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on Small Business Management |
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Issue of 2025–04–28
twenty-two papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Krieger, Bastian; Scrofani, Stefania; Strecke, Linus |
| Abstract: | We explore the association between signaling and conducting innovation collaborations with public research organizations and firms' revenues from firm and market novelties. Based on data from the German Community Innovation Survey 2023 and web-based indicators, firms conducting collaboration report higher revenues from market novelties, suggesting their relevance for the performance of more radical innovations. Firms signaling collaboration through website content report higher revenues from firm novelties, suggesting relevance for the performance of more incremental innovations. These findings indicate distinct mechanism in how collaborations with public research organizations relate to innovation performance. |
| Keywords: | University-Industry Transfer, Innovation Performance, Signaling |
| JEL: | O31 O36 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312575 |
| By: | Jarkko Harju; Toni Juuti; Tuomas Matikka |
| Abstract: | Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses compared to others. There is no similar selection based on parental income, but more than half of new entrepreneurs have entrepreneurial parents. Individual income gains from entrepreneurship are similar across different background characteristics, but parental entrepreneurship and personal income are positively linked to key firm-level outcomes such as productivity and job creation. This highlights the importance of the intergenerational transmission of entrepreneurial skills and suggests that businesses established by high-income individuals generate largest positive spillovers. |
| JEL: | L26 J24 J3 |
| Date: | 2024–08–29 |
| URL: | https://d.repec.org/n?u=RePEc:pst:wpaper:346 |
| By: | Kraft, Kornelius; Rammer, Christian |
| Abstract: | Reverse engineering allows firms to learn about critical components and design features of competitors' technologies. Historically, reverse engineering has often been used to help technological laggards to catch-up and profit from other's inventions. However, through reverse engineering firms may also obtain knowledge that can be used for own innovation efforts beyond mere imitation, making it a relevant knowledge acquisition channel for technological leading firms in high-tech economies. Based on data from the German part of the Community Innovation Survey (CIS), this paper provides empirical evidence on the characteristics of firms that use reverse engineering, and whether reverse engineering can lead to superior innovation performance in terms of commercializing innovations with a high degree of novelty. Our results suggest that in the context of a high-tech economy, it is rather firms that operate under fierce price competition that use reverse engineering, helping them to obtain higher innovation output, though for innovations with a low degree of novelty. |
| Keywords: | Reverse engineering, knowledge spillovers, innovation output |
| JEL: | O31 O33 D83 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:313008 |
| By: | Muhammad Faizal Samat ("Faculty of Business and Management, Universiti Teknologi Mara, 40450 Shah Alam, Selangor, Malaysia " Author-2-Name: Zaim Aizat Afdhal Bashri Author-2-Workplace-Name: "SEGI College Kuala Lumpur, 33-35, Jalan Hang Lekiu, 50100 Kuala Lumpur, Wilayah Persekutuan Kuala Lumpur Malaysia. " Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This study investigates the impact of cashless payment adoption on the performance of Small and Medium Enterprises in Malaysia, examining the mediating role of facilitating conditions. Drawing upon the Diffusion of Innovation Theory, we propose a model where government support, organizational support, technological support, and trust influence cashless payment adoption. Methodology/Technique - The research adopts a quantitative approach using structured questionnaires distributed among employees in various Malaysian SMEs. Data were analyzed using statistical tools, including regression analysis, to determine the strength and nature of relationships between the variables. Finding - The results reveal that transformational leadership and a supportive organizational culture significantly enhance employee performance. In contrast, autocratic leadership styles tend to have a negative effect. The study also finds that organizational culture plays a mediating role in the relationship between leadership style and employee performance. Novelty - This paper contributes to the existing literature by focusing specifically on Malaysian SMEs, providing empirical evidence on the interplay between leadership styles, organizational culture, and performance—an area previously underexplored in the Southeast Asian context. Type of Paper - Empirical" |
| Keywords: | Leadership style, organizational culture, employee performance, SMEs, Malaysia |
| JEL: | G23 M00 |
| Date: | 2025–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:gjbssr662 |
| By: | Czarnitzki, Dirk; Lepers, Robin; Pellens, Maikel |
| Abstract: | The circular economy represents a systematic shift in production and consumption, aimed at extending the life cycle of products and materials while minimizing resource use and waste. Achieving the goals of the circular economy presents firms with the challenge of innovating new products, technologies, and business models, however. This paper explores the role of artificial intelligence as an enabler of circular economy innovations. Through an empirical analysis of the German Community Innovation Survey, we show that firms investing in artificial intelligence are more likely to introduce circular economy innovations than those that do not. Additionally, the results indicate that the use of artificial intelligence enhances firms' abilities to lower production externalities (for instance, reducing pollution) through these innovations. The findings of this paper underscore artificial intelligence's potential to accelerate the transition to the circular economy. |
| Keywords: | Circular economy, Innovation, Artificial intelligence |
