|
on Small Business Management |
|
Issue of 2024‒01‒08
twenty-two papers chosen by |
| By: | Kyung Min Lee; Mee Jung Kim; J. David Brown; John S. Earle; Zhen Liu |
| Abstract: | We evaluate the contributions of immigrant entrepreneurs to innovation in the U.S. using linked survey-administrative data on 199, 000 firms with a rich set of innovation measures and other firm and owner characteristics. We find that not only are immigrants more likely than natives to own businesses, but on average their firms display more innovation activities and outcomes. Immigrant owned firms are particularly more likely to create completely new products, improve previous products, use new processes, and engage in both basic and applied R&D, and their efforts are reflected in substantially higher levels of patents and productivity. Immigrant owners are slightly less likely than natives to imitate products of others and to hire more employees. Delving into potential explanations of the immigrant-native differences, we study other characteristics of entrepreneurs, access to finance, choice of industry, immigrant self-selection, and effects of diversity. We find that the immigrant innovation advantage is robust to controlling for detailed characteristics of firms and owners, it holds in both high-tech and non-high-tech industries and, with the exception of productivity, it tends to be even stronger in firms owned by diverse immigrant-native teams and by diverse immigrants from different countries. The evidence from nearly all measures that immigrants tend to operate more innovative and productive firms, together with the higher share of business ownership by immigrants, implies large contributions to U.S. innovation and growth. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:23-56&r=sbm |
| By: | Guglielmo Maria Caporale; Cristiana Donati; Nicola Spagnolo |
| Abstract: | This paper investigates how access to finance and skilled workforce endowments affect the propensity of European small and medium sized enterprises (SMEs) to adopt different types of resource efficiency measures (REMs), possibly simultaneously. For this purpose, a Multinomial Logit model is estimated using data from the 2017 Flash Eurobarometer survey covering a large sample of European firms. The analysis is carried out first for the whole sample and then for clusters based on two contextual factors measured by the Ease of Access to Loans Index (EAL) and the European Skill Index (ESI). The findings suggest that the two firm characteristics considered lead to the adoption of more than one REM simultaneously. Moreover, the propensity to implement them is stronger in the case of firms located in countries with easier access to financial resources, whilst the workforce skill-set appears to be a less important factor in this context. |
| Keywords: | resource efficiency measures, financing, SMEs, workforce skills |
| JEL: | G32 O16 Q40 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_10799&r=sbm |
| By: | Marco Augliera (University of Trento); Gabriella Berloffa (University of Trento); Fabio Pieri (University of Trento) |
| Abstract: | This work investigates the relationship between the numerical flexibility of a firm’s workforce and its innovative performance, taking into account the heterogeneity of firms and labor contracts. Using longitudinal data on Italian firms, we find that the share of temporary employees has a positive and significant effect on innovation for small and micro firms in low-tech and less knowledge-intensive sectors and a negative effect for medium and large firms in high-tech and knowledge-intensive sectors. These results suggest that managers and entrepreneurs may use temporary employment as an effective human resource practice to foster innovation in those firms whose technology or knowledge do not require vast and firm- specific investments. They also highlight possible unintended consequences of changes in the employment protection legislation for firms’ innovative performance. Functional flexibility (training policies) and wage flexibility (second-level wage bargaining scheme) are neither substitutes nor complements to numerical flexibility, suggesting that firms use numerical, functional, and wage flexibility in different combinations. |
| Keywords: | Numerical flexibility; labor contracts; firm innovation; industrial relations |
| JEL: | D22 L23 M54 M55 J41 |
| Date: | 2022–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:csl:devewp:481&r=sbm |
| By: | Ashish Arora; Sharon Belenzon; Larisa C. Cioaca; Lia Sheer; Hansen Zhang |
