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on Small Business Management |
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Issue of 2024‒03‒11
seventeen papers chosen by |
| By: | Laatsit, Mart (CIRCLE, Lund University); Boschma, Ron (Utrecht University) |
| Abstract: | Policy networks are an important source of information for policy making. Yet, we have only a limited understanding of how policy networks are structured among innovation policy makers and which factors shape their structure. This paper studies how proximities can explain what drives the connections in policy networks. More specifically, we look at innovation policy networks between EU member states. We use social network analysis based on our own data to map the networks of the 28 EU innovation policy directors, consisting of 756 potential connections, and study the proximities shaping these networks. Geographical and cultural proximity turn out to be strong predictors for symmetric and asymmetric ties, but we do not find a relationship between policy proximity (in terms of similarities in business environment regulations and innovation policy) and policy network formation between countries. |
| Keywords: | Innovation policy; policy networks; proximities; policy proximity; social network analysis |
| JEL: | O33 O38 |
| Date: | 2024–02–14 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2024_003&r=sbm |
| By: | Anderson, Stephen J.; Chintagunta, Pradeep; Vilcassim, Naufel J. |
| Abstract: | This paper studies the impact of international business coaching via virtual collaboration technology on the strategies and sales of emerging market entrepreneurs. It sheds light on three novel research questions: (1) What is the effect of virtual business coaching on firm sales? (2) What is the mechanism through which this effect occurs; specifically, does virtual coaching stimulate shifts in marketing strategy? (3) Do entrepreneurs benefit more from virtual coaching when they are less strategic in their decision-making? We conducted a randomized controlled field experiment with 930 entrepreneurs in Uganda to examine the impact of a virtual coaching intervention that connects management professionals in primarily advanced markets and entrepreneurs in emerging markets with the aim of improving business performance. The analysis finds a positive and significant main effect on firm sales – treatment entrepreneurs increase monthly sales by 27.6% on average. In addition, entrepreneurs who receive virtual coaching are 52.8% more likely to have shifted their marketing strategy in a new direction. Moreover, consistent with this mechanism of inducing strategic business changes, the results show that entrepreneurs who receive virtual coaching tend to do better when they (ex ante) lack strategic focus. These results have important implications for the development of marketing strategies by entrepreneurs and multinational managers, as well as for policymakers interested in improving the performance of small firms in emerging markets and beyond. |
| Keywords: | marketing strategy innovation; strategic shift; business model change; pivoting; international business coaching; virtual collaboration technology; Covid-19 and remote work; small firm growth; entrepreneurship; joint Growth Research Program; Marshall Institute |
| JEL: | J50 |
| Date: | 2023–11–10 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120474&r=sbm |
| By: | Saul Estrin; Susanna Khavul; Alexander S. Kritikos; Jonas Löher |
| Abstract: | Financing entrepreneurship spurs innovation and economic growth. Digital financial platforms that crowdfund equity for entrepreneurs have emerged globally, yet they remain poorly understood. We model equity crowdfunding in terms of the relationship between the number of investors and the amount of money raised per pitch. We examine heterogeneity in the average amount raised per pitch that is associated with differences across three countries and seven platforms. Using a novel dataset of successful fundraising on the most prominent platforms in the UK, Germany, and the USA, we find the underlying relationship between the number of investors and the amount of money raised for entrepreneurs is loglinear, with a coefficient less than one and concave to the origin. We identify significant variation in the average amount invested in each pitch across countries and platforms. Our findings have implications for market actors as well as regulators who set competitive frameworks. |
| Keywords: | equity crowdfunding, soft information, entrepreneurship, finance, financial access and inclusion |
| JEL: | D26 G23 G41 L26 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2064&r=sbm |
| By: | Vilcassim, Naufel J. |
| Abstract: | Among the millions of entrepreneurs in developing economies, few are able to earn a decent livelihood. To help these entrepreneurs succeed, governmental and nongovernmental organizations invest billions of dollars every year in providing training programs. Many of these programs involve providing entrepreneurs with mentors. Unfortunately, the effects of these programs are often muted, or even null, for woman-owned firms. Against this backdrop, we tested whether gender matching, where female entrepreneurs are randomly paired with a female mentor, could help address the gender gap. Findings from a randomized controlled field experiment with 930 Ugandan entrepreneurs show that mentor gender has a powerful impact on female entrepreneurs. Firm sales and profits of female entrepreneurs guided by a female mentor increased by, on average, 32% and 31% compared with the control group, and these estimates are even larger for female entrepreneurs with high aspirations. In contrast, female entrepreneurs guided by a male mentor did not significantly improve performance compared with the control group. We provide suggestive mechanism evidence that female mentor-mentee arrangements were characterized by more positive engagements. |
