restructuring; carbon neutrality; digital transformation; small and medium-sized enterprises; SMEs; SME growth; SME policy; display industry; automotive industry; industrial structure; SME technology; SME capacity; Korea
    JEL: D20 D23 D25 E22 L16 L21 L25 L29 L52 L62 L63 L68
    Date: 2023–08–30
  7. By: Akcigit, Ufuk; Alp, Harun; Diegmann, André; Serrano-Velarde, Nicolas
    Abstract: This paper investigates a unique policy designed to maintain employment during the privatization of East German firms after the fall of the Iron Curtain. The policy required new owners of the firms to commit to employment targets, with penalties for non-compliance. Using a dynamic model, we highlight three channels through which employment targets impact firms: distorted employment decisions, increased productivity, and higher exit rates. Our empirical analysis, using a novel dataset and instrumental variable approach, confirms these findings. We estimate a 22% points higher annual employment growth rate, a 14% points higher annual productivity growth, and a 3.6% points higher probability of exit for firms with binding employment targets. Our calibrated model further demonstrates that without these targets, aggregate employment would have been 15% lower after 10 years. Additionally, an alternative policy of productivity investment subsidies proved costly and less effective in the short term.
    Keywords: industrial policy, privatizations, productivity, size-dependent regulations
    JEL: D22 D24 J08 L25
    Date: 2023
  8. By: Sachiko HATA; Yasuo SUGIYAMA
    Abstract: This research explores how entrepreneurs deploy defense mechanisms when facing the potential misappropriation of their own resources by established corporate partner “sharks.” The prior literature has examined legal and timing defenses, along with social defenses that utilize the network structure of investment relationships with power imbalances between young firms and large firms. By conducting qualitative analysis based on 41 semi-structured interviews with entrepreneurs' firms, broader and more detailed defense strategies were identified, including seven (invisible) defense mechanisms, such as “balanced coopetition, ” “eliminate information asymmetry, ” “agile implementation of ideas, ” which were not immediately identifiable as defense mechanisms."
    Keywords: Microcredit; Open Innovation, Startup, Entrepreneurs, Qualitative research, Defense mechanism
    JEL: M10 M13 M21
    Date: 2023–09
  9. By: Valerija Botric (The Institute of Economics, Zagreb); Sonja Radas (The Institute of Economics, Zagreb); Bruno Skrinjaric (The Institute of Economics, Zagreb)
    Abstract: This paper aims to shed light on gender differences in firm performance in a period that entails an unprecedented crisis with specific effects on gender roles, i.e., COVID-19. The analysis focuses on Croatian high-tech manufacturing and knowledge-intensive service sector SMEs. Previous literature indicates that the obstacles the SMEs face may be even more significant for women-owned firms. Specifically, women entrepreneurs find it more challenging to secure social and financial capital. Women often face restrictions on their working hours due to societal pressure and family obligations, and they are rarely well-connected because they are often not members of influential business networks. Literature also suggests that the usual pressures on female working hours have disproportionally increased during the COVID-19 imposed lockdowns, so the general expectation is that women entrepreneurs were not able to cope equally with the changed market circumstances. In this study, we consider a causation-effectuation management framework to investigate how women- and men-owned SMEs used these management styles to address the business challenges in the COVID-19 crisis. Our contribution aims explicitly to answer the invitation made in recent literature to explore how gender influences the effects of the four dimensions of effectuation on firm performance.
    Keywords: women entrepreneurship; firm performance; management styles; COVID-19
    JEL: B54 J16 L26
    Date: 2023–07
  10. By: Morande, Swapnil; Arshi, Tahseen; Gul, Kanwal; Amini, Mitra
    Abstract: This pioneering study employs machine learning to predict startup success, addressing the long-standing challenge of deciphering entrepreneurial outcomes amidst uncertainty. Integrating the multidimensional SECURE framework for holistic opportunity evaluation with AI's pattern recognition prowess, the research puts forth a novel analytics-enabled approach to illuminate success determinants. Rigorously constructed predictive models demonstrate remarkable accuracy in forecasting success likelihood, validated through comprehensive statistical analysis. The findings reveal AI’s immense potential in bringing evidence-based objectivity to the complex process of opportunity assessment. On the theoretical front, the research enriches entrepreneurship literature by bridging the knowledge gap at the intersection of structured evaluation tools and data science. On the practical front, it empowers entrepreneurs with an analytical compass for decision-making and helps investors make prudent funding choices. The study also informs policymakers to optimize conditions for entrepreneurship. Overall, it lays the foundation for a new frontier of AI-enabled, data-driven entrepreneurship research and practice. However, acknowledging AI’s limitations, the synthesis underscores the persistent relevance of human creativity alongside data-backed insights. With high predictive performance and multifaceted implications, the SECURE-AI model represents a significant stride toward an analytics-empowered paradigm in entrepreneurship management.