| Abstract: | We study the relationships between corporate R&D and three components of public science: knowledge, human capital, and invention. We identify the relationships through firm-specific exposure to changes in federal agency R\&D budgets that are driven by the political composition of congressional appropriations subcommittees. Our results indicate that R&D by established firms, which account for more than three-quarters of business R&D, is affected by scientific knowledge produced by universities only when the latter is embodied in inventions or PhD scientists. Human capital trained by universities fosters innovation in firms. However, inventions from universities and public research institutes substitute for corporate inventions and reduce the demand for internal research by corporations, perhaps reflecting downstream competition from startups that commercialize university inventions. Moreover, abstract knowledge advances per se elicit little or no response. Our findings question the belief that public science represents a non-rival public good that feeds into corporate R&D through knowledge spillovers. |
| JEL: | O3 |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:31899&r=sbm |
| By: | Andrés Mauricio Gómez-Sánchez (Facultad de Ciencias Contables, Económicas y Administrativas, Universidad del Cauca, Colombia); Juan A. Máñez-Castillejo (Department of Applied Economics II, Universidad de Valencia and ERICES, Spain); Juan A. Juan A. Sanchis-Llopis (Department of Applied Economics II, Universidad de Valencia and ERICES, Spain) |
| Abstract: | This paper investigates the impact of two innovating strategies (product and process) on total factor productivity (TFP) growth and the dynamic linkages between these strategies, for Colombia. In a first stage, we explore through panel data discrete choice models whether the ex-ante more productive firms are those that introduce innovations. In a second stage, we test whether the introduction of innovations boosts productivity growth. In this second stage, we use matching techniques. In a final stage, we explore the firm’s joint decision to innovate in process and/or product through a bivariate probit model. Data from the Annual Manufacturing Survey and the Technological Development and Innovation Survey, for 2007-2016, are used for Colombian manufacturing firms. Our results suggest that the most productive firms self- select into the introduction of innovations (both process and product). Further, these innovations render positive returns in terms of productivity growth only one period forward regardless of the type of innovation. In addition, we also find a strong persistence of process and product innovation over time, and cross effects between these two strategies, as product innovations are boosted by process innovation and vice versa. |
| Keywords: | product innovation, process innovation, productivity, self-selection/returns into/from innovation |
| JEL: | O3 D24 L6 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:2311&r=sbm |
| By: | Giacomo Lo Conte; Andrea Mina; Silvia Rocchetta |
| Abstract: | In this paper we explore the impact of place-based innovation policy in Europe. We focus on the effects of Smart Specialisation strategies on the labour productivity of regional economies. We design an analytical framework that takes into account the entrepreneurial discovery process through which the policy is implemented, and connect the technological relatedness of regions with their specialisation choices. We use an IV estimation approach capable of handling endogeneity problems, and apply it to an extensive dataset of 102 NUTS2 regions extracted from the European Commission Smart Specialisation Portal. The results show that Smart Specialisation strategies increase labour productivity as long as the priorities are set in sectors related to pre-existing technological capabilities, indicating the fundamental importance of path-dependency in diversification choices. The findings deepen our understanding of regional development and innovation strategies, and have relevant implications for the implementation of appropriate policy instruments. |
| Keywords: | Related diversification; Specialization; Regional policy; Innovation policy; Place-based Policies |
| JEL: | O33 R11 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2323&r=sbm |
| By: | Catherine Laffineur (Université Côte d'Azur; GREDEG CNRS); Maria Minniti (Syracuse University, New-York); Benjamin Montmartin (SKEMA Business School) |
| Abstract: | Most individuals accumulate work experience before starting a venture. Does the knowledge gained from the worker’s occupation influential of the decision to become self-employed? Does it make a difference for the business? Data on the career history of individuals are used to identify whether being employed in an occupation requiring high managerial knowledge matter for the processes by which individuals move into and perform in all kinds of self-employment. We find that higher knowledge in management increases the likelihood to start a business and improves business performance. We also find that workers with higher knowledge in management perform better when they start an incorporated business. |
