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on Small Business Management |
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Issue of 2024‒04‒22
thirteen papers chosen by |
| By: | J. Daniel Kim; Joonkyu Choi; Nathan Goldschlag; John Haltiwanger |
| Abstract: | Using administrative data from the U.S. Census Bureau, we introduce a new public-use database that tracks activities across firm growth distributions over time and by firm and establishment characteristics. With these new data, we uncover several key trends on high-growth firms—critical engines of innovation and economic growth. First, the share of firms that are high-growth has steadily decreased over the past four decades, driven not only by falling firm entry rates but also languishing growth among existing firms. Second, this decline is particularly pronounced among young and small firms, while the share of high-growth firms has been relatively stable among large and old firms. Third, the decline in high-growth firms is found in all sectors, but the information sector has shown a modest rebound beginning in 2010. Fourth, there is significant variation in high-growth firm activity across states, with California, Texas, and Florida having high shares of high-growth firms. We highlight several areas for future research enabled by these new data. |
| Keywords: | Firm Growth, Business Dynamism, Entrepreneurship, Business Dynamics Statistics |
| JEL: | L11 L25 L26 O30 O40 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:24-11&r=sbm |
| By: | Kruglov, Panteleimon |
| Abstract: | This study explores the relationship between R&D intensity, as a measure of innovation, and financial performance among S&P 500 companies over 100 quarters from 1998 to 2023, including multiple crisis periods. It challenges the conventional wisdom that larger companies are more prone to innovate, using a comprehensive dataset across various industries. The analysis reveals diverse associations between innovation and key financial indicators such as firm size, assets, EBITDA, and tangibility. Our findings underscore the importance of innovation in enhancing firm competitiveness and market positioning, highlighting the effectiveness of countercyclical innovation policies. This research contributes to the debate on the role of R&D investments in driving firm value, offering new insights for both academic and policy discussions. |
| Keywords: | Innovation, Financial Crises, financial valuation |
| JEL: | E44 O33 |
| Date: | 2024–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120404&r=sbm |
| By: | Serenella Caravella; Giovanni Cerulli; Francesco Crespi; Eleonora Pierucci |
| Abstract: | This paper analyses the growth-enhancing effect of different types of innovative activities, i.e., standard-innovation and eco-innovation by focusing on the potential role of exports in mediating the innovation-growth nexus. The empirical study is carried out on a representative sample of Italian firms built by integrating data from the Italian CIS-Community Innovation Survey with the ASIA-FRAME database of the Italian National Statistical Office (ISTAT), which reports information on export values and employment dynamics. The econometric analysis applies Structural Equations Models (SEM) and a two-step counterfactual analysis. Results show that export activities, spurred by engagement in innovation efforts, represent a powerful transmission channel through which innovation displays its effect on firms’ growth. Moreover, results highlight the existence of some heterogeneity in the capacity of different types of innovation activities, i.e., standard-innovation and eco-innovation to leverage the export channel to foster firms’ growth. In particular, the empirical evidence has identified a stronger indirect export-mediated impact for Efficiency-improving (EFI) than for Pollutionreducing (PR) Eco-innovation. |
| Keywords: | Eco-innovation, Export-mediated effect, Innovation-growth nexus |
| JEL: | Q52 Q55 L25 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0282&r=sbm |
| By: | Leogrande, Angelo |
| Abstract: | In the following article I take into consideration the role of knowledge workers in the Italian regions. The analysed data refers to the ISTAT-BES database. The metric analysis consists of an in-depth analysis of the trends of the regions and macro-regions, followed by clustering with the k-Means algorithm, the application of machine learning algorithms for prediction, and the presentation of an econometric model with panel methods date. The results are also critically discussed in light of the North-South divide and the economic policy implications. |
| Keywords: | Innovation, Innovation and Invention, Management of Technological Innovation and R&D, Technological Change, Intellectual Property and Intellectual Capital |
| JEL: | O3 O30 O31 O32 O33 O34 |
| Date: | 2024–03–26 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120550&r=sbm |
| By: | Mella-Barral, P.; Sabourian, H. |
| Abstract: | Firms can voluntarily create independent firms to implement their technologically distant innovations and capture their value through capital markets. We argue that when firms repeatedly compete to make innovations, there is inefficient external implementation of innovations and “excessive†creation of such firms. This inefficiency is most exacerbated in the early stages of an industry, when the number of firms is still limited. |