    Date: 2023–08–29
  11. By: Yeboah, Samuel
    Abstract: This analysis delves into the diverse landscape of Foreign Direct Investment (FDI) policies within developing nations and their profound implications for entrepreneurial ecosystems. Through comparative analysis, the study uncovers a range of strategies countries employ, from liberal to restrictive FDI approaches, which significantly impact interactions between foreign investors and local startups, ultimately shaping innovation, growth, and competitiveness in entrepreneurial ecosystems. In some developing nations, liberal FDI policies play a pivotal role, strategically designed to attract foreign capital, technology, and expertise. For instance, Singapore and Ireland have implemented proactive, incentive-driven measures, particularly in high-tech sectors, resulting in thriving entrepreneurial ecosystems integrated into global value chains. These policies foster collaborative environments, granting local startups improved access to capital, markets, and invaluable knowledge from foreign investors. Conversely, other nations adopt more restrictive FDI policies to safeguard strategic sectors and protect domestic enterprises from undue foreign influence. India and China exemplify this approach, erecting regulatory barriers in industries like telecommunications and banking to retain policy autonomy and nurture domestic capabilities. While preserving local interests, these policies inadvertently limit access to FDI benefits, including advanced technologies, skills, and global market connectivity. Governments often utilize incentive schemes such as tax breaks and subsidies to attract FDI, making their countries appealing to foreign investors and providing local startups with essential resources and mentorship, significantly contributing to their growth. However, ownership restrictions, particularly in strategically significant sectors, serve to protect domestic control but may discourage potential investors and hinder collaboration between startups and foreign entities. Striking a balance between preserving sovereignty and promoting global integration becomes a pivotal challenge for these nations. The regulatory environment plays a central role in shaping the relationship between FDI policies and entrepreneurial ecosystems. Favourable regulatory frameworks that encourage competition, safeguard intellectual property and simplify business registration drive innovation and attract FDI, which subsequently benefits startups. Transparent regulations that reduce uncertainty and risks bolster investor confidence, making FDI a potential lifeline for local startups.
    Keywords: Entrepreneurial Ecosystems; Comparative Analysis; Liberal FDI Policies; Restrictive FDI Policies; Incentive Schemes; Ownership Restrictions; Regulatory Environment; Innovation; Investor Confidence; Ease of Doing Business; Policy Alignment
    JEL: F21 F23 G38 L26
    Date: 2023–07–18
  12. By: Bernadette Power; Gavin C. Reid
    Abstract: This paper estimates simultaneously the supply and the demand determinants of the trademark adoption decision made by start-ups. We use a partial observability econometric model, as non-adoption is unobserved. Estimation is by maximum likelihood using the partial observability bivariate probit (POBP) model. This is run on a large (N > 13k) representative unbalanced longitudinal panel of surviving startups, derived from the Kauffman Foundation startup dataset (2004-2011) for the USA. Our model is shown to provide a good explanation of supply and demand determinants of trademark adoption, in terms of signs of key variables, and statistical significance. For example, size, incorporation, and expenditure on R&D are important on the supply-side; and copyrights, licensing out, and being in a high knowledge information sector, are important on the demand-side. Policy implications are considered, focusing on marginal and elasticity effects.
