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on Small Business Management |
|
Issue of 2024‒06‒24
twenty-two papers chosen by |
| By: | Anna Stansbury (Peterson Institute for International Economics); Dan Turner (Centre for Progressive Policy); Ed Balls (King's College London and Harvard Kennedy School) |
| Abstract: | This paper analyzes binding constraints to productivity growth in the United Kingdom's regions outside London and the greater South East. These analyses challenge a number of common arguments about the UK's regional economic inequality problem. The authors find little evidence consistent with the hypotheses (i) that low shares of university graduates remain the primary constraint on growth for the UK's regions; (ii) that there is a generalized issue with access to finance for firms outside the South East; or (iii) that low or falling regional migration rates are to blame for the persistence of the UK's regional economic inequalities. Instead, they find evidence consistent with (i) a specific relative shortage of STEM degrees; (ii) binding transport infrastructure constraints within major non-London conurbations; (iii) a failure of public innovation policy to support clusters beyond the South East, in particular through the regional distribution of public support for research and development (R and D); and (iv) missed opportunities for higher internal mobility due to London's overheating housing market. The authors also find some suggestive evidence consistent with constraints on access to early-stage equity financing for high growth-potential small and medium-sized enterprises in certain regions. |
| JEL: | O47 R12 R58 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp24-12&r= |
| By: | Kleinhempel, Johannes; Estrin, Saul |
| Abstract: | Comparative international entrepreneurship research has often used measures of high-growth expectations entrepreneurship to proxy for the construct of high-impact entrepreneurship. We revisit this practice by assessing the cross-country association between high-growth expectations and realized high-impact entrepreneurship to speak to construct measurement fit. We find that expectations are not a good proxy for realizations; they are associated with different determinants and outcomes, respectively. We go on to introduce the notion of entrepreneurial projection bias to gauge the misfit between expectations and realizations. Conditioning on entrepreneurial projection bias partially restores the association between realized high-impact entrepreneurship and its determinants (or outcomes) when realizations are proxied using expectations. Furthermore, we show that opportunity-motivated entrepreneurship also does not proxy well for high-impact entrepreneurship. Our analysis brings into question current survey-based approaches to measuring high-impact entrepreneurship and existing rankings of countries’ entrepreneurial performance, with important implications for entrepreneurship theory and policy. |
| Keywords: | Construct measurement, High-impact entrepreneurship, High-growth expectations entrepreneurship, Entrepreneurial projection bias, Comparative international entrepreneurship research |
| JEL: | L26 M13 O30 O57 |
| Date: | 2024–05–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120863&r= |
| By: | Koike Yasutaka-Mori; Toshitaka Maruyama; Koki Okumura |
| Abstract: | This paper develops an endogenous growth model that incorporates a frictional inventor market and examines the allocation of inventors across firms, knowledge diffusion, and its impact on growth. In our model, inventors play dual roles: they engage in in-house R&D and transfer knowledge from previous employers to new ones when changing jobs. Using an administrative panel dataset on German inventors matched to their employing establishments and patents, we find that, relative to general workers, inventors are more likely to transition to less productive establishments and suffer a higher wage growth via the transition. We also find that the knowledge base of establishments measured by patents grows faster when a significant proportion of their inventors originate from establishments possessing a larger knowledge base. We then calibrate the model to reflect these empirical findings and examine the effects of innovation policy. While subsidies to frontier firms discourage knowledge diffusion from these firms to technologically lagging firms, these subsidies also encourage innovation within frontier firms. The former negative effect dominates in the short term, but the latter positive effect dominates in the long run. |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:dpr:wpaper:1244&r= |
| By: | Yusuke Itai (Bank of Japan); Ryota Maeno (Bank of Japan); Akira Miyoshi (Bank of Japan); Asuka Nishino (Bank of Japan) |
| Abstract: | The importance of startups is attracting renewed attention in discussions about improving productivity and stimulating innovation in Japan. Although most startups are still located in Tokyo, there have been positive changes in recent years, such as an increasing trend in startup funding in regions outside of Tokyo. However, the amount of funding raised by startups in Japan is still small compared to that in the United States and Europe. In addition, various issues regarding startups have been raised, including a lack of diversity in the investor base and a shortage of personnel at the executive level. This article provides an overview on recent positive trends among startups in Japan and challenges for future development. It also introduces the current situation and initiatives for development of startups in regional Japan. |