| Keywords: | Repeated Innovations, Spin-Offs, Voluntary Firm Creation |
| JEL: | M13 O31 O33 |
| Date: | 2023–06–30 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camjip:2312&r=sbm |
| By: | Nakatani, Ryota |
| Abstract: | Multifactor productivity (MFP) growth is an imperative economic engine. MFP dynamism across five advanced and seven developing countries from 1996 to 2015 is analyzed, elucidating its association with financing and intangible assets. Debt is manifested by its inverted U-shaped nonlinear relationship with MFP advancement, while corporate cash holdings are negatively (positively) associated with MFP development in five (three) countries. The heterogeneous relationships between intangible assets and MFP growth are identified across industries, countries, and time; intangible assets are requisite MFP growth enhancers for manufacturing in developing countries, for service businesses in advanced countries, and for the period after the global financial crisis. The greater the productivity effect of intangible assets is, the higher a country’s per-capita income and/or governance quality becomes. Additionally, the results evince the catching-up of MFP to the technological frontier. Moreover, older firms exhibit slower MFP growth than their peers, whilst the positive effects of firm size on MFP growth are larger in high-tech and knowledge-intensive industries. |
| Keywords: | Industrial Analysis; Multifactor Productivity Growth; Cash Holding; Debt Financing; Knowledge and Technology Intensive Sectors; Intangible Assets |
| JEL: | D22 D24 G32 L25 L6 L8 M21 O34 O57 |
| Date: | 2024–03–20 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120503&r=sbm |
| By: | Leogrande, Angelo |
| Abstract: | In this article I analysed the trend of innovation in the production system in the Italian regions using ISTAT-BES data. After presenting a static analysis and innovation trends of the production system, I present a clustering with a k-Means algorithm optimized with the Silhouette coefficient. Subsequently, an econometric analysis is presented for estimating the determinants of innovation in production systems. Finally, the results are critically discussed with economic policy recommendations. |
| Keywords: | Innovation, Innovation and Invention, Management of Technological Innovation and R&D, Technological Change, Intellectual Property and Intellectual Capital |
| JEL: | O30 O31 O32 O33 O34 |
| Date: | 2024–03–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120542&r=sbm |
| By: | Hiroyuki Hino (Office of Global Affairs, Duke University, U.S.A. and Research Institute of Economics and Business Administration, Kobe University, JAPAN); Nobuaki Hamaguchi (Research Institute of Economics and Business Administration, Kobe University, JAPAN); Charles Piot (Cultural Anthropology and African & African American Studies, Duke University, U.S.A.); Jiahan Yin (Department of Economics, Duke University, U.S.A.) |
| Abstract: | This paper attempts to gain greater clarity about an issue which has considerable bearing on economic policy in Africa yet remains poorly diagnosed: the relation between informality and dynamism among low-income micro enterprises. We begin with the premise that micro entrepreneurs are driven by non-pecuniary motives, to varying degree, and adopt informal ways of doing business when informal motivations are strong. Building on this premise, we construct a regression model in which the dynamism of microenterprises is explained by the informality of entrepreneurs' motivations and of his/her ways of doing business as well as interactions among these two informality variables. We apply the model to microentrepreneurs in Ghana, Kenya and Nigeria, with data derived from a survey conducted for this research. The regression results show that the relation between informality and dynamism is intricate. Two of the four informal business practices tested - small business size and limited bookkeeping - negatively affect business growth while the other two have no significant influence either way. On the other hand, informal motivations - represented by a composite index of non-pecuniary motivations - have a positive effect on business growth although the effect is not directly observable. When an enterprise is operated in an informal setting by an entrepreneur with strong informal motivations, the synergy between the setting and the motivation works to increase the chance of business growth. The resilience of microenterprises too is linked positively to informality although interactions between motivation and business practice tend to reduce business growth in this case. Informal motivations and informal business practices are interwoven, an insight that could help in developing policy that could strengthen informal enterprises on the continent. |
| Keywords: | Informality; Africa; Microenterprises; Growth; Resilience |
| JEL: | O55 O17 Z13 |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:kob:dpaper:dp2024-14&r=sbm |
| By: | Campagnolo, Gilles |