    Keywords: Trademark adoption, business start-ups, intellectual property, supply, and demand
    JEL: D01 D22 K11 L21 L26
    Date: 2023–06
  13. By: Hiroyuki Kasahara; Yasuyuki Sawada; Michio Suzuki
    Abstract: This paper examines the ramification of government capital injections into financially distressed banks during the 1997 Japanese banking crisis. By leveraging a unique dataset merging firm-level financial statements and bank balance sheets, the study aims to examine whether the capital injections primarily benefited high-productivity firms or were misallocated to struggling “zombie” firms. The empirical results suggest that banks, post-injection, increased lending to both high-productivity non-zombie firms and low-productivity zombie firms. While the former is in line with conventional theories that prioritize high-productivity firms for investment and productivity enhancement, the latter suggests credit misallocation towards struggling firms mainly for debt servicing. Intriguingly, the study finds no evidence that these injections promoted investments among firms, irrespective of their productivity or financial health status. In particular, we provide suggestive evidence that zombie firms even reduced investments, especially in infrastructure, while high-productivity non-zombie firms did not exhibit a significant investment boost despite receiving more loans. However, these high-productivity firms displayed positive growth in labor productivity and total factor productivity, potentially driven by sales growth and increased advertisement expenses rather than employment and wage adjustments.
    Keywords: capital injection, bank regulation, banking crisis, total factor productivity, Zombie
    JEL: E22 G21 G28
    Date: 2023
  14. By: Antonella Biscione (CESPIC, Catholic University “Our Lady of Good Counsel”); Chiara Burlina (“Marco Fanno” Department of Economics and Management, University of Padova); Raul Caruso (Department of Economic Policy and CSEA, Università Cattolica del Sacro Cuore, CESPIC Catholic University “Our Lady of Good Counsel”)
    Abstract: Training has generally been linked to firm’s innovation propensity, but evidence remains sparse on the role of different typologies of training for firms in transition economies. Using a unique sample from the World Bank Enterprise Surveys (wave 2018-2020), we test the effect of training programs on innovation in 27 countries of Eastern Europe and Central Asia. We test several definitions of training, and our results show that both product and process innovations benefit from all the proposed activities. To validate our findings, we employ a specific instrumental variable approach by applying the Lewbel’s special regressor technique, whose outcome confirms our baseline results. Our contribution is twofold: first, we exploit a new database for transition countries that fill the gap in the literature on training programs also in these economies; second, for a policy perspective, we highlight the need to invest and promote training to boost innovation capacity of firms in these countries to reach the level of developed economies.
    Keywords: Transition Economies; Innovation; Training
    JEL: O14 O32 P27 P36
    Date: 2023–01
  15. By: Rui Castro (McGill University); Pavel Sevcik (University of Quebec in Montreal)
    Abstract: We study the aggregate productivity effects of firm-level financial frictions. Credit constraints affect not only production decisions, but also household level schooling decisions. In turn, entrepreneurial schooling decisions impact firm-level productivities, whose cross-sectional distribution becomes endogenous. In anticipation of future constraints, entrepreneurs under-invest in schooling early in life. Frictions lower aggregate productivity because talent is misallocated across occupations, and capital misallocated across firms. Firm level productivities are also lower due to schooling distortions. These effects combined account for between 36 and 68 percent of the U.S.-India aggregate productivity difference. Schooling distortions are the major source of aggregate productivity differences.