| Keywords: | Startups; Startup investments; Startups in regional Japan; Entrepreneurial ecosystem; Regional entrepreneurial ecosystem |
| JEL: | G24 L26 M13 R11 |
| Date: | 2024–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:boj:bojrev:rev24e05&r= |
| By: | Burak Deniz; Ýbrahim Yarba |
| Abstract: | This study analyzes bank loan maturity and corporate investment linkage by using novel firm-level data covering the universe of all incorporated firms in Türkiye over the last decade. The results of the panel regression model with multi-dimensional fixed effects reveal that loan maturity has a significant positive association with investment, indicating that longer debt maturity fosters corporate investment. The results reveal that the positive linkage between longer debt maturity and investment is more pronounced for small and medium-sized enterprises (SMEs). This is also the case for young firms and firms with high growth opportunities. Considering the evidence provided in the literature that bank lending conditions, including maturity structure, are highly cyclical and vulnerable to financial conditions and economic policy uncertainties, our findings highlight the importance of reducing the policy uncertainties as well as the importance of policies that make equity financing more attractive and deepen the capital markets. |
| Keywords: | Bank loans, Corporate investment, Debt maturity structure |
| JEL: | C23 D22 E22 G31 G32 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:2405&r= |
| By: | Alexander S. Kritikos; Mika Maliranta; Veera Nippala; Satu Nurmi |
| Abstract: | We examine how the gender of business-owners is related to the wages paid to female relative to male employees working in their firms. Using Finnish register data and employing firm fixed effects, we find that the gender pay gap is – starting from a gender pay gap of 11 to 12 percent - two to three percentage-points lower for hourly wages in female-owned firms than in maleowned firms. Results are robust to how the wage is measured, as well as to various further robustness checks. More importantly, we find substantial differences between industries. While, for instance, in the manufacturing sector, the gender of the owner plays no role for the gender pay gap, in several service sector industries, like ICT or business services, no or a negligible gender pay gap can be found, but only when firms are led by female business owners. Businesses in male ownership maintain a gender pay gap of around 10 percent also in the latter industries. With increasing firm size, the influence of the gender of the owner, however, fades. In large firms, it seems that others – firm managers – determine wages and no differences in the pay gap are observed between male- and female-owned firms. |
| Keywords: | Entrepreneurship, Gender Pay Gap, Discrimination, Linked employeremployee data |
| JEL: | J16 J24 J31 J71 L26 M13 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp2079&r= |
| By: | Mohamed ID BAHA (FSJES Agadir); Mohamed Eddani (FSJES Agadir) |
| Abstract: | This article aims to model the relationship between the use of Digital Technologies (DT) and the performance of Small and Medium Enterprises (SMEs) in Morocco. The theoretical study draws on various theories and models to construct a conceptual model based on three groups of influencing factors. This model is then empirically validated with 211 SMEs in the Souss Massa (SM) region. Using the structural equations approach, the results of the quantitative study demonstrate the positive and significant influence of DT characteristics on the performance of these SMEs, especially when these technologies are user-friendly or provide a comparative advantage. Additionally, the results indicate that companies benefit in terms of image, positive outcomes, and employee productivity when employees rely on DT and use them frequently. However, task-technology fit has no significant effect. This study provides insights for SMEs in the SM region and offers perspectives for future research. Keywords: Digital Technologies (DT); structural equations; SME performance; task-technology fit; DT use; DT characteristics. |
| Abstract: | Cet article vise à modéliser la relation entre l'utilisation des Technologies Numériques (TN) et la performance des Petites et Moyennes Entreprises (PME) au Maroc. L'étude théorique s'appuie sur diverses théories et modèles pour construire un modèle conceptuel basé sur trois groupes de facteurs d'influence. Ce modèle est ensuite soumis à une vérification empirique auprès de 211 PME de la région de Souss Massa (SM). En utilisant l'approche des équations structurelles, les résultats de l'étude quantitative démontrent l'influence positive et significative des caractéristiques des TN sur la performance de ces PME, surtout lorsque ces technologies sont conviviales ou présentent un avantage comparatif. De plus, les résultats indiquent que les entreprises bénéficient en termes d'image, de résultats positifs et de productivité des employés lorsque ces derniers dépendent des TN et les utilisent d'une manière fréquente. Cependant, l'adéquation tache-technologies n'a aucun effet significatif. Cette étude apporte des contributions aux PME de la région de SM et offre des perspectives pour des recherches futures. Mots clés : Technologies Numériques (TN) ; équations structurelles ; performance des PME ; adéquation tâche-technologie ; utilisation des TN ; caractéristiques des TN. |
| Keywords: | African Scientific Journal, Digital Technologies (DT), Structural equations, SME performance, Task-technology fit, DT use, DT characteristics, Technologies Numériques (TN), Équations structurelles, Performance des PME, Adéquation tâche-technologie, Utilisation des TN, Caractéristiques des TN, Sigles et acronymes |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-04563306&r= |