| Keywords: | female entrepreneurs; gender gap; glass ceiling; mentorship gender-matching; randomized controlled field experiment; small firm growth; developing economies; (ESRC) joint Growth Research Program; the Deloitte Institute for Innovation and Entrepreneurship (DIIE); and the universities the authors were affiliated with when the research was conducted. |
| JEL: | L20 J16 |
| Date: | 2023–12–22 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:120477&r=sbm |
| By: | Christophe J. Godlewski (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg); Hong Nhung Le (LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg) |
| Abstract: | We investigate the impact of family ties on the performance of family firms in East Asia. To measure family ties, we used both objective and subjective indicators from the World Value Survey. Our findings indicate that family firms that are nurtured in a society with strong family ties tend to have better performance compared to family firms that operate in a culture with weak family ties. Furthermore, family firms that have strong familial relationships are more likely to gain a competitive advantage over nonfamily firms. Conversely, family firms with weak ties tend to underperform nonfamily firms. Our results are robust across various measures of firm performance, classifications of family firm, considerations of heteroskedasticity and endogeneity, and different econometric methods. |
| Date: | 2024–01–26 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04435944&r=sbm |
| By: | McNamara, Sarah; Neidhöfer, Guido; Lehnert, Patrick |
| Abstract: | We estimate intergenerational mobility of education for people born 1940-1999 at the subnational level for 40 European countries. The result is a panel of mobility indices for 105 mesoregions (NUTS1), and 215 microregions (NUTS2). We use these indices to make three contributions. First, we describe the geography of intergenerational mobility in Europe. Second, adapting a novel weighting procedure based on cohorts' relative economic contribution, we transform cohort-linked measures into annual measures of intergenerational mobility for each region. Third, we investigate the relationship between intergenerational mobility and innovation, and find robust evidence that higher mobility is associated with increased innovation. |
| Keywords: | Intergenerational Mobility, Equality of Opportunity, Human Capital, Innovation, Regional Economic Performance, Europe |
| JEL: | D63 I24 J62 O15 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283012&r=sbm |
| By: | Gan Jin; Günther G. Schulze (Department of International Economic Policy, University of Freiburg) |
| Abstract: | Can historical institutions affect today’s firm innovation? We analyze a historical experiment in 1902, when the foreign-run Chinese Maritime Customs Service (CMC), known for its efficient and transparent governance, took over some of the notoriously corrupt Chinese Native Custom stations and improved their governance. Using a large data set of contemporary industrial firms in China, we show that firms in locations historically affected by the CMC rules exhibit higher innovation intensities today, which can be attributed to the persisting norms of honesty and lawfulness embedded in the CMC institution. They reduce local corruption and stimulate firms’ investment in R&D and training to this day. We identify a causal effect by comparing firms in locations affected by the takeover with firms in similar but unaffected regions nearby. We also use an IV strategy that exploits the takeover criterion, which stipulated that Native Customs stations within a 25 km radius of a CMC customs station could be taken over by the Western powers. |
| Keywords: | Innovation, Persistence, Institutions, Corruption, China |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:fre:wpaper:46&r=sbm |
| By: | De Monte, Enrico |
| Abstract: | This paper investigates the evolution of aggregate productivity and markups among French manufacturing firms between 1994 and 2016, by focusing on the role of reallocation with respect to both aggregate measures. Firm-level productivity and markups are estimated based on a gross output translog production function using popular estimation methods. I find an aggregate productivity growth of about 34% over the whole period while aggregate markups are found to remain relatively stable. As a key finding the study shows that over time reallocation of sales shares affects differently aggregate productivity and markups: Before 2000 both aggregate productivity and markups are importantly driven by reallocation effects; Post-2000, instead, the contribution of reallocation to aggregate productivity becomes negligible, inducing a slowdown in aggregate productivity growth, while I measure persistent reallocation of sales shares from lower to higher markup firms. Policy relevant implications of these dynamics are discussed. |
| Keywords: | productivity decomposition, production function estimation, business dynamism, market power, entry and exit |
| JEL: | C13 D21 D24 L16 L60 O47 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283014&r=sbm |
| By: | KOIZUMI Hideto |
