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on Small Business Management |
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Issue of 2024‒10‒07
twelve papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Xiao, Jing (CIRCLE, Lund University); Lindholm Dahlstrand, Åsa (CIRCLE, Lund University) |
| Abstract: | Recently, acqui-hiring, which refers to the acquisitions driven by gaining access to target human capital, has emerged as a proliferating phenomenon in acquisitions of small technology firms. However, we still know little about this phenomenon, particularly outside the community of Silicon Valley. This study sheds new light on the nature of acqui-hiring by focusing on what drives acqui-hiring. Using a sample of 213 technological acquisitions of Swedish technology firms, our results show that firms tend to be acqui-hired when they are younger and when they are based on the development of deep tech, a group of emerging disruptive technologies, of which the technological base involves high levels of technological newness and complexity. The results show a support to our initial idea that acqui-hiring could be driven by the acquiring firm’s need to acquire complex knowledge and/or new capabilities that are embodied in target key employees or engineering teams. In addition, we develop a typology and identify four types of acqui-hiring. We use case illustrations of deep-tech acqui-hiring to demonstrate four differentiated acquisition strategies, including technology strengthening, product expansion, product experimentation and technology experimentation. |
| Keywords: | Acqui-hiring; deep tech; technological acquisitions; technological newness and complexity; combined methods; Sweden |
| JEL: | G34 L26 O32 O33 |
| Date: | 2024–09–04 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2024_011 |
| By: | Görg, Holger; Mulyukova, Alina |
| Abstract: | This paper exploits time and geographic variation in the adoption of Special Economic Zones in India to assess the direct effects of the program on firm performance. We combine geocoded firm-level data and geocoded SEZs. Our analysis yields that conditional on controlling for initial selection based on observables, the establishment of new SEZs did not induce any discernible positive effect on the productivity growth of firms in the SEZs. To explain this, we focus on the possibility of distortions through non-profitable activities on the part of managers. We find that firms especially in publicly-owned SEZs decreased their productivity growth, while firms located in privately-owned SEZs experience productivity increases. We also show that directors of firms located inside the publicly-owned zones experienced a significant increase in their salary growth, which is not the case in privately-owned SEZs. Our findings are in line with the idea that the possibility of rent-seeking by managers leads to distortions in program implementation. |
| Keywords: | Special Economic Zones, Firm performance, India |
| JEL: | O18 O25 P25 R10 F21 F60 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:302102 |
| By: | Patricia Peñalosa; Lukas Kleine-Rueschkamp |
| Abstract: | This paper explores the geography of “green innovation hubs” and the relationship between green patents and local labour markets. The analysis considers the spatial distribution and evolution of patenting activity for green inventions and identifies green innovation hubs, i.e., regions demonstrating notable strength in green patenting. It also explores the relationship between the regional level of green patenting, economic activity, education, and local labour dynamics across OECD regions. Greater Copenhagen (a cross-border area including parts of Denmark and Southern Sweden) is used as an example to illustrate one region's green innovation ecosystem, assessing its progress, unique opportunities, and challenges. |
| Date: | 2024–09–24 |
| URL: | https://d.repec.org/n?u=RePEc:oec:cfeaaa:2024/09-en |
| By: | Daniel Grimaldi; Jose Renato Haas Ornelas |
| Abstract: | This paper explores a unique event that abruptly and unexpectedly increased the subsidy levels associated with a traditional earmarked credit line in Brazil. Using a local difference-in-differences approach, we find strikingly different results depending on firms’ size. For mid-large firms, despite an increase in subsidy intake of almost 90%, there were no relevant effects on employment or debt, suggesting they mostly used new loans to replace older (more expensive) debt. For smaller firms, we observed a similar increase in the dosage of subsidies, but we also saw an increase in earmarked debt (roughly 75%) and employment (around 6% in the number of employees and 10% in the payroll). However, all labor-related effects were short-lived and vanished after two years. A cost-effectiveness analysis for a two-year window shows that monthly credit subsidies were higher than the increase in the affected firm’s monthly payroll by BRL 393 for micro and small firms and by BRL 165, 685 for mid-large firms. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bcb:wpaper:599 |
| By: | Sommer, Christoph |
