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on Small Business Management |
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Issue of 2025–03–10
nineteen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Fontanelli, Luca; Calvino, Flavio; Criscuolo, Chiara; Nesta, Lionel; Verdolini, Elena |
| Abstract: | We leverage a uniquely comprehensive combination of data sources to explore the enabling role of human capital in fostering the adoption of predictive AI systems in French firms. Using a causal estimation approach, we show that ICT engineers play a key role for AI adoption by firms. Our estimates indicate that raising the current average share of ICT engineers in firms not using AI (1.66%) to the level of AI users (6.7%) would increase their probability to adopt AI by 0.81 percentage points - equivalent to an 8.43 percent growth. However, this would imply substantial investments to fill the existing gap in ICT human capital, amounting to around 450.000 additional ICT engineers. We also explore potential mechanisms, showing that the relevance of ICT engineers for predictive AI is driven by the innovative nature of its use, make-vs-buy choices, large availability of data, ICT and R&D intensity. |
| Keywords: | artificial intelligence; human capital; technological diffusion |
| JEL: | J24 O33 |
| Date: | 2024–11–18 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126787 |
| By: | Vargas Da Cruz, Marcio Jose; Pereira Lopez, Mariana De La Paz; Salgado Chavez, Edgar |
| Abstract: | This paper investigates the relationship between disruptive technologies and access to finance for digital tech firms in Africa. Through textual analysis of data from Crunchbase and Pitchbook, the study explores how firms across different age cohorts incorporate disruptive technologies into their offerings in e-commerce, fintech, and information technology services. The findings reveal three key insights for African digital tech startups. First, African startups are less likely to incorporate disruptive technologies into their offerings compared to other regions, except for mobile payments. Second, incorporating these technologies is associated with more funding, but this link is weaker in Africa than in other regions. These results hold when excluding mobile payments and addressing potential endogeneity using instrumental variables. Third, firms that do incorporate disruptive technologies tend to secure funding earlier, with lower initial amounts, but are more likely to succeed in terms of exit or valuation growth than their peers. |
| Date: | 2023–12–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10633 |
| By: | Antonin Bergeaud; Max Deter; Maria Greve; Michael Wyrwich |
| Abstract: | We investigate the causal relationship between inventor migration and regional innovation in the context of the large-scale migration shock from East to West Germany between World War II and the construction of the Berlin Wall in 1961. Leveraging a newly constructed, century-spanning dataset on German patents and inventors, along with an innovative identification strategy based on surname proximity, we trace the trajectories of East German inventors and quantify their impact on innovation in West Germany. Our findings demonstrate a significant and persistent boost to patenting activities in regions with higher inflows of East German inventors, predominantly driven by advancements in chemistry and physics. We further validate the robustness of our identification strategy against alternative plausible mechanisms. We show in particular that the effect is stronger than the one caused by the migration of other high skilled workers and scientists. |
| Keywords: | patents, migration, Germany, iron curtain, innovation |
| Date: | 2025–02–19 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2076 |
| By: | Julian Caballero; Sebastian Doerr; Aaron Mehrotra; Fabrizio Zampolli |
| Abstract: | Small and medium-sized enterprises (SMEs) in emerging market economies struggle to access credit, partly due to firms' short financial histories and lack of collateral. The rise of big tech and fintech lenders that make better use of data and digital innovation could reduce the need for collateral and improve SMEs' access to credit. However, big tech and fintech lending so far constitutes only a small share of the total. Digital innovation by itself may not be enough to substantially improve SME lending without further progress in overcoming more deep-seated obstacles. |
| Date: | 2025–02–27 |
| URL: | https://d.repec.org/n?u=RePEc:bis:bisblt:99 |
| By: | Soufiane Elbroumi (USMBA - Université Sidi Mohamed Ben Abdellah); Maha Assaad Idrissi (UIT - Université Ibn Tofaïl) |