| Abstract: | The effectiveness of tax policies targeting firms has been evaluated conventionally based on the effects on the firms that are directly affected by the tax policies. However, the indirect effects through the supply chains of the directly affected firms can also be of first-order importance. This paper estimates the indirect effects on firm performance of tax incentives for investment through production networks, exploiting the quasi-experimental event of an investment stimulus policy targeting small and medium enterprises and unique proprietary data of supply chains in Japan. After confirming the direct effects, I find evidence suggesting that the indirect effects on direct suppliers are even larger than the direct effects, while no discernible effects are found on downstream firms. The absence of downstream effects appears to stem from the fact that treated firms crowd out the market share of untreated large firms, leading to an insufficient change in market prices. In total, while the tax policy successfully stimulates the targeted small firms, its spillover effects are primarily confined to the upstream customers which tend to be large. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24025&r=sbm |
| By: | Paolo Carioli; Dirk Czarnitzki; Gastón P Fernández Barros |
| Abstract: | Artificial Intelligence (AI) is considered to be the next general-purpose technology, with the potential of performing tasks commonly requiring human capabilities. While it is commonly feared that AI replaces labor and disrupts jobs, we instead investigate the potential of AI for overcoming increasingly alarming skills shortages in firms. We exploit unique German survey data from the Mannheim Innovation Panel on both the adoption of AI and the extent to which firms experience scarcity of skills. We measure skills shortage by the number of job vacancies that could not be filled as planned by firms, distinguishing among different types of skills. To account for the potential endogeneity of skills shortage, we also implement instrumental variable estimators. Overall, we find a positive and significant effect of skills shortage on AI adoption, the breadth of AI methods, and the breadth of areas of application of AI. In addition, we find evidence that scarcity of labor with academic education relates to firms exploring and adopting AI. |
| Keywords: | Artificial Intelligence, CIS data, skills shortage |
| Date: | 2024–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ecoomp:735893&r=sbm |
| By: | Tryfonas Christou (European Commission - JRC); Francesca Crucitti (European Commission - JRC); Abián García Rodríguez (European Commission - JRC); Nicholas Lazarou (European Commission - JRC); Simone Salotti (European Commission - JRC) |
| Abstract: | This paper presents a macroeconomic evaluation of the impact of the Horizon 2020 funds, carried out using the spatial dynamic general equilibrium model RHOMOLO. The policy disbursement data used to feed the model relate to the actual use of the funds over the period 2014-2021, so this is considered an ex-post evaluation. The model simulations suggest that the GDP gains in 2021 for the European Union as a whole would be up to 0.19% compared to the hypothetical baseline with no innovation policy. The GDP gains are also expected to be significant after the end of the 2014-2020 programming period, due to the positive effects of process and product innovations resulting from Horizon 2020 funding. The effects gradually diminish due to the gradual obsolescence of the new knowledge and innovations generated by the policy intervention. The model results also reveal significant interregional spillovers in some, but not all, countries of the Union. |
| Keywords: | innovation policy, regional growth, general equilibrium. |
| JEL: | C68 O30 R13 |
| Date: | 2024–01 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:termod:202401&r=sbm |
| By: | Jan Malek; Melissa Newham; Jo Seldeslachts; Reinhilde Veugelers |
| Abstract: | This paper analyzes M&A patterns of R&D projects in the antidiabetics industry. For this purpose, we construct a database with all corporate individual antidiabetics R&D projects over the period 1997 - 2017, and add detailed information on firms’ technology dimension using patent information, next to their position in product markets. This allows us to identify the identity of targets and acquirers (who), the timing of acquisitions along the R&D process (when), and which type of R&D projects changes hands in terms of technology novelty (what). The main results can be summarized as follows. First, most of the action in M&As is in early R&D stages, still far from product markets. Second, most of the early-stage projects that change hands are high-risk/high-gain novel projects. Third, the industry leaders in the product markets are rather inactive in acquiring those novel early-stage projects. The likely acquirers of such projects are small or pipeline firms. Our results put in perspective the narrative that large incumbents acquire small targets with low-risk projects close to product launch. |
| Keywords: | M&As, innovation, R&D, pharmaceutics, technology, novelty, patents |
| Date: | 2024–02–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:msiper:735739&r=sbm |
| By: | Lewis, David; Bowers, Rebecca; Heslop, Luke; Tawfic, Simon |