| Abstract: | Carl Menger is remembered less for his analysis of entrepreneurship (which in the following analysis refers to his fundamental notions related to the nature of business practice) than for his views on matters like money, individualism or the nature of institutions (there are exceptions to this subdued interest, such as Kirzner 1978). However, these issues are related and a long-debated notion among Austrians, namely time, relates investment, entrepreneurship, uncertainty and Menger’s tentative quasi-anthropology (kept in his notes). This paper conscientiously investigates those issues through Menger’s views on the notion of time. |
| Keywords: | Böhm-Bawerk (Eugen von); entrepreneurship; innovation; Menger (Carl); time |
| JEL: | B13 B31 O31 |
| Date: | 2022–09–03 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:117195&r=sbm |
| By: | Davide Melcangi; Silvia Sarpietro |
| Abstract: | This paper presents empirical evidence on the nature of idiosyncratic shocks to firms and discusses its role for firm behavior and aggregate fluctuations. We document that firm-level sales and productivity are hit by heavy-tailed shocks and follow a nonlinear stochastic process, thus departing from the canonical linear. We estimate a state-of-the-art model to flexibly capture the rich dynamics uncovered in the data and characterize the drivers of nonlinear persistence and non-Gaussian shocks. We show that these features are crucial to get empirically plausible volatility and persistence of micro-originated (granular) aggregate fluctuations. |
| Keywords: | firm dynamics; productivity; nonlinearities; non-Gaussian shocks; granular fluctuations |
| JEL: | D22 E23 E32 |
| Date: | 2024–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:97929&r=sbm |
| By: | Nicola Comincioli; Paolo M. Panteghini; Sergio Vergalli; Paolo Panteghini |
| Abstract: | In this article we study start-up investments in developing countries. Using a representative firm, we wonder how relevant are the effects of taxation and risk on new business activities. It is worth noting that developing countries are usually characterized by three main characteristics. Firstly, a firm’s Earnings Before Interest and Taxes (EBIT) is likely to be more volatile than in developed jurisdictions. Secondly, firms in developing countries can be affected by a higher risk of expropriation. In particular, this may happen when early-stage businesses are supported by multinational companies. Thirdly, financial market show higher inefficiencies, compared to countries. Using a real-option approach, we study start-up investment decisions. We find that, although tax rates are usually higher than the developed countries’ ones, taxation has an almost negligible effect. If however a policy-maker aims at boosting new business activities it must decrease both EBIT volatility and the expropriation risk, as well as improving financial market efficiency. |
| Keywords: | real options, business taxation, default risk, developing countries, numerical simulations |
| JEL: | H25 G33 G38 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_11014&r=sbm |
| By: | Emin Dinlersoz; Can Dogan; Nikolas Zolas |
| Abstract: | Using comprehensive administrative data on business applications over the period 2004-2023, we study emerging business ideas for developing AI technologies or producing goods or services that use, integrate, or rely on AI. The annual number of new AI business applications is stable between 2004 and 2012 but begins to rise after 2012, and increases faster from 2016 onward into the pandemic, with a large, discrete jump in 2023. The distribution of AI business applications is highly uneven across states and sectors. AI business applications have a higher likelihood of becoming employer startups and higher expected initial employment compared to other business applications. Moreover, controlling for application characteristics, employer businesses originating from AI business applications exhibit higher employment, revenue, payroll, average pay per employee, and labor share, but have similar labor productivity and lower survival rate, compared to those originating from other business applications. While these early patterns may change as the diffusion of AI progresses, the rapid rise in AI business applications, combined with their generally higher rate of transition to employers and better performance in some post-transition outcomes, suggests a small but growing contribution from these applications to business dynamism. |
| Date: | 2024–03 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:24-09&r=sbm |
| By: | Yumeng Gu; Sanjay R. Singh |
| Abstract: | We incorporate incumbent innovation in a Keynesian growth framework to generate an endogenous distribution of market power across firms. Existing firms increase markups over time through successful innovation. Entrant innovation disrupts the accumulation of market power by incumbents. Using this environment, we highlight a novel misallocation channel for monetary policy. A contractionary monetary policy shock causes an increase in markup dispersion across firms by discouraging entrant innovation relative to incumbent innovation. We characterize the circumstances when contractionary monetary policy may increase misallocation. |
| Keywords: | monetary policy; markup dispersion; allocative efficiency; market power |
| Date: | 2024–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedfwp:97992&r=sbm |