    Keywords: Aggregate Productivity, Financial Frictions, Entrepreneurship, Human Capital, Misallocation
    JEL: E24 I25 J24 O11 O15 O16 O47
    Date: 2023–08
  16. By: Asuamah Yeboah, Samuel
    Abstract: This systematic review explores the dynamic relationship between Foreign Direct Investment (FDI)-driven entrepreneurial ecosystems and the United Nations' Sustainable Development Goals (SDGs). FDI is recognized as a potent catalyst for global development, and its alignment with specific SDGs can create a transformative impact across various domains. By strategically harnessing FDI, countries can accelerate their progress towards achieving the SDGs and building a more inclusive and equitable future. The study identifies several key SDGs where FDI-driven entrepreneurial ecosystems play a pivotal role: SDG 1: No Poverty: FDI fosters economic growth, generates employment opportunities, and enhances labour productivity, consequently alleviating poverty. It contributes to improving wages, human capital development, and overall well-being. SDG 8: Decent Work and Economic Growth: FDI-supported ecosystems promote inclusive economic growth by creating jobs and enhancing working conditions. They boost local productivity, induce employment, and stimulate consumption. SDG 9: Industry, Innovation, and Infrastructure: FDI brings technological innovation, knowledge transfer, and advanced infrastructure, fostering innovation and enhancing local business competitiveness. SDG 10: Reduced Inequality: FDI empowers marginalized communities, enabling them to access resources, markets, and global networks, thus reducing inequality. SDG 17: Partnerships for the Goals: FDI-driven partnerships between foreign corporations and local startups leverage expertise, resources, and networks to collectively achieve various SDGs. Such collaborations aim to align with the principles and objectives of SDG 17. SDG 4: Quality Education: Multinational corporations' involvement in FDI can lead to educational initiatives, skill development programs, and technology transfers that enhance educational quality. SDG 13: Climate Action: FDI-driven innovation results in sustainable technologies, cleaner production processes, and environmental solutions contributing to climate action. SDG 16: Peace, Justice, and Strong Institutions: FDI promotes transparency, accountability, and ethical business practices, strengthening institutions and contributing to a stable business environment. SDG 5: Gender Equality: FDI-supported startups empower women entrepreneurs, enhance gender diversity in the workforce, and create opportunities for women's economic participation. SDG 11: Sustainable Cities and Communities: FDI-driven entrepreneurial ecosystems contribute to urban development through smart technologies, sustainable infrastructure, and innovative solutions. SDG 7: Affordable and Clean Energy: FDI plays a critical role in the adoption of clean energy technologies, supporting the transition to renewable energy sources.
    Keywords: Poverty Alleviation, Economic Growth, Innovation, Inequality Reduction, Partnerships, Quality Education, Climate Action, Strong Institutions, Gender Equality, Sustainable Urban Development, Clean Energy Adoption.
    JEL: F21 F23 O31 O32 O33 O38 O40 O41 O43 O44 O57
    Date: 2023–07–20
  17. By: Alexander Schiersch; Irene Bertschek; Thomas Niebel
    Abstract: Our paper contributes to the discussion about Europe’s digital sovereignty. We analyze the relationship between firm performance and the diversification of sourcing countries for imported ICT goods. The analysis is based on administrative data for 3888 German manufacturing firms that imported ICT goods in the years 2010 and 2014. We find that firms that diversify the sourcing of ICT goods across multiple countries perform better than similar firms with a less diversified sourcing structure. This result holds for value added as well as for gross operational surplus as performance measures and for two different indicators of diversification.
    Keywords: ICT goods imports, global sourcing, digital sovereignty, firm performance
    JEL: F14 F23 L14 L23 D24
    Date: 2023
  18. By: Elías Albagli; Andrés Fernández; Juan Guerra-Salas; Federico Huneeus; Pablo Muñoz
    Abstract: As a response to shocks, firms can adjust through several margins. But typically these margins are studied separately. In this paper, we jointly study firms’ margins of adjustments in output, capital, labor, input markets and productivity by leveraging a rich administrative dataset from Chile. We apply the analysis to the pandemic in the wake of the shock and throughout the economy’s recovery path. Importantly, we also study firms’ access to public policies aimed at supporting credit and protecting employment relations. We document considerable heterogeneity in the adjustment to the pandemic across firm size and industry. We also document widespread and heterogeneous access to the aforementioned policies. A corollary of credit policies is a considerable increase in firms’ leverage.
    Date: 2023–06
  19. By: Yeboah, Samuel
    Abstract: This systematic review explores the multifaceted impact of Foreign Direct Investment (FDI) on local startups' access to global markets. FDI plays a pivotal role in facilitating the expansion of local businesses into international markets by offering valuable resources and insights. The review delves into several critical dimensions: Distribution Networks: FDI grants startups access to established distribution networks of multinational corporations (MNCs), providing a channel to reach a broader customer base. It discusses the trade-offs between distribution-oriented and production-oriented FDI, highlighting their effects on startups' global reach. Market Knowledge: Foreign investors bring invaluable market insights and intelligence, aiding startups in understanding customer preferences, cultural nuances, and competitive landscapes. This section explores how market knowledge helps foreign investors overcome the liability of foreignness and enhances their competitiveness and innovation. Brand Visibility: Partnering with well-known foreign corporations enhances startups' credibility and visibility in global markets, leading to increased trust among potential customers. It investigates the determinants of brand visibility and its role in overcoming foreignness. Local Insights: FDI provides startups with access to foreign investors' local expertise, enabling them to tailor their products or services to meet the demands of specific international markets. This paper analyses the sources and determinants of local insights. Through an examination of these dimensions, this systematic review sheds light on the transformative potential of FDI in enabling local startups to access international markets. It also emphasizes the importance of strategic partnerships, knowledge sharing, and the adaptation of strategies for success in global business environments.