| Keywords: | Entrepreneurship, Self-Employment, Occupational Choice, Firm Performance |
| JEL: | J62 L25 L26 |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2023-19&r=sbm |
| By: | ESPARZA MASANA Ricard; WOOLFORD Jayne (European Commission - JRC) |
| Abstract: | Higher education institutions (HEIs) are increasingly expected to contribute to regional development and transformative innovation and heralded as actors of change in the context of the twin transitions and European recovery and resilience. Knowledge Alliances and European University alliances are two funding initiatives for HEIs that enable the translation of this broad strategic agenda into an individual and local context and the negotiation of the global (excellence) – local (relevance) dichotomy and potential alignment of their missions. The potential for HEIs to contribute to and participate in regional innovation ecosystems and European and global education, research and innovation agendas is under-exploited. This report explores the role of these two initiatives in strengthening this interaction. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135388&r=sbm |
| By: | Michael Fritsch (Friedrich Schiller University Jena, Germany); Maria Greve (Utrecht University, The Netherlands, and Friedrich Schiller University Jena, Germany); Michael Wyrwich (University of Groningen, The Netherlands, and Friedrich Schiller University Jena, Germany) |
| Abstract: | We describe and analyze the long-term development of self-employment in German regions between 1895 and 2019. Based on rankings ("league tables") for the two years we identify those regions where the relative level of self-employment significantly increased ('leapfroggers'), and those where the level of self-employment as compared to other regions deteriorated ('plungers'). Germany is a particularly interesting case due to the turbulent history of the country over the 20th century that includes two lost World Wars, occupation by foreign armies, forty years of division into a capitalist and a socialist state, as well as reunification and shock transformation of the eastern part to a market economy. While there is some persistence of regional self-employment despite all the disruptive changes, we also find and discuss considerable changes of regional levels of entrepreneurial activity. |
| Keywords: | Entrepreneurship, self-employment, regional dynamics |
| JEL: | L26 R11 O52 |
| Date: | 2024–01–02 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2024-001&r=sbm |
| By: | Yu, Po-yang; Lai, Ching-Chong |
| Abstract: | This paper develops a monetary R&D-driven endogenous growth model featuring endogenous innovation scales and the price-marginal cost markup. To endogenize the step size of quality improvement, we propose a trade-off mechanism between the risk of innovation failure and the benefit of innovation success in R&D firms. Several findings emerge from the analysis. First, a rise in the nominal interest rate decreases economic growth; however, its relationship with social welfare is ambiguous. Second, either strengthening patent protection or raising the professional knowledge of R&D firms leads to an ambiguous effect on economic growth. Third, the Friedman rule of a zero nominal interest rate fails to be optimal in view of the social welfare maximum. Finally, our numerical analysis indicates that the extent of patent protection and the level of an R&D firm’s professional knowledge play a crucial role in determining the optimal interest rate. |
| Keywords: | intellectual property rights; economic growth; endogenous innovation scales; endogenous markups; inflation |
| JEL: | E41 L11 O30 O40 |
| Date: | 2022–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:119381&r=sbm |
| By: | Stijn Kelchtermans (KU Leuven; Hasselt University); Francesca Melillo (Skema Business School; CNRS, GREDEG, France) |
| Abstract: | Entrepreneurs often find co-founders among past colleagues. While previous work focused on the knowledge that entrepreneurs may transfer from their shared prior employer to the new venture, , this paper takes on a full career perspective to explore more comprehensively how shared affiliations affect the selection of co-founders. Using Crunchbase and LinkedIn data, we construct a detailed panel of 712 solo and team founders of innovative startups in Belgium from 1970 to 2019, including harmonized indicators of their prior affiliations (schools, firms) and expertise (study fields, job functions). We estimate logit models for the odds of co-founding for 379 actual co-founder pairs matched to a control group of counterfactual co-founders, accounting for each entrepreneur’s unobserved preference for founding solo. Our results confirm the shared employer effect on the odds of co-founding from prior research but show that it interacts negatively with shared schooling backgrounds. Drawing on theory of team formation strategies, i.e., resource-seeking and interpersonal attraction motives, we argue that co-founders weigh the complementarity of the network of their co-founder more heavily than interpersonal relations stemming from overlapping study and career trajectories. We rule out other explanations by controlling for other resource complementarities between the co-founders, for which we find they are not conducive to team formation, on the contrary. Our findings show the value of looking back further than only the recent shared work experience of entrepreneurs, contributing to the literature on team formation in new ventures. |