| Abstract: | SMEs are key to development, as they provide livelihoods and jobs for the majority of people in LMICs. Yet, their development is often hampered by constrained access to finance. SMEs mostly depend on bank loans for external finance. However, these have been insufficient to overcome SMEs' financing constraints, especially in LMICs, such that it seems pertinent to explore other financing sources. The World Bank and OECD have repeatedly pointed to capital markets (e.g. Thompson et al., 2018; World Bank, 2020a). Hence, this policy brief explores the role of capital markets for SME finance in LMICs. Numerous challenges, both on the supply and demand sides, impede SMEs' involvement with capital markets. SMEs struggle with the costs of issuing securities, reporting and corporate governance requirements and, in the case of equity, with concerns about dilution of ownership. Investors on the demand side are discouraged by imperfect information and limited exit options. Consequently, SMEs hardly use equity or market-based debt, especially in LMICs. However, capital markets can have an indirect positive effect on SME finance: Several financial instruments (e.g. securitisation, equity capital for banks) exploit the respective comparative advantages of banks (information-related activities) and markets (liquidity), and create interactions with benefit flows from markets to banks and vice versa, which result in their complementarity and co-evolution. Specifically, capital market development is associated with increases in bank lending, in particular to smaller and riskier firms (Sommer, 2024; Song & Thakor, 2010). Yet, this is not necessarily the first-best option to mitigate SMEs' financing constraints, since it often takes decade-long reforms to create suitable conditions for capital markets. This has the following implications for policymaking: Policymakers need to tailor their decisions to the most promising ways of fostering SME finance to local contexts. While SME promotion may involve capital market development in some middle-income countries, this is still way off for many LMICs, as it may take strenuous institutional and structural reforms over a prolonged period to create an environment for thriving capital markets. Policymakers should foster non-traditional instruments to provide SMEs with direct access to capital market financing. Receivables and lending platforms are especially promising for LMICs and can be promoted through specialised regulatory frameworks, information and capacity-building, as well as co-investments and tax incentives. Policymakers should scale up policies to improve SMEs' access to loans; this serves both as an immediate response to SMEs' financing constraints and as a complement to policies to ensure that banks' increased lending activities (spillovers from capital market development) can (also) be channelled towards SMEs. Depending on country-specific bottlenecks, this may include addressing well-known problems in SME lending through the establishment of credit bureaus and registries as well as moveable asset registries; strengthening contract enforcement and insolvency laws; and implementing a regulatory framework conducive to digitalisation. |
| Keywords: | structural change, economic development and employment, SMEs, capital markets |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:idospb:302799 |
| By: | Lauren Cohen; Umit Gurun; Katie Moon; Paula Suh |
| Abstract: | Analyzing millions of patents granted by the USPTO between 1976 and 2020, we find a pattern where specific patents only rise to prominence after considerable time has passed. Amongst these late-blooming influential patents, we show that there are key players (patent hunters) who consistently identify and develop them. Although initially overlooked, these late-blooming patents have significantly more influence on average than early-recognized patents and are associated with significantly more new product launches. Patent hunters, as early detectors and adopters of these late-blooming patents, are also associated with significant positive rents. Their adoption of these overlooked patents is associated with a 6.4% rise in sales growth (t = 3.02), a 2.2% increase in Tobin’s Q (t = 3.91), and a 2.2% increase in new product offerings (t = 2.97). We instrument for patent hunting, and find strong evidence that these benefits are causally due to patent hunting. The rents associated with patent hunting on average exceed those of the original patent creators themselves. Patents hunted are closer to the core technology of patent hunters, more peripheral to writers, and in less competitive spaces. Lastly, patent hunting appears to be a persistent firm characteristic and to have an inventor-level component. |
| JEL: | L1 O31 O33 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32965 |
| By: | Sanchis-Guarner, Rosa; Szumilo, Nikodem; Vernet, Antoine |
| Abstract: | We study the impact of improved rail access on entrepreneurship rates in England and Wales. We use data from the Census spanning 2001, 2011, and 2021 to analyse self-employment rates in granular geographic areas of around 200 residents. Specifically, we study how they respond to changes in the distance to the nearest train station occurring due to 56 new station openings. We find that all else equal, moving 1 km further away from a station reduces self-employment rates by 0.12 percentage points, with the effect dissipating beyond 7 km. Secondary results suggest that access to rail makes it easier to become self-employed while not making it more attractive compared to employment. Our findings suggest that rail infrastructure improvements can support local entrepreneurship and economic activity, contributing to regional development and reducing economic inequality. |
| Keywords: | entrepreneurship; rail; self-employment |
| JEL: | L20 O18 R11 |
| Date: | 2024–08–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:124680 |
| By: | Magali Aubert (UMR MoISA - Montpellier Interdisciplinary center on Sustainable Agri-food systems (Social and nutritional sciences) - Cirad - Centre de Coopération Internationale en Recherche Agronomique pour le Développement - IRD - Institut de Recherche pour le Développement - CIHEAM-IAMM - Centre International de Hautes Etudes Agronomiques Méditerranéennes - Institut Agronomique Méditerranéen de Montpellier - CIHEAM - Centre International de Hautes Études Agronomiques Méditerranéennes - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - Institut Agro Montpellier - Institut Agro - Institut national d'enseignement supérieur pour l'agriculture, l'alimentation et l'environnement); Geoffroy Enjolras (UGA - Université Grenoble Alpes) |
