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on Small Business Management |
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Issue of 2024‒10‒14
fifteen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Francesco D'Alessandro (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy); Enrico Santarelli (, Department of Economics, University of Bologna, Italy - Global Labor Organization (GLO), Essen, Germany); Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany) |
| Abstract: | In this paper we integrate the insights of the Knowledge Spillover Theory of Entrepreneurship and Innovation (KSTE+I) with Schumpeter's idea that innovative entrepreneurs creatively apply available local knowledge, possibly mediated by Marshallian, Jacobian and Porter spillovers. In more detail, in this study we assess the degree of pervasiveness and the level of opportunities brought about by AI technologies by testing the possible correlation between the regional AI knowledge stock and the number of new innovative ventures (that is startups patenting in any technological field in the year of their foundation). Empirically, by focusing on 287 Nuts-2 European regions, we test whether the local AI stock of knowledge exerts an enabling role in fostering innovative entry within AI-related local industries (AI technologies as focused enablers) and within non AI-related local industries, as well (AI technologies as generalised enablers). Results from Negative Binomial fixed-effect and Poisson fixed-effect regressions (controlled for a variety of concurrent drivers of entrepreneurship) reveal that the local AI knowledge stock does promote the spread of innovative startups, so supporting both the KSTE+I approach and the enabling role of AI technologies; however, this relationship is confirmed only with regard to the sole high-tech/AI-related industries. |
| Keywords: | KSTE+I, Artificial Intelligence, innovative entry, enabling technologies |
| JEL: | O33 L26 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie5:dipe0039 |
| By: | Sabien Dobbelaere (Vrije Universiteit Amsterdam); Michael D. König (Vrije Universiteit Amsterdam); Andrin Spescha (ETH Zurich); Martin Wörter (ETH Zurich) |
| Abstract: | The fraction of R&D active firms decreased in Switzerland but increased in the Netherlands from 2000-2016. This paper examines reasons for this divergence and its impact on productivity growth. Our micro-data reveal R&D concentration among high-productivity firms in Switzerland. Innovation support sustains firms’ R&D activities in both countries. Our structural growth model identifies the impact of innovation, imitation and R&D costs on firms’ R&D decisions. R&D costs gained importance in Switzerland but not in the Netherlands, explaining the diverging R&D trends. Yet, counterfactual analyses show that policies should prioritize enhancing innovation and imitation success over cost reduction to boost productivity growth. |
| Keywords: | R&D, innovation, imitation, R&D costs, policy, productivity growth, traveling wave. |
| Date: | 2023–12–22 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20230080 |
| By: | Haris, Faldi; Rahadi, Raden Aswin |
| Abstract: | VC investment has undergone a substantial transition, particularly in emerging countries, where there is a growing entrepreneurial culture. Southeast Asia (SEA) has emerged as an image of trust due to its remarkable accomplishments in venture capital funding. Notwithstanding, the VC success rate is quite low, with up to 75 percent of venture-backed businesses failing to return cash to their investors and 30 to 40 percent of those 75 percent liquidating their assets, resulting in their investors losing their entire investment (Ghosh, 2012). In light of this context, this study sets out to investigate the behavior of venture capital firms in Southeast Asia and the complex decision-making processes involved. This research aims to enhance the success rate of VC firms and contribute to the advancement of VC literature by precisely identifying the relevant parameter. This study seeks to analyze the complex landscape of venture capital activities in a highly dynamic entrepreneurial ecosystem, using the complete framework created by Gompers et al. (2023). A case study, a widely recognized method in exploratory research, is used as the primary methodology to reveal novel themes and insights obtained from respondents in venture capital firms. Using a semi-structured interview, this study implies that VC fund structure and strategy, start-up screening criteria, start-up valuation, exit, and risk management have a significant effect on determining SEA VC firm investment decisions. This study is one of the first efforts to utilize Gompers et al.'s (2023) framework in the specific setting of Southeast Asia. This study contributes to the current research on venture capital decision-making by providing innovative measurement parameters, with a particular emphasis on the notion of "runway." These features, which relate to a startup's expenditure rate and its long-term viability offer a broader understanding of the financial factors that impact investments made by SEA VC companies. |
| Date: | 2024–09–05 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:t3byd |
| By: | Gherbi Laid (Echahid Hamma Lakhdar University) |