| Abstract: | The circular economy (CE) represents an innovative approach to addressing contemporary environmental, social, and economic challenges. This study investigates the factors influencing the adoption of circular practices by Moroccan small and medium enterprises (SMEs), focusing on economic, technological, and institutional dimensions. Based on empirical data from 250 SMEs across Morocco's major economic regions, the research highlights how access to funding, clean technologies, and managerial awareness serve as key drivers of this transition. The findings reveal that financial and technological resources significantly promote the adoption of multi-R approaches (reduce, reuse, recycle), while institutional constraints pose substantial barriers. Moreover, sectoral disparities are evident, with higher adoption rates in industry and services compared to commerce. This study offers strategic recommendations to accelerate the circular transition of Moroccan SMEs, including public incentives, institutional reforms, and enhanced stakeholder awareness. The findings contribute to academic discussions on CE in emerging economies while providing practical insights for policymakers and businesses. |
| Abstract: | L'économie circulaire (EC) constitue une approche novatrice pour répondre aux défis environnementaux, sociaux et économiques contemporains. Cet article examine les facteurs influençant l'adoption des pratiques circulaires par les petites et moyennes entreprises (PME) marocaines, en mettant en lumière les dimensions économiques, technologiques et institutionnelles. Basée sur une analyse empirique menée auprès de 250 PME réparties sur les principales régions économiques du Maroc, cette recherche explore comment des leviers tels que l'accès aux financements, aux technologies propres et à la sensibilisation des dirigeants peuvent stimuler cette transition. Les résultats montrent que si les ressources financières et technologiques favorisent l'intégration des approches multi-R (réduction, réutilisation, recyclage), les contraintes institutionnelles freinent considérablement cette adoption. En outre, des disparités sectorielles marquées sont identifiées, l'industrie et les services montrant un engagement plus élevé que le commerce. Cette étude propose des recommandations stratégiques pour accélérer la transition circulaire des PME marocaines, notamment à travers des incitations publiques, des réformes institutionnelles et une sensibilisation accrue des parties prenantes. Les conclusions enrichissent le débat académique sur l'économie circulaire dans les économies émergentes tout en offrant des orientations pratiques pour les décideurs et les entreprises. |
| Keywords: | Circular economy Small and medium-sized enterprises (SMEs) Multi-R practices Sustainable Transition, Circular economy, Small and medium-sized enterprises (SMEs), Multi-R practices, Sustainable Transition |
| Date: | 2024–12–31 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04916123 |
| By: | Bøler, Esther Ann; Holtsmark, Katinka; Ulltveit-Moe, Karen Helene |
| Abstract: | We analyze how a major negative shock to the producers of fossil fuels may lead to a shift from dirty to clean R&D along the supply chain. First, we develop a theoretical framework of directed technical change, showing that adjustment costs in R&D activity can lead fossil energy sector suppliers to shift their R&D activity towards clean innovation more than other firms, as a consequence of a negative oil price shock. Second, we investigate the impact of a major drop in the oil price in 2014 on clean R&D. Relying on rich firm level trade data, we propose a novel method of identifying firms' exposure to the price shock. We find that more exposed firms increased their clean R&D investments more than less exposed firms. Our findings contribute to the understanding of the drivers of clean technological change, which is vital to assess the effectiveness of different climate policy measures, including carbon pricing. |
| Keywords: | clean innovation; supply chains; carbon pricing |
| JEL: | F18 O31 Q55 Q58 |
| Date: | 2024–12–13 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126766 |
| By: | Patino Pena, Fausto Andres; Ferro, Esteban |
| Abstract: | This paper examines the role of firm dynamics in aggregate total factor productivity, job flows, and wage inequality in Ecuador. Utilizing a comprehensive employer-employee dataset, the paper documents firm dynamics and job flow patterns that are consistent with the presence of market distortions. Also, the paper identifies factor misallocation as the main contributor to Ecuador's total factor productivity deceleration. Given these trends, the paper explores allocative inefficiency drivers through firm- and industry-level regressions. Firms in the top productivity quintile face distortive non-wage labor costs that are 3.7 times higher than the bottom quintile, after controlling for firm size and age. The findings also provide evidence of credit misallocation across firms. Additionally, industries with higher job mobility, credit access, and competition and lower non-wage labor costs, minimum wage incidence, and zombie firms demonstrate higher allocative efficiency. Moreover, worker-level regressions indicate that misallocation drivers explain up to 41 percent of wage inequality, with non-wage labor costs and product market frictions as distortions driving this inequality. |