| Keywords: | Founding team, shared employer experience, resource-seeking, interpersonal attraction |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:gre:wpaper:2023-22&r=sbm |
| By: | Michael Fritsch; Alina Sorgner; Michael Wyrwich |
| Abstract: | We propose an extension of the standard occupational choice model to analyze the life satisfaction of senior entrepreneurs as compared to paid employees and particularly retirees in Germany. The analysis identifies income and health status as main factors that shape the relationship between occupational status and life satisfaction. Senior entrepreneurs enjoy higher levels of life satisfaction than retirees and senior paid employees. This higher life satisfaction is mainly due to their higher income. Physical and mental health play a crucial role in determining both an individual’s occupational status and their overall life satisfaction. We find that senior self-employed report to be healthier compared to other groups of elderly individuals. However, when controlling for health, retirees exhibit an even higher level of life satisfaction compared to their self-employed counterparts. Heterogeneity analysis of various types of senior entrepreneurs and senior paid employees confirms this general pattern. In addition, we find some evidence indicating that senior entrepreneurs may compromise their leisure time, a main asset of retired individuals. Implications for research, policy, and practitioners are discussed. |
| Keywords: | Senior entrepreneurship, health conditions, well‐being, life satisfaction, age |
| JEL: | L26 I31 J10 D91 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp1196&r=sbm |
| By: | Alicia Martin-Navarro; Felix Velicia-Martin; Jose Aurelio Medina-Garrido; Pedro R. Palos-Sanchez |
| Abstract: | For decades, entrepreneurship has been promoted in academia and tourism sector and has it been seen as an opportunity for new business ventures. In terms of entrepreneurial behavior, effectual logic shows how the individual uses his or her resources to create new opportunities. In this context, this paper aims to determine effectual propensity as an antecedent of entrepreneurial intentions. For this purpose, and based on the TPB model, we conducted our research with tourism students from Cadiz and Seville (Spain) universities with Smart PLS 3. The results show that effectual propensity influences entrepreneurial intentions and that attitude and perceived behavioral control mediate between subjective norms and intentions. Our research has a great added value since we have studied for the first time efficacious propensity as an antecedent of intentions in people who have never been entrepreneurs. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2311.14340&r=sbm |
| By: | Ghinami, Francesca; Montresor, Sandro |
| Abstract: | This paper aims to investigate the role that different forms of proximity have in the access to Venture Capital (VC) by Innovative Startup Companies (ISC). By referring to the population of Italian innovative startups, we find that tangible (spatial) proximity account for this matching, but more in functional than in geographical terms. Industrial proximity between the two actors matters too, and makes the role of functional proximity less binding for the matching. The greatest correlation emerges with respect to a relational kind of proximity, due to the closeness between partners in organisational and social terms. |
| Date: | 2023–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:hqrj7&r=sbm |
| By: | Kongphop WONGKAEW; SAITO Yukiko |
| Abstract: | This study investigates the impact of the COVID-19 pandemic on zombification, firm exit, and chief executive officer (CEO) succession, and examines how CEO age moderates these effects. Using Japanese firm-level data from 2013 to 2021, we discover that the prevalence of zombification increased during the COVID-19 pandemic, as firm performance deteriorated and financial leverage increased. However, the pandemic had a limited impact on firm exit. We also find that the impact of the pandemic on firms varied depending on the age of their CEOs. Firms led by younger CEOs were more likely to increase their long-term borrowing and less likely to exit the market. Conversely, firms led by older CEOs were more likely to exit voluntarily or experience CEO turnover, and this was true especially for family-owned firms and those in peripheral prefectures. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:23080&r=sbm |