| By: | Damane, Moeti; Ho, Sin-Yu |
| Abstract: | We examine the impact of financial inclusion of Sub-Saharan Africa (SSA) small and medium-sized enterprises (SMEs) on financial stability. Results show that financial inclusion of SMEs negatively affects stability in SSA countries, and the negative link is even stronger as levels of financial stability increase across countries. Our findings are consistent with the theory of excessive credit expansion or extreme financial inclusion theory, suggesting that to safely promote SME financial inclusion and foster financial sector stability, efforts should be directed toward improving banking sector risk mitigation efforts, financial sector supervision and strengthening coordination among regional financial sector regulators. |
| Keywords: | Sub-Saharan Africa; Financial Inclusion; Financial Stability; Small and Medium sized Enterprises, Fixed Effect Model; Quantile Regression |
| JEL: | G00 G2 G21 G28 |
| Date: | 2024–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:121093&r= |
| By: | Amendolagine, Vito; Crescenzi, Riccardo; Rabellotti, Roberta |
| Abstract: | This paper investigates how institutional conditions at national and regional levels shape the decisions of Multinational Enterprises (MNEs) to invest abroad by means of either acquisitions or greenfield investments. The empirical analysis covers all Foreign Direct Investment (FDI) projects in the European Union by the largest MNEs in the world to study alternative choices by the same firm and account for firm-level characteristics in investment decisions. The empirical results show that - other things being equal - regions with stronger investment eco-systems are more likely to attract acquisitions, while greenfield investments are more likely in regions with comparatively weaker systemic conditions. Howerver, the regional quality of institutions makes a fundamental difference to the nature of the investment projects attracted by regions: those with high quality of government can attract greenfield investments undertaken by the most productive MNEs. By improving their quality of government, local and regional policy makers can attract higher quality greenfield investment projects to their constituencies, potentially breaking the vicious circle between low productivity areas and low productivity FDI. |
| Keywords: | foreign direct investment; greenfield investment; cross-border acquisitions; multinational enterprises; firm heterogeneity; regions; European Union; institutions; European Union Horizon 2020 Programme H2020/2014-2020 (Grant Agreement n 639633-MASSIVE-ERC-2014-STG).; Wiley deal |
| JEL: | R12 R58 F23 |
| Date: | 2024–05–13 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:122662&r= |
| By: | Carlo Altomonte; Nevine El-Mallakh; Tommaso Sonno |
| Abstract: | We build a novel worldwide database merging information on patent-citations of firms paired with information on firms' affiliation to Business Groups (BGs). We exploit these data to document how BGs appropriate knowledge through standalone firm acquisition. First, we confirm that innovative standalone firms have a higher probability of becoming part of a BG. Second, we document how BGs tend to acquire firms that are on an upward trend in patents and citations. We also show that innovating activity significantly deteriorates post-acquisition, particularly for firms with high-quality, cited patents. Third, we show that such a deterioration in innovation activity is driven by acquired firms patenting within the same technological classes of the acquiring BG, while the latter does not hold for acquired firms patenting in different technologies than the BG's. We also find that acquisitions occurring in environments characterized by higher market concentration and more mature leading firms are associated with a relatively more pronounced reduction in innovation. These results generalize the defensive acquisition narrative, suggesting that BGs leverage these transactions as a strategic manoeuvre to solidify their market position in the face of potential competition. |
| Keywords: | business groups, innovation |
| Date: | 2024–04–30 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1996&r= |
| By: | Yibo Qiao; Nicola Cortinovis; Andrea Morrison; |
| Abstract: | This article investigates how MNEs influence the export behavior of domestic firms in the context of China. We conceptually disentangle different MNE spillovers related to local export dynamics, linking in a unique framework specific spillover mechanisms, channels, activation conditions and type of knowledge conveyed. Empirically, our analysis relies on a panel dataset containing all Chinese manufacturing firms in the period 2000-2007. The results show that relatedness linkages matter in the context of export quantity, while forward-backward linkages matter for the sophistication of export. These findings suggest that relatedness linkages convey mainly marketing-related knowledge spillovers, while forward-backward linkages are diffusing mainly product-related knowledge spillovers. |
| Keywords: | Relatedness, forward-backward linkages, multinational enterprises, export, innovation, China |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2415&r= |
| By: | David Aristei; Manuela Gallo; Raoul Minetti |