| Abstract: | This study aims to shed light on the role of business incubators in supporting entrepreneurship and entrepreneurship development in the university environment, as incubators are considered one of the most important support and accompaniment mechanisms that contribute to the development of entrepreneurial projects, The study adopted a case study approach through the preparation and development of a questionnaire, which was distributed, The study concluded that Algeria is striving to develop a diverse and integrated system to support, accompany and promote entrepreneurship in various aspects that affect it directly or indirectly, The business incubator at the University of the Valley is one of the most important of these mechanisms, as there is a positive impact of the business incubator's activity on entrepreneurship among students at the University of the Valley. |
| Keywords: | entrepreneurship, business incubator, support and accompaniment mechanisms, University of the Valley. JEL Classification Codes: L26 L31 D2 O3, University of the Valley. JEL Classification Codes: L26, L31, D2, O3 |
| Date: | 2023–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04680590 |
| By: | Leogrande, Angelo; Drago, Carlo; Arnone, Massimo |
| Abstract: | The article explores the diffusion of online sales tools among Italian enterprises with at least ten employees, considering regional inequalities through methods that help address economic policy. The study gives an overall assessment of the adoption of e-commerce among Italian SMEs, using multiple methods that help to identify regional disparities and provide insight for policymakers. The data were obtained from the ISTAT-BES database. Analysis was applied using the k-Means machine learning algorithm by comparing the Silhouette coefficient vs. the Elbow method. The elbow method reveals greater expository capacity, and the optimal number of clusters equals 3. The econometric analysis used the following methods: Panel Data with Fixed Effects, Panel Data with Random Effects, Weighted Least Squares-WLS, and Dynamic Panels at 1 Stage. The results show that cultural and creative employment and regular internet users are positively associated with SMEs active in e-commerce while negatively associated with the family's availability of at least one computer and internet connection. Finally, the article compares different machine learning algorithms to predict the future value of SMEs active in e-commerce. The results are discussed critically. |
| Keywords: | e-Commerce, Small and Medium Enterprises, Regional Inequalities, Panel Data, k-Means, Machine-Learning. |
| JEL: | O3 O30 O31 O32 O33 O34 O38 |
| Date: | 2024–11 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122115 |
| By: | Hiroshi Inokuma (Director and Senior Economist, Institute for Monetary and Economic Studies, Bank of Japan (E-mail: hiroshi.inokuma@boj.or.jp)); Juan M. Sánchez (Senior Economic Policy Advisor, Federal Reserve Bank of St. Louis (E-mail: juan.m.sanchez@stls.frb.org)) |
| Abstract: | A slowdown in population growth causes a decline in business dynamism by increasing the share of old businesses. But how does it affect productivity growth? We answer this question by extending a standard business dynamics model to include endogenous productivity growth. Theoretically, the growth rate of the size of surviving old businesses is a "sufficient statistic" for determining the direction and magnitude of the impact of population growth on productivity growth. Quantitatively, this effect is significant across balanced growth paths for the United States and Japan. TFP growth in the United States falls by 0.3 percentage points because of the slowing in population growth between 1970 and 2060. The same driving force produces a significantly bigger response in Japan. Despite the significant long-run effect, we discover that changes in TFP growth are slow in reaction to population growth changes due to two short-run counterbalancing factors. |
| Keywords: | population growth, economic growth, firms dynamics, demographics, productivity, innovation, TFP |
| JEL: | E20 J11 O33 O41 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:ime:imedps:24-e-09 |
| By: | Khellil Khaled (OEB - Université Larbi-Ben-Mhidi [Oum-El-Bouaghi]); Loucif Kamilia (OEB - Université Larbi-Ben-Mhidi [Oum-El-Bouaghi]) |
| Abstract: | This study aims to assess the development of small and medium-sized enterprises in Algeria from 2010 to 2022 and their contribution to economic diversification and reducing Algeria's reliance on oil revenues, using descriptive and analytical techniques plus the inductive approach to examine and analyze data collected, the study shows that Algeria's small and medium-sized enterprises are vulnerable and ineffective at contributing to the country's economic diversification, and their extensive orientation towards the services and construction sectors does not help create added value despite the significant growth in their count during the period of study. |
| Keywords: | Small and Medium-sized Enterprises Economic Diversification Algerian exports. JEL Classification Codes : Q32 Q37, Small and Medium-sized Enterprises, Economic Diversification, Algerian exports. JEL Classification Codes : Q32, Q37 |
| Date: | 2023–12–30 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04684569 |
| By: | Berlinski, Samuel; Gagete-Miranda, Jessica |