| Abstract: | In a search of higher income and lower dependence on intermediaries in the food chain, family farms are increasingly adopting short food supply chains (SFSCs). The purpose of this paper is to investigate the role of farm entrepreneurs and their family in defining the implementation of SFSCs. We use the 2010 Exhaustive Agricultural Census of French farms and implement a logit model. The results underline the fact that young and educated farm entrepreneurs are more likely to promote SFSCs. The presence of the family on the farm as well as the involvement of family members play a key role in the choice of SFSCs. However, the marital status of a farm entrepreneur and the involvement of their spouse have no specific influence. This research sheds new light on the key role played by families in supporting productive and marketing strategies of farms. |
| Keywords: | family-run management, short food supply chains, farming |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04669456 |
| By: | Görg, Holger; Lehr, Jakob |
| Abstract: | This paper, for the first time, investigates the impact of foreign acquisitions on German manufacturing firms using, newly available unique administrative micro data spanning 25 years. Based on an event study design combined with propensity score matching techniques, we find that foreign acquisitions significantly increase labor productivity and average wages in acquired firms. A reduction in employment drives both effects. |
| Keywords: | Foreign direct investment, Foreign acquisitions, Firm behavior, Ex-post evaluation |
| JEL: | F23 F61 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:302104 |
| By: | Juhro, Solikin M.; Kuantan, Dhaha Praviandi; Oktaviandhi, Nadhil Auzan |
| Abstract: | This study explores the response of non-financial corporations and financial intermediaries to recent regulatory changes in Indonesia’s downstream sector. It examines their participation, constraints, and funding requirements. The research employs a qualitative descriptive design, incorporating both a structured questionnaire and network analysis based on detailed financial data. The focus is on key sectors driving the development of downstream industries in Indonesia, such as palm oil processing, nickel-aluminum smelting, and vehicle assembly. The findings reveal that downstream processing generally enhances corporate performance, but the benefits are disproportionately skewed toward large enterprises. Small firms, on the other hand, encounter significant challenges, including limited processing capacity, inadequate funding, and restricted access to loans, which hinder their active participation in downstream activities. To fully realize the potential benefits of downstream processing, the study suggests that financial policies must be reformed to support businesses of all sizes across different stages of the supply chain. Additionally, improving access to financing is essential to enable smaller firms to participate more effectively in these activities. These measures would provide critical support to companies, particularly those operating at the lower levels of the value chain, thereby fostering economic growth at the local level. |
| Keywords: | Downstreaming, Financing Policies, Industrial Manufacturing, Indonesia, Supply Chain Finance |
| JEL: | L60 L70 |
| Date: | 2024–08–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121844 |
| By: | Alejandro Fernández Cerezo (BANCO DE ESPAÑA); Borja Fernández-Rosillo San Isidro (BANCO DE ESPAÑA); Natividad Pérez Martín (BANCO DE ESPAÑA) |
| Abstract: | The availability of a firm-level database that is representative of the productive sector of an economy on an aggregate scale is increasingly important to analyse the heterogeneity of different economic variables at different levels of aggregation (for instance, by region, firm size or sector). This paper seeks, first, to evaluate the representativeness of the Banco de España’s Integrated Central Balance Sheet Database (Integrated CBSO database or CBI by its Spanish initials) for conducting regional analysis with firm-level data and, second, to analyse the differences in firm size distribution between the Spanish regions. |
| Keywords: | firm data, firm size distribution, financial reporting |
| JEL: | C81 D21 L11 R11 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:bde:opaper:2429e |
| By: | Krieger, Bastian |
| Abstract: | The access to foreign knowledge via service imports fosters the success of innovations in Germany. The probability of firms in- troducing new or significantly improved products, services, or processes is more than twice as high for those that import knowl- edge services than for non-importers (68 per cent vs. 33 per cent). Furthermore, knowledge importers experience a greater av- erage percentage reduction in their unit costs due to new processes (three per cent vs. one per cent), and a larger revenue share from new products and services (18 per cent vs. eight per cent). Over the course of the previous decade, Germany witnessed a notable surge in the importation of knowledge services, with the value of such imports more than doubling from $16, 949 million in 2010 to $46, 392 million in 2022. Moreover, Germany's focus on the European Union as a trade partner significantly increased. The European Union's share of Germany's total imports of knowledge services rose from 35 per cent in 2010 to 44 per cent in 2019. This trend follows the proposed strategy of the German Federal Ministry of Education and Research (BMBF) to focus on a specific selection of countries as knowledge sources to enhance Germany's technological sovereignty and resilience to global challeng- es. However, to compensate for rising protectionism worldwide, trade barriers between Germany and its selected countries - in particular the EU single market - have the potential to be further reduced. |
| Keywords: | Innovation, trade in services, knowledge, service, import, Germany |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewpbs:302801 |