| Abstract: | This study provides first empirical evidence on the impact of entrepreneurs' financial knowledge on borrower discouragement. Using novel survey data on Italian micro-enterprises, we find that less financially knowledgeable entrepreneurs are more likely to be discouraged from applying for new financing, due to higher application costs and expected rejection. Our main results are robust to several sensitivity checks, including accounting for potential endogeneity. Furthermore, we show that the observed self-rationing mechanism is rather inefficient, suggesting that financial knowledge might play a key role in reducing credit market imperfections. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.05891&r= |
| By: | Kuosmanen, Natalia; Pajarinen, Mika; Heshmati, Almas |
| Abstract: | Abstract The service sector is undergoing rapid changes attributed to digitalization. This study examines the relationship between digitalization and the performance of the Finnish private service firms from 2015 to 2021 using linked employer-employee data, financial data and an IT usage survey. Our descriptive and regression analyses reveal significant variability in the level and areas of digital adoption across service industries. Information and communication, and professional activities are found highly digitalized, while accommodation and food service activities, and transportation and storage lag in digitalization intensity. Additionally, we find a strong positive correlation between firms’ digitalization and revenues, particularly for firms with higher digital intensity. This correlation persisted throughout the COVID-19 pandemic. We also observe a positive correlation between digitalization and productivity in the early years, but more recent data suggest a weakening of this association, possibly due to increased digital adoption among less productive firms during the pandemic. Finally, our analysis indicates that larger firms, or those with a larger market share or international activities, tend to have higher levels of digitalization. Thus, investment in digitalization is recommended to enhance service sectors performance. |
| Keywords: | Digitalization, Firm performance, Productivity, Private service industry, Finland |
| JEL: | L25 L80 L86 O14 O33 |
| Date: | 2024–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:rif:wpaper:117&r= |
| By: | Annamaria Fiore; Stefano Marastoni |
| Abstract: | This report examines the opportunities the local and regional policies offer to aid innovative entrepreneurships, focusing on the Apulian region. Through empirical observations and analysis, it specifically describes the Start Cup Puglia (SCP), the competition organized annually by ARTI. The competition incentivizes innovative business plans with high-knowledge content, offering project support, technical assistance, and business development services. The report concludes addressing policy recommendations, such as promoting startups as links between scientific knowledge and traditional production, fostering alliances, facilitating financing and market access, and enhancing digital platforms for team building. |
| Date: | 2024–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:awg:insrep:ir12&r= |
| By: | Giulio Cornelli; Magdalena Erdem; Egon Zakrajsek |
| Abstract: | We investigate the relationship between the probability of a CEO forced-turnover and firm performance on several environmental dimensions. Our findings suggest that a higher risk of being terminated for the CEO is correlated with a lower environmental ranking, particularly on environmental innovation activities, and more ESG controversies for the firm. The inclusion of ESG-pay clauses in executives' compensation packages only marginally offsets such deterioration. Looking at data on Greenhouse gas (GHG) emissions, we consistently find that a rise in the probability of being terminated corresponds to an increase in scope 2 and 3 emissions ("carbon leakeage"), whereas scope 1 emissions remain unchanged. Through an instrumental variable approach, we trace the deterioration of firms' ESG controversies- and environmental innovation scores to a strategical re-orientation towards short-terminism. |
| Keywords: | corporate finance, ESG, emissions, environmental innovation, short-terminism |
| JEL: | D22 G30 G34 O31 Q55 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:1190&r= |
| By: | Schröpf, Benedikt; Kovalenko, Tim |
| Abstract: | Although domestic establishment relocations are part of both the factor reallocation across regions and establishment dynamics within an economy, evidence on firm mobility in Germany is rather scarce. In this study, we therefore examine establishment- and regional-level patterns of firm mobility in Germany. Using rich administrative data, we document that most relocation flows go from major cities to the surrounding urban districts, suggesting sub-urbanization patterns. In terms of establishment-level characteristics, we document that middle-sized and knowledge-intensive establishments exhibit high relocation propensities. Further, establishments moving to major cities or urban districts are rather high-wage establishments while establishments moving to rural districts are rather low-wage establishments. Our regional analyses reveal that relocating establishments prefer nearby regions with (compared to their old locations) low tax burdens and low population densities. |
| Keywords: | Firm mobility, Establishment Relocation, Firm Location, Germany |
| JEL: | R10 R12 R30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwqwdp:296487&r= |
| By: | Sánchez, Mariola; Nerja, Adrian |