    Keywords: Global Markets; Distribution Networks; Market Knowledge; Brand Visibility; Local Insights; Startups; International Expansion; Market Entry; Multinational Corporations (MNCs)
    JEL: D22 F21 F23 L25 L26 L86 M13 O32
    Date: 2023–05–17
  20. By: Kugelberg, Susanna (Copenhagen Business School); Borrás, Susana (Copenhagen Business School)
    Abstract: This paper is a teaching case study written for educational purposes. The case brings forward a real-life situation of an organization that is engaged in the exciting but also risky journey of implementing a green innovation at a large scale. The case is written in a way that allows students to reflect and think about the organizational and leadership challenges and opportunities involved. The teacher can activate these reflections in the context of various possible theoretical and analytical frameworks, in a number of possible different courses. The case is about Exergi, the main utility company producing district heating in Stockholm. After successfully transitioning from coal to bio-energy sources, since 2020 Exergi has embarked on a new and far more ambitious venture: Bioenergy Carbon Capture and Storage (BECCS). This technology captures CO2 emissions from biomass combustion and stores them, potentially resulting in negative emissions. BECCS plays a central role in IPCC mitigation pathways and Exergi has recognized an opportunity, but venturing into this uncharted territory presents numerous challenges. BECCS is a new and untested technology at an industrial scale, requiring substantial investments, and a market for selling carbon removal certificates (CRC) that does not exist yet. Though promising for reaching net zero targets in time, the viability of BECCS for Exergi depends on a supportive regulatory framework, cross-border cooperation, and the creation of a CRC market. To navigate these challenges, Exergi relies on creating an innovative organizational culture as well as mobilizing external stakeholders. Hence, CEO Anders Egelrud has hired individuals with entrepreneurial mindsets, and sought external expertise as well as creating strong networks and communication approach. Yet, some internal tensions have also come to the fore, due to the rapid internal dynamics. Overall, Exergi's transition from coal to BECCS reflects the commitment to sustainable practices by an incumbent, and its willingness to size new opportunities. The company's success driving this transformation forward hinges on many events coming together, both external and internal to the firm.
    Keywords: climate mitigation; green transitions; eco-innovation; sustainability; capacity; dynamic capabilities; utilities; energy; incumbent; district heating; Sweden; Stockholm; carbon capture; bioenergy; biomass; leadership; net zero; climate neutrality; transformative innovation
    JEL: O31 O33 O38 O44 Q01 Q16 Q55 Q58
    Date: 2023–09–11
  21. By: Rahmat Ullah; Rashid Aftab; Saeed Siyal; Kashif Zaheer
    Abstract: This book presents detailed discussion on the role of higher education in terms of serving basic knowledge creation, teaching, and doing applied research for commercialization. The book presents an historical account on how this challenge was addressed earlier in education history, the cases of successful academic commercialization, the marriage between basic and applied science and how universities develop economies of the regions and countries. This book also discusses cultural and social challenges in research commercialization and pathways to break the status quo.