| By: | Elvira Uyarra (Manchester Institute of Innovation Research, The University of Manchester); Oishee Kundu (Y Lab, Cardiff University); Raquel Ortega-Argiles (Productivity Institute, The University of Manchester); Malcolm Harbour (Connected Places Catapult) |
| Abstract: | The use of public procurement to advance innovation but also other social, environmental and public service delivery goals has been high in the innovation policy debate in the last two decades. Drawing from the literature on the economics of innovation and innovation policy, this paper provides an overview and critique of the key debates surrounding public procurement of innovation, specifically the rationales, means and challenges associated with its use as an innovation policy tool. We note that despite strong academic interest and policy activity in this area, strategic public procurement to promote innovation is still unevenly adopted. The evidence base is also weak in terms of the methods and data to understand its impact. We argue more research is needed to quantify the outcomes of procurement interventions in different national and sectoral contexts and their integration with other innovation policy instruments. |
| Keywords: | Public procurement, Innovation, Regulation, Public policy, Evaluation |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdj:smioir:2023-06&r=sbm |
| By: | Timo Leidecker; Tim Bulman |
| Abstract: | Raising productivity growth is central to closing the gap with the incomes and well-being enjoyed in many OECD countries. Croatia has internationally competitive firms, and a dynamic economy with many young and potentially productive firms. However, overall performance has been limited by the presence of many less productive firms and more productive firms that often fail to grow. This likely reflects a business environment that weakens competitive pressures and makes investments more costly and risky. Reducing the burdens of lengthy and unpredictable regulatory procedures, resolving legal disputes faster with a more efficient judicial system, and improving public sector integrity, will be key for boosting productivity growth. Developing public equity markets and expanding R&D support would improve access to finance for young and innovative firms. State-owned enterprises play a comparatively large role in Croatia’s economy but tend to underperform financially and in delivering goods and services. Improving their governance, by strengthening the state’s oversight and governance arrangements, can improve outcomes. This Working Paper relates to the 2023 OECD Economic Survey of Croatia. |
| Keywords: | access to finance, insolvency policies, law use, productivity analysis, public sector integrity, research & development policies, rule of law, state-owned enterprises |
| JEL: | D24 D25 D31 D4 G2 K2 K4 L11 |
| Date: | 2023–12–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1783-en&r=sbm |
| By: | Izumi, Atsuko (UTEcon); Sawada , Yasuyuki (University of Tokyo); Watanabe, Yasutora (UTEcon); Elhan-Kayalar, Yesim (Asian Development Bank) |
| Abstract: | In this paper, we review the overall micro, small, and medium-sized enterprise landscape in Asia, including the challenges and constraints faced by enterprises in physical (offline) and online markets. We then explore the unique circumstances and externalities that arise due to the special characteristics of platforms and how they impact merchants and other platform users. Our findings suggest that the unique features of platforms, and the two-sided market structure they foster, require a bespoke policy approach from competition authorities and policymakers. |
| Keywords: | competition policy; two-sided market; platforms; MSMEs |
| JEL: | K21 L41 L44 |
| Date: | 2023–11–28 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0704&r=sbm |
| By: | Sara Amoroso; Benedikt Herrmann; Alexander S. Kritikos |
| Abstract: | High growth firms (HGFs) are important for job creation and considered to be precursors of economic growth. We investigate how product- and labor-market regulations, as well as the quality of regional governments that implement these regulations, affect HGF development across European regions. Using data from Eurostat, OECD, WEF, and Gothenburg University, we show that both regulatory stringency and the quality of the regional government influence the regional shares of HGFs. Additionally, we find that the effect of labor- and product-market regulations ultimately depends on the quality of regional governments. The institutional quality has a moderating role in defining the effect of regulations on the regional shares of HGFs. Our findings contribute to the debate on the effects of regulations by showing that regulations are not, per se, “good, bad, and ugly", rather their impact depends on the efficiency of regional governments. Our paper offers important building blocks to develop tailored policy measures that may influence the development of HGFs in a region. |