| Abstract: | This study examines labor law enforcement spillovers in Brazil's highly informal economy, focusing on disability quota enforcement for formal firms. New inspection procedures increased compliance through heightened inspections and fines, boosting disability hiring. We investigate spillover effects across various firm networks: neighborhood, ownership, and human resources specialists. Results show that spillovers can have up to twice the impact on disability employment compared to direct fines. These findings highlight the potential for targeted enforcement strategies to amplify policy effectiveness beyond directly affected firms even in developing economies characterized by low compliance with employment laws. |
| Keywords: | Enforcement spillovers;Networks;persons with disability;Brazil |
| JEL: | I38 J68 K31 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13681 |
| By: | Pascal Bougssere (UV-BF - Université virtuelle du Burkna Faso); Mamadou Toe (UTS - Université Thomas Sankara); Wend-Kuuni Raïssa Yerbanga (UTS - Université Thomas Sankara) |
| Abstract: | This article examines the influence of microcredit financing conditions on the financial performance of microenterprises in Burkina Faso. To this end, an analysis was carried out using a linear model for a sample of 129 microenterprises based on panel data from 2017 to 2019. The results obtained using the Feasible Generalized Least Squares (FGLS) method show that the amount of microcredit and the repayment period have a positive impact on the financial performance of microenterprises. In contrast, the interest rate, proximity to microfinance institutions (MFIs) and the gender of the business owner negatively affect this performance. These results emphasize that in the Burkinabe context, proximity to MFIs does not guarantee the profitability of microenterprises, but rather benefits MFIs in repaying loans and expanding their portfolio. They also indicate that women-led micro-enterprises are less profitable because they have difficulties accessing credit, particularly due to a lack of collateral. Conversely, businesses run by educated owners have better financial performance. |
| Keywords: | Financing conditions, microcredit, microenterprise, financial performance |
| Date: | 2024–09–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04692353 |
| By: | JaeBin Ahn (International Monetry Fund); Shekhar Aiyar (National Council of Applied Economic Research, Delhi); Andrea F. Presbitero (International Monetry Fund) |
| Abstract: | This paper provides cross-country firm-level evidence on productivity spillovers from foreign direct investment (FDI), separately for greenfield FDI and cross-border mergers and acquisitions (M&As). The granularity of bilateral sector-level FDI datasets allows for addressing possible endogeneity issues by applying a two-step approach whereby an exogenous FDI measure is constructed from a gravity-type regression of bilateral FDI flows. When looking at the effects of greenfield investments on firm labor productivity we find: i) positive intraindustry spillover effects for firms located in advanced countries, and ii) positive backward spillover effects for firms located in emerging and developing countries. These spillovers are driven entirely by FDI from advanced countries. The results from cross-border M&As are noisier, with weakly suggestive evidence for positive intra-industry spillovers in advanced countries but negative backward spillovers in emerging markets and developing countries. |
| Keywords: | Foreign direct investment; Cross-border M&A; Intra-industry spillovers; Backward spillovers; Forward spillovers |
| JEL: | F14 F21 F23 F60 |
| Date: | 2024–05–24 |
| URL: | https://d.repec.org/n?u=RePEc:nca:ncaerw:172 |
| By: | James M. Brand; Mert Demirer; Connor Finucane; Avner A. Kreps |
| Abstract: | Computing technologies have become critical inputs to production in the modern firm. However, there is little large-scale evidence on how efficiently firms use these technologies. In this paper, we study firm productivity and learning in cloud computing by leveraging CPU utilization data from over one billion virtual machines used by nearly 100, 000 firms. We find large and persistent heterogeneity in compute productivity both across and within firms, similar to canonical results in the literature. More productive firms respond better to demand fluctuations, show higher attentiveness to resource utilization, and use a wider variety of specialized machines. Notably, productivity is dynamic as firms learn to be more productive over time. New cloud adopters improve their productivity by 33% in their first year and reach the productivity level of experienced firms within four years. In our counterfactual calculations, we estimate that raising all firms to the 80th percentile of productivity would reduce aggregate electricity usage by 17%. |
| JEL: | D24 L86 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32938 |
| By: | Arnone, Massimo; Leogrande, Angelo; Drago, Carlo; Costantiello, Alberto |