    Date: 2023–08
  22. By: Mayra Buvinic (Center for Global Development); James C. Knowles; Firman Witoelar (Crawford School of Public Policy, Australian National University)
    Abstract: This paper analyzes a rich pre-pandemic data set on both men and women business owners from 401 mainly rural villages in five regencies (kabupaten) of East Java province, Indonesia. There are some similarities but mostly large gender differences in characteristics and resources in this random sample of Indonesian businesswomen and businessmen. Similarities include years worked in the business and cognitive ability of businesspeople. Large differences include proportionately more women business owners operating ‘consumer facing’ restaurants and retail shops hard hit by the COVID-19 pandemic and sharp gender gaps favoring men in the total value of business capital and savings and in all sources of monthly earned income. Multivariate analysis (propensity score matching) finds that much of the observed gender gaps in earned income and savings remain after business owners are effectively matched on the basis of their pre-existing characteristics and resources (endowments) suggesting that underlying discrimination may be an important driver. The findings further suggest that discrimination by customers and gender rigidities in women’s work time allocation likely contribute to gender inequalities in business outcomes. In the absence of effective interventions, there is a risk of a vicious cycle in which women’s low earnings lead to low savings (unexplained by gender differences in saving behavior), limited capital formation and risk-taking, and to even lower earnings. The paper uses these and other findings to discuss ways for gender-informed economic recovery programs to strengthen micro and small businesses, especially by addressing household and community factors that tilt business environments in favor of men.
    Keywords: gender, women’s entrepreneurship, women’s business outcomes, financial inclusion
    JEL: J16 L26 B54 D91
    Date: 2021–12–17
  23. By: Yeboah Asuamah, Samuel
    Abstract: Foreign Direct Investment (FDI) has emerged as a significant driver of skill development and local capacity building within host countries. This systematic review explores the mechanisms through which FDI initiatives contribute to skill enhancement, knowledge transfer, and the overall development of local talent and economies. By examining various channels of knowledge exchange, including training programs, joint ventures, technology licensing, mentorship, research collaborations, and more, this review provides insights into the dynamic synergy created when global expertise meets local talent. The review highlights the multifaceted benefits of FDI for communities, including improved competitiveness, innovation, and sustainable growth. Through a systematic and comprehensive analysis of existing literature, this review sheds light on the pivotal role FDI plays in empowering communities and fostering continuous development. Policymakers, scholars, and practitioners seeking to leverage FDI for local capacity building will find this review to be a valuable resource.
    Keywords: Skill Development; Local Capacity Building; Knowledge Transfer; Training Programs; Joint Ventures; Technology Licensing; Mentorship; Research Collaborations; Empowerment; Sustainable Development; Innovation; Global Expertise; Local Talent; Community Development
    JEL: F21 F23 H8 I25 O32 O33 O35 O38
    Date: 2023–07–12
  24. By: Jorge Miranda-Pinto; Alvaro Silva; Eric R. Young
    Abstract: We study the network origins of business cycle asymmetries using cross-country and administrative firmlevel data. At the country level, we document that countries with a larger number of non-zero intersectoral linkages (denser networks) display a more negatively skewed cyclical component of output. At the firm level, we find that firms with a larger number of suppliers and customers (degrees) display a more negatively-skewed distribution of their output growth. To rationalize these findings, we construct a multisector model with input-output linkages and show that the relationship between output skewness and network density naturally arises once we consider non-linearities in production. In an economy with low production flexibility (inputs are gross complements), denser production structures imply that relying on more inputs becomes a risk that further amplifies the effects of negative productivity shocks. The opposite holds if firms display high production flexibility (inputs are gross substitutes): having more inputs to choose from becomes an opportunity to diversify the effects of negative productivity shocks. We calibrate the model using our rich firm-to-firm network Chilean data and show that more connected firms experience larger declines in output in response to a COVID-19 shock, consistent with the data. We also show that, as in the data, the cross-sectional distribution of output growth in the model displays a fatter left tail during downturns. The previous result is shaped by the interplay between production complementarities and network interconnectedness, rather than by the asymmetry of the shocks. The size of the shock determines the strength of the relationship between degrees and output decline, which highlights the importance of non-linearities and the limitations of local approximations.
    Date: 2022–12
  25. By: Gonzalo García-Trujillo; Nathalie González-Prieto; Alvaro Silva
    Abstract: We study how working for a startup affects labor market outcomes using Chilean employer-employee data. Findings reveal that joining a startup results in a 6.7% reduction in earnings over the next five years, with half attributed to lower average earnings and a half to spending more time out of formal employment. Workers at startups also exhibit a lower probability of being employed and experiencing job-to-job transitions. They also hold fewer jobs. These effects are persistent but vary across worker and firm characteristics. In particular, startups that survive have a smaller earnings penalty, while top-performing startups offer an earnings premium.
    Date: 2023–04

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