| Keywords: | Business dynamics, Regulation, Institutions, Regional data |
| JEL: | L50 L25 H11 O43 R11 R50 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2053&r=sbm |
| By: | DIODATO Dario (European Commission - JRC); NAPOLITANO Lorenzo (European Commission - JRC); PUGLIESE Emanuele; TACCHELLA Andrea |
| Abstract: | Innovation and industrial policies in the EU is often undertaken at regional level. Policymakers that have to design regional industrial strategy need quantitative tools for guidance. Economic complexity can support policymakers especially during the early phase of policy design: patent and trade data are fed into predictive models to assess the chances of success of a strategy. The methods of economic complexity follow the driving principles of machine learning to predict the probability that a region becomes successful in a given technology or product. We present a series of quantitative tools for regions: (1) relative innovation capabilities; (2) expected diversification by sector; (3) expected diversification by product; (4) fitness of a region for a project. |
| Date: | 2023–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc136443&r=sbm |
| By: | Batbaatar, Maral (The Ratio Institute); Sandström, Christian (The Ratio Institute); P Larsson, Johan (The Ratio Institute); Wennberg, Karl (The Ratio Institute) |
| Abstract: | This paper reviews theoretical rationales for mission-oriented innovation policy and provides an empirical overview of extant 28 papers and 49 cases on the topic. We synthetize varieties of mission formulations, actors involved, and characteristics of missions described as more or less failed or successful. 59 percent of the studied missions are still ongoing, 33 percent are considered successful and 8 percent as failures. 67 percent of the studied missions have taken place in Europe, 24 percent in North America and 8 percent in Asia. The majority of innovation projects referred to as missions do not fulfill the criteria defined by the OECD. Results suggest that missions related to technological or agricultural innovations are more often successful than broader types of missions aimed at social or ecological challenges. Challenges regarding the governance and evaluation of missions remain unresolved in the literature. We find no case that contains a cost-benefit analysis or takes opportunity cost into account. |
| Keywords: | Innovation; Government agencies; Mission-oriented Policies; Grand societal challenges |
| JEL: | H11 H50 L26 L52 O32 |
| Date: | 2023–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:ratioi:0368&r=sbm |
| By: | LASARTE LOPEZ Jesus (European Commission - JRC); GONZÁLEZ HERMOSO Hugo; ROSSI CERVI Walter; VAN LEEUWEN Myrna; M'BAREK Robert (European Commission - JRC) |
| Abstract: | The analysis of the regional dimension of the bioeconomy is important due to its policy implications. The EU’s Bioeconomy Strategy recognizes the potential contribution of the bioeconomy for the development of rural and remote areas. More recently, an increasing number of EU regions are launching their own bioeconomy strategies, and a number of EU initiatives seek to promote the deployment of the bioeconomy to boost rural areas and create jobs and growth opportunities (e.g. the Council of the European Union's Conclusions on the opportunities of the bioeconomy, approved on April 25, 2023, or the Regional Innovation Valleys for the Bioeconomy and the Food system). Despite the political momentum, data availability on the socioeconomic contributions of the bioeconomy is still very limited, making it challenging to evaluate the outcomes of the aforementioned policies. This document presents the BioRegEU pilot dataset, which aims to fill this data gap by providing estimates of employment and value added in the bioeconomy sectors at the NUTS2 level. Although the analysis of the data offers insights into the territorial distribution of bio-based activities in the EU, it is still preliminary and requires further refinement. In this sense, the authors of this report invite users and interested parties to provide feedback on the accuracy of the overview drawn by the estimates, identification of significant deviations from reality according to expert knowledge, as well as on additional refinements and data sources. |
| Date: | 2023–11 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc135346&r=sbm |