| Date: | 2024–03–27 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10739 |
| By: | Pia Andres |
| Abstract: | Should policymakers protect European firms by restricting imports of solar technology from China? Pia Andres finds that Chinese competition has resulted in many European firms going out of business, but it has also prompted more intense innovative activity among some of those that have survived. |
| Keywords: | Green Growth, Economic geography, Globalisation, Technological change |
| Date: | 2025–02–20 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepcnp:694 |
| By: | Rami Mikko Ahmed Galal |
| Abstract: | Economic zone programs are generally pursued to improve firms' performance within discrete areas by removing the constraints firms face. Whether or not they succeed in doing so is an empirical question. This paper capitalizes on a unique survey of firms within and outside zones in South Asia to assess the effects of zone programs on firms’ performance in exports, investment, employment, and productivity. Adopting a propensity score matching approach and district-level fixed effects, the paper explores four questions: whether zones support firm performance; whether the type of zone makes a difference, which kinds of public support services matter more, and whether firms inside zones grow faster. The results show that (i) being inside a zone positively affects foreign direct investment and employment, (ii) the effects across zone types are mixed, (iii) infrastructure and trade facilitation play a greater role in firm performance than fiscal incentives and governance facilities, and (iv) firms inside zones grow faster. |
| Date: | 2024–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10781 |
| By: | Bernhard Ganglmair; Alexander Kann |
| Keywords: | defensive publications, disclosure, open innovation, patents, R&D, text-asdata We study the content, novelty, and value of defensive publications relative to patents. We use a large language model (LLM) to apply the cooperative patent classification (CPC) system to a set of defensive publications (from 1962 to 2022) from the journal Research Disclosure, thus mapping such research disclosures and patents into a common space and allowing for a direct evaluation of textual similarities between these two types of R&D outputs. We find that while in some technologies, patents and research disclosures follow similar aggregate trends, some exhibit diverging developments over time. We also document shifts in the position of research disclosures in the patenting space that are indicative of changes in the technological landscape not captured in patents. We further show that substantial numbers of research disclosures are published before their closest patents are filed, and many contain terminology before it is first used in patents. Last, we find that in several technology areas, research disclosures have evolved from being an outlet for niche results to a vehicle to publicize technological developments of high practical relevance and value. Our results imply that when we draw conclusions about the nature of technological progress or the direction of innovation based solely on patent data, we obtain an incomplete picture. |
| JEL: | C81 O32 O34 O36 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_656 |
| By: | Cirera, Xavier; Vargas Da Cruz, Marcio Jose; Soares Martins Neto, Antonio; Lee, Kyungmin; Gomes Nogueira, Caroline |
| Abstract: | This paper explores new firm-level data to examine the gender gap in technology adoption and the associated effect on firm performance. The data show a small difference in technology sophistication between firms managed by women and those managed by men, but there are larger differences in terms of labor productivity. Firms with female top managers are just as likely to adopt the most sophisticated technologies for general business functions that are common across all firms except for enterprise resource planning. However, firms managed by women adopt advanced technologies less frequently for sector-specific business functions. The study also finds that firms with higher technology sophistication tend to have higher productivity and the returns to the use of more sophisticated technologies are larger in businesses managed by women, which helps to narrow the productivity gap between firms managed by women and those managed by men. |
| Date: | 2024–05–15 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10771 |
| By: | Bruhn, Miriam; Demirguc-Kunt, Asli; Singer, Dorothe |
| Abstract: | This paper assesses the medium-run effects of government support to firms during the COVID-19 crisis and whether the effectiveness of this support varied with its timing. Using data from three rounds of the World Bank’s Enterprise Surveys COVID-19 Follow-up Surveys carried out between May 2020 and April 2022, it relates government support in Round 1 (received in the first half of 2020) and Round 2 (received during the second half of 2020 or early 2021) with firm performance in Round 3 (generally mid-2021). Controlling for a host of background characteristics, firms that received support in Round 1 performed better in terms of Round 3 sales, but only if they did not have continued support. Firms that also received support in Round 2 had similar Round 3 sales as those that received no support and were more likely to decrease employment. Firms that received government support only in Round 2 experienced no boost in Round 3 performance. The findings suggest that government support should be provided promptly, but it should also be phased out quickly. |