| Abstract: | The provision of entrepreneurship advice is a growing feature of private sector development in South Asia, but has so far received little attention from researchers. This article explores advice in two South Asian countries (Sri Lanka and Bangladesh), drawing on recent community level ethnographic fieldwork among advice seekers and providers, to explore the significance for low-income households of business advice within the unfolding processes of both marketization and state support. It offers a theoretical innovation in the concept of ‘advicescape’, and provides an empirical contribution in the form of ethnographic sketches conveying the experiences and local level perspectives of business advice users. Despite the growth of a complex business support ecosystem in each country, the paper finds that many such people are falling through the cracks, in that they face problems accessing advice, find its quality variable, and tend to rely heavily on informal advice. It concludes with some reflections on the business and development approach, including a brief normative discussion around improving the inclusivity and effectiveness of entrepreneurship advice. |
| JEL: | R14 J01 |
| Date: | 2024–02–20 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122073&r=sbm |
| By: | KATAGIRI Mitsuru |
| Abstract: | This study investigates the effects of employment protection legislation (EPL) on entrepreneurship, firm dynamics, and economic growth in a general equilibrium model that incorporates endogenous Schumpeterian growth. The model implies that more stringent EPL encourages households to accumulate more firm-specific human capital, which raises the opportunity cost to start a business. Using Japanese firm- and household-level microdata to calibrate parameter values, the quantitative exercise reveals that EPL reform aimed at its elimination could stimulate entrepreneurship in the household sector, thus boosting economic growth through more creative destruction in the firm sector. A partial equilibrium model that disregards the general equilibrium effects can overestimate or underestimate the policy effects of the EPL reform on entrepreneurship and economic growth. Policies that directly support firm entries or incumbents' research-and-development investment have limited impacts on economic growth as long as stringent EPL exists. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24022&r=sbm |
| By: | MOTOHASHI Kazuyuki; Alireza EMAMI JAVID |
| Abstract: | To develop an innovation ecosystem and maintain a healthy ecosystem through contributions from partners, the ecosystem owner must balance exercising control over the partners and allowing them autonomy in their activities. While a large body of literature discusses the comparative statics of the optimal degree of “control†over “autonomy†, few studies empirically investigate governance model dynamics during ecosystem development. This study sheds new light on this issue using information from the Siemens IoT Platform called MindSphere. Specifically, by measuring the similarity among the partners in terms of their business domain, we constructed an indicator of complementarity among platform participants. We then evaluate Siemens’s platform governance strategy using Burt’s constraint index (measuring structural holes in network data). Siemens changed its governance model from facilitating mutual complementarity among partners in the early stage of platform development to inducing more competition in its later stage using network externality as a centripetal force. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24027&r=sbm |
| By: | ZHU Chen; MOTOHASHI Kazuyuki |
| Abstract: | Startups have emerged as pivotal innovators in the commercialization of AI technology. Nonetheless, these nascent enterprises often require substantial capital infusion to realize the economic returns from their innovations. This study examines the role of prototypes in facilitating their fundraising process. We utilized historical web content to identify the presence of prototypes and employed web traffic data to monitor their customer growth. Our findings indicate that prototyping positively affects the potential customer attraction process, signaling the feasibility and profitability of their business hypotheses to potential investors. In addition, as a technologically intensive industry, most AI startups begin with a technology-centric approach. While a technology-led starting point underscores competitiveness, it also inherently introduces uncertainty. We offer quantitative evidence demonstrating how prototyping acts as a moderating factor, reducing the impact of such uncertainty by expediting investor decision-making. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:24021&r=sbm |
| By: | Arntz, Melanie; Genz, Sabrina; Gregory, Terry; Lehmer, Florian; Zierahn-Weilage, Ulrich |
| Abstract: | This paper examines the extent to which aggregate-level de-routinization can be attributed to firm-level technology adoption during the most recent technological expansion. We use administrative data and a novel firm survey to distinguish frontier technologies from older technologies. We find that adopters of frontier technologies contribute substantially to deroutinization. However, this is driven only by a subset of these firms: large adopters replace routine jobs and less routine-intensive adopters experience faster growth. These scale and composition effects reflect firms' readiness to adopt and implement frontier technologies. Our results suggest that an acceleration of technology adoption would be associated with faster de-routinization and an increase in between-firm heterogeneity. |
| Keywords: | technology, automation, tasks, capital-labor substitution, decomposition |
| JEL: | J21 J23 J24 O33 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:283011&r=sbm |