| Abstract: | In this paper, we compare the scenarios of exclusive licenses and cross-licenses under the existence of partial vertical integration. To do this, a successive duopoly model is proposed, with two owners and two firms competing in a differentiated product market. Each technology owner has a share in one of the competing firms, so that competition is also extended to the upstream R&D sector. We propose a novel analysis where differences in the size of their innovation process are allowed, extending the results in Sánchez et al. (2021). We find that the cross-licensing scenario is preferred when the size of the innovation is small; this occurs regardless of the participation in the competing companies and how many innovate. If the innovation is very large, the owners may be better off with exclusive licenses. |
| Keywords: | Patent Licensing; Exclusive licenses; Market for technology; Asymmetric innovation |
| JEL: | L13 L24 O33 |
| Date: | 2024–04 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:120829&r= |
| By: | Ege Erdil; Tamay Besiroglu; Anson Ho |
| Abstract: | Accurately modeling the production of new ideas is crucial for innovation theory and endogenous growth models. This paper provides a comprehensive methodological survey of strategies for estimating idea production functions. We explore various methods, including naive approaches, linear regression, maximum likelihood estimation, and Bayesian inference, each suited to different data availability settings. Through case studies ranging from total factor productivity to software R&D, we show how to apply these methodologies in practice. Our synthesis provides researchers with guidance on strategies for characterizing idea production functions and highlights obstacles that must be addressed through further empirical validation. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.10494&r= |
| By: | Diegmann, André; Pohlan, Laura; Weber, Andrea |
| Abstract: | We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance. |
| Keywords: | firm performance, identification, political connections, politicians |
| JEL: | D72 L25 O43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwhdps:296476&r= |
| By: | Ana Sasi-Brodesky (Bank of Israel) |
| Abstract: | This paper examines empirically the effect of concentrated ownership on resolving financial distress of public firms with large, publicly traded, corporate bond debt. Using a large sample of distressed firms in Israel over the course of a decade, I show that stronger financial ties of controlling owners to the firm, manifest in higher cash flow rights and the presence of previously extended related-party debt, are associated with a higher probability of resolving distress in an out-of-court reorganization without experiencing ownership turnover. I argue that these ownership characteristics are indicative of increased motivation of insiders to reorganize the firm and retain control, but in addition, they serve the controlling shareholders financially to ensure their continued holding of the company. |
| Date: | 2024–02 |
| URL: | http://d.repec.org/n?u=RePEc:boi:wpaper:2024.02&r= |
| By: | Peskes, Markus; Tang Zheng, Fabian |
| Abstract: | Although fallen into disrepute Corporate financing in the form of private equity has developed into a billion-dollar industry. Private equity arose from the need for alternative financing options and has had a long lasting impact on the economy and society. Companies of this sector, which is often described as non-transparent, regularly make headlines because of leveraged buy-outs (LBOs). This multifaceted industry provides various forms of equity capital outside regulated capital markets and should be viewed in a more differentiated manner, especially considering its growing significance for SMEs. The peculiarities of private equity extend beyond just conceptual delineation and its structures, reaching into the methods aimed at achieving excess returns over the public market. This excess return is offset by a range of value enhancement methods and private equity undoubtedly can exert significant influence on companies. Therefore, a holistic view of this industry seems warranted. Accordingly, this research paper examines private equity investments focusing on the mid-market in terms of their sustainable value contributions for investors and companies. It explores whether private equity is more of a blessing or a curse especially for SMEs. |
| Keywords: | SME, LBO, Finance, Private Equity, Leveraged Buy Out, Controlling, M&A |
| JEL: | G2 G23 G24 |
| Date: | 2024 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:295101&r= |
| By: | Tobias Koenig; Thomas Brenner; ; |
| Abstract: | The evolution of industrial clusters has received much attention in the recent literature on evolutionary economic geography (EEG) and regional science. However, scientific results on the influence of different factors on the decline or renewal of mature industrial clusters are scarce. Therefore, this study identifies different factors: preconditions, triggering events and self-augmenting processes, and examines their influence on declining or renewing industrial clusters. In order to obtain transferable results, this meta-analysis is based on 69 individual empirical case studies from different countries and industries. The empirical results show, firstly, that the decline and renewal of industrial clusters is driven by different preconditions, triggering events and self-augmenting processes. Secondly, these factors change over time and may have both positive and negative dimensions. Finally, the decline of industrial clusters is more often associated with unfavorable preconditions and triggering events, while self- augmenting processes are more often found in the context of cluster renewal. |
| Keywords: | Cluster; Evolution; Decline; Renewal; Meta-analysis |
| JEL: | O33 R10 R11 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2418&r= |