| Date: | 2023–12–12 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10641 |
| By: | Estrin, Saul; Herrmann, Andrea; Levesque, Moren; Mickiewicz, Tomasz; Sanders, Mark |
| Abstract: | We present a Schumpeterian growth model with new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven, revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a unique sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor input to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and labor) that helps ventures overcome bottlenecks in the innovation process, and we propose a line of research to explain the (large) unexplained variation in venture creation efficiency. |
| Keywords: | entrepreneurship; innovation; new venture creation; proprietary resources; stochastic frontier analysis; schumpeterian growth model |
| JEL: | O31 L29 |
| Date: | 2024–11–15 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126789 |
| By: | Altomonte, Carlo; El-Mallakh, Nevine; Sonno, Tommaso |
| 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 |
| JEL: | O30 |
| Date: | 2024–04–30 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126757 |
| By: | James Bessen; Xiupeng Wang |
| Abstract: | Investments in software, R&D, and advertising have surged, nearing half of U.S. private nonresidential investment. Yet just a few hundred firms dominate this growth. Most firms, including large ones, regularly invest little in capitalized software and R&D, widening this “intangible divide” despite falling intangible prices. Using comprehensive US Census microdata, we document these patterns and explore factors associated with intangible investment. We find that firms invest significantly less in innovation-related intangibles when their rivals invest more. One firm’s investment can obsolesce rivals’ investments, reducing returns. This negative pecuniary externality worsens the intangible divide, potentially leading to significant misallocation. |
| Keywords: | intangibles, R&D, software, innovation, obsolescence |
| JEL: | E22 O31 O32 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:25-15 |
| By: | João Amador; Paulo Barbosa; João Cortes |
| Abstract: | This paper studies firms’ distances to becoming successful exporters. The empirical exercise uses rich data on Portuguese firms and assumes that there are significant features distinguishing exporters from non-exporters. An array of machine learning models—Bayesian Additive Regression Tree (BART), Missingness Not at Random (BART-MIA), Random Forest, Logit Regression, and Neural Networks—are trained to predict firms’ export probability and to shed light on the critical factors driving the transition to successful export ventures. Neural Networks outperform the other models and remain highly accurate when export definitions and training and testing strategies are changed. We show that the most influential variables for prediction are labor productivity and the share of imports from the EU in total purchases. Additionally, firms at the median distance to sell in international markets operate with about twice the assets of the group in the decile more distance from exporting. Firms in the decile closest to the export market operate with around 12 times more assets than those in the decile more distant from exporting. |
| JEL: | C53 C55 L2 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202420 |
| By: | Casimiro, June Ann J.; Romualdo, Karenina B.; Santiago, Via Shane R. |
| Abstract: | This study investigates the innovation strategies of cultural micro, small, and medium enterprises (MSMEs) in Northern and Central Luzon, Philippines, operating within the domain of traditional cultural expressions, particularly traditional crafts and culinary crafts. These enterprises play a dual role in preserving cultural heritage and contributing to local economic development. As cultural and creative industries (CCIs) gain increasing recognition for their economic and social contributions, cultural MSMEs in developing regions face unique challenges. Through a qualitative case study approach involving nine MSMEs, the research explores innovations in products, processes, and business models. It also examines the motivations driving these innovations, barriers encountered, and opportunities for enhancing sustainability and competitiveness. Findings reveal that cultural entrepreneurs innovate to ensure economic viability, preserve cultural heritage, empower communities, and leave a lasting legacy. Their strategies respond to evolving consumer preferences, seek to