| Abstract: | This research explores how regional socioeconomic variables affect the perception of social trust and support networks (PYCC) in Italian regions, and examines the implications for public policy designed to strengthen social cohesion. This study examines the variable "People You Can Count On" (PYCC) from the ISTAT-BES dataset, focusing on its distribution across Italian regions between 2013 and 2022. Using clustering through a k-Means algorithm optimized with the Silhouette coefficient and the Elbow method, three distinct clusters of regions emerged, highlighting significant differences in social support networks. An econometric model was employed to estimate the PYCC variable, factoring in socioeconomic indicators such as employment rates, income inequality, and social participation. The results indicate a complex interplay between socioeconomic conditions and social trust, with regions in the South and Islands showing increased community support, while many Northern regions experienced declines. The study suggests that areas with lower economic conditions often foster stronger social networks, driven by necessity. These findings underline the importance of targeted public policies aimed at fostering social cohesion, particularly in regions facing economic challenges. Policy implications include enhancing education, supporting small enterprises, and promoting social housing and welfare initiatives. Strengthening community participation and volunteering are also highlighted as critical strategies to build resilient support networks. Overall, the research provides valuable insights into the regional disparities of social trust and the role of socioeconomic factors in shaping community support across Italy. |
| Keywords: | Altruism, Social Trust, k-Means, Machine-Learning, Silhouette Coefficient, Elbow Method, Panel Data, Regional Disparities |
| JEL: | D6 D63 D64 D9 J21 |
| Date: | 2024–09–15 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122076 |
| By: | Ratna Sahay (National Council of Applied Economic Research, Delhi); Navya Srivastava (National Council of Applied Economic Research, Delhi); Mahima Vasishth (National Council of Applied Economic Research, Delhi) |
| Abstract: | TGlobally, women’s share in corporate leadership has been steadily rising, including in India. The female director mandate under The Companies Act (2013) in India marked a significant step toward gender-inclusive corporate leadership, requiring listed firms to have at least one woman on their board. Within a year, the percentage of listed firms without women on board plummeted from 53 percent to less than 10 percent. Despite this progress, India still lags in the share of women in middle and senior management roles at only 17 percent, compared to nearly 33 percent for the world. This paper documents the status of gender-inclusive corporate leadership and uses the woman director mandate in the Act to study its relationship with firm outcomes, including financial performance and corporate culture in India. Interestingly we find that firms, on average, were appointing more women than mandated by the Act, suggesting the favorable impact of the current government’s signal to foster women-led development and the positive experience gained by firms. At the same time, newly appointed women were younger and more educated than their male counterparts and their average directorship “stretch factor†increased significantly compared to men. Combining personnel-level data from NSE-listed firms with firm performance data and employing a reverse difference-in-difference econometric strategy, we find that having at least one woman on board is associated with higher economic performance, financial stability, and lower financial risk. Additionally, using almost 400, 000 employee reviews scraped from a company review platform, we find that higher shares of women in board positions correlate positively with employee ratings and sentiment scores only when firms also hire women in top management positions. This analysis highlights the business case of appointing more women at the top. |
| Keywords: | Women’s Leadership, Firm Performance, Firm Culture |
| JEL: | J16 L25 M59 |
| Date: | 2024–05–24 |
| URL: | https://d.repec.org/n?u=RePEc:nca:ncaerw:170 |
| By: | Kay, Rosemarie; Pahnke, André; Welter, Friederike |
| Abstract: | While existing research on business successions stresses the importance of the economic situation of family business in this context, research on women's entrepreneurship, however, suggests that women-led businesses may be less economically attractive for potential successors because of structural differences in comparison to men-led business. Moreover, the business owner's gender may have an impact on the business succession process and its outcome too. Based on one the largest German establishment surveys which is augmented by additional administrative data, this chapter seeks to further link the two research strands by providing first insights into the impact of family businesses owner's gender on both business succession planning and the outcome of the business succession process. Regarding the outcome of business successions, the results indicate that differences between women- and men-led businesses are not related to gender but to characteristics of the businesses to be handed over. |
| Keywords: | Gender, family businesses, business succession |
| JEL: | J16 L26 M2 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifmwps:303037 |
| By: | Pablo Ottonello; Wenting Song; Sebastian Sotelo |
| Abstract: | We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms’ communications (earnings calls, regulatory filings, and social media), by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms’ political engagement. (1) Political engagement is rare among firms. (2) Political engagement is concentrated among large firms. (3) Firms tend to specialize in specific topics and outlets. (4) Large firms tend to engage in a wider set of topics and outlets. (5) The 2020 surge in firms’ political engagement was associated with an increase in the engagement of medium-sized firms and a change in the mix of political topics. |
| JEL: | C8 D22 D72 G3 L1 M14 |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32923 |