expand market reach, and aim to modernize operations while maintaining the authenticity of their cultural products. However, challenges such as succession planning, diminishing artisanal skills, and limited access to financial resources constrain their capacity to scale, adopt new technologies, and remain competitive in both local and global markets. The study identifies key innovation strategies, including product and process diversification, technology integration, strategic marketing, and stakeholder collaboration. Many MSMEs adopt hybrid production models, blending traditional craftsmanship with mechanized processes to enhance efficiency without undermining cultural value. Partnerships with government agencies, universities, and private entities emerge as critical to fostering innovation ecosystems that support cultural entrepreneurship. Despite these efforts, significant barriers persist. The declining interest of younger generations in traditional crafts threatens the continuity of artisanal skills, compounded by the absence of formal training programs. Limited financial resources further hinder growth and modernization, restricting the ability of MSMEs to compete effectively. To address these challenges, the study advocates for a collaborative approach involving policymakers, industry stakeholders, and consumers to create an enabling environment for innovation and sustainability. Such a framework must include targeted support for skills development, financial accessibility, and market expansion. This research emphasizes the essential role of cultural MSMEs within the traditional cultural expressions domain and their contribution to the broader CCI ecosystem. It offers actionable insights for addressing structural barriers and leveraging opportunities to enhance the resilience and competitiveness of these enterprises. By empowering cultural MSMEs, the Philippines can preserve its rich cultural heritage while fostering economic growth and social development. Comments on this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph. |
| Keywords: | entrepreneurship;MSMEs;culture;creative industries;innovation;strategy;cultural entrepreneurship;cultural and creative industries;CCI |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:phd:dpaper:dp_2024-48 |
| By: | Draca, Mirko; Nathan, Max; Nguyen-Tien, Viet; Oliveira Cunha, Juliana; Rosso, Anna; Valero, Anna |
| Abstract: | Which types of human capital influence the adoption of advanced technologies? We study the skill biased adoption of information and communication technologies (ICT) across two waves in the UK. Specifically, we compare the ‘new wave’ of cloud and machine learning / AI technologies during the 2010s - pre-LLM - with the previous wave of personal computer adoption in the 1990s and early 2000s. At the area-level we see the emergence of a distinct STEM-biased adoption effect for the second wave of cloud and machine learning / AI technologies (ML/AI), alongside a general skill-biased effect. A one-standard deviation increase in the baseline share of STEM workers in areas is associated with around 0.3 of a standard deviation higher adoption of cloud and ML/AI. We find similar effects at the firm level where we are able to test for the influence of a wide range of skills. In turn, this STEM-biased adoption pattern has encouraged the concentration of these technologies, leading to more acute differences between high-tech and low-tech areas and firms. In contrast with classical technology diffusion, recent cloud and ML/AI adoption in the UK seems more likely to widen inequalities than reduce them. |
| Keywords: | technology diffusion; ICT; human capital; STEM |
| JEL: | J24 O33 |
| Date: | 2024–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:127313 |
| By: | João Amador; Paulo Barbosa; Esmeralda Arranhado |
| Abstract: | This paper estimates the impact on firms’ goods exports of two key policies implemented by export promotion agencies (EPAs): matchmaking in international markets and financial grants for internationalization. We merge Portuguese rich firm-level data on exports of goods, balance sheets, and income statements, with detailed information on the activity of the EPA between 2012 and 2021. The empirical exercise estimates the causal effect of these policies with a staggered difference-in-difference estimator. We conclude that the support provided to Portuguese firms significantly and positively affected their exports of goods. Financial grants for internationalization led to a significant increase in firms’ goods exports, with a greater effect on micro and small firms and in the sectors of “Wholesale of household goods” and “Manufacture of wearing apparel”. Similarly, matchmaking activities led to a significant increase in exports. In France, the country for which Portuguese companies request the most matching support, the effect is greater for micro and small firms and in the sector of “Manufacturing of other textiles”. |
| JEL: | D22 F13 F14 L25 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ptu:wpaper:w202421 |