| JEL: | Q55 O31 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312577 |
| By: | Yoga Affandi (Bank Indonesia); MHA Ridhwan (Bank Indonesia); Cahya Mega Panji Santosa (Bank Indonesia) |
| Abstract: | This study examines the factors driving digital adoption among ultra-micro, micro, and small enterprises (UMSEs) in Indonesia, using data from a survey of 10, 142 UMSEs across 34 provinces. A comprehensive Digital Adoption Index was developed to assess adoption levels and their regional variations, focusing on key business processes, including e-procurement, POS systems, e-marketing, e-commerce, and digital payments. Results indicate that digital adoption is significantly influenced by owner demographics, firm characteristics, business environment, infrastructure quality, and cultural factors, contributing to disparities in adoption across regions. The findings suggest that digital adoption positively impacts UMSEs’ business performance, business innovation, financial literacy and financial inclusion, highlighting the potential for digital tools to enhance financial knowledge and access within this sector. This research provides actionable insights for policy development aimed at supporting digital transformation among UMSEs, particularly in areas with low adoption levels. |
| Keywords: | Digital Adoption, Ultra-Micro, Micro and Small Enterprises, Business Performance, Business Innovation, Financial Literacy, Financial Inclusion |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:idn:wpaper:wp122024 |
| By: | Rim Bahroun; Nadine Levratto; Mounir Amdaoud |
| Abstract: | Integrated into public policies aimed at fostering entrepreneurship, thePÉPITE plan (Student Hubs for Innovation, Transfer, and Entrepreneurship) plays a keyrole in promoting an entrepreneurial culture in higher education. Through the NationalStudent-Entrepreneur Status (SNEE), it provides tailored support for business creation.However, existing data reveal significant disparities among different PÉPITE hubs interms of trajectories and impact.This study seeks to document this heterogeneity througha semantic analysis of the documents produced by PÉPITE, from the competition phaseto reporting, using the SpaCy natural language processing model. Our findings highlighta strong homogeneity in the content of reports, reflecting a high degree of alignmentwith institutional expectations. However, they also suggest that greater consideration oflocal specificities and increased flexibility could enhance the program’s effectiveness andstrengthen its impact on student entrepreneurial engagement. |
| Keywords: | Student entrepreneurship, PÉPITE, Semantic analysis, Natural language processing |
| JEL: | I23 M13 O32 J24 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:drm:wpaper:2025-20 |
| By: | Konstantins Benkovskis (Latvijas Banka); Styliani Christodoulopoulou (European Central Bank); Olegs Tkacevs (Latvijas Banka) |
| Abstract: | This study examines the adoption of digital technologies by Latvian firms, focusing on the factors influencing adoption decisions and the impact of these technologies on firm performance. Using firm-level responses to the digitalisation survey, the paper covers four technologies: broadband internet, webpages, web sales, and EDI sales. The results suggest that larger firms, exporters, and those employing ICT specialists along with a higher-skilled workforce, are more inlined to adopt digital technologies. The provision of relevant training programmes for both ICT and non-ICT staff is essential for fostering technology adoption, particularly for more complex systems like web sales. To assess the impact of digitalisation on firm performance, the study employs a difference- in-differences approach, finding that webpage adoption positively affects turnover and employment, particularly in the manufacturing sector. EDI sales also enhance firm performance, boosting turnover and employment. The study emphasises the need for complementary investments in workforce skills, ICT training, and organisational re-structuring to fully realise the benefits of digital transformation. |
| Keywords: | digital technologies, e-commerce, firm performance |
| JEL: | D22 O14 O33 L25 J23 J24 F14 |
| Date: | 2025–04–11 |
| URL: | https://d.repec.org/n?u=RePEc:ltv:dpaper:202501 |
| By: | Jésus Fernández-Villaverde; Yang Yu; Francesco Zanetti; Jesús Fernández-Villaverde |
| Abstract: | Defensive hiring of researchers by incumbent firms with monopsony power reduces creative destruction. This mechanism helps explain the simultaneous rise in R&D spending and decline in TFP growth in the US economy over recent decades. We develop a simple model highlighting the critical role of the inelastic supply of research labor in enabling this effect. Empirical evidence confirms that the research labor supply in the US is indeed inelastic and supports other model predictions: incumbent R&D spending is negatively correlated with creative destruction and sectoral TFP growth while extending incumbents’ lifespan. All these effects are amplified when ideas are harder to find. An extended version of the model quantifies these mechanisms’ implications for productivity, innovation, and policy. |
| Keywords: | productivity growth, innovation, R&D, patents, creative destruction |
| JEL: | E22 L11 O31 O33 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11753 |
| By: | Aleksander 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 male-owned 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 employer-employee data |
| JEL: | J16 J24 J31 J71 L26 M13 |
| Date: | 2024–04–19 |
| URL: | https://d.repec.org/n?u=RePEc:pst:wpaper:343 |
| By: | MATSUURA Toshiyuki; SAITO Hisamitsu |
| Abstract: | Using Japanese plant product-level data, this study focuses on the impact of increasing import competition pressure on changes in product portfolios by examining product entry and exit. We also consider the role of R&D activities at the plant level. While previous research on the adjustment of product portfolios for multi-product firms has emphasized the narrowing of products to core products, we show that firms engaged in R&D activities actively replace existing products with new ones and expand into new business fields due to increased import competition. These results are consistent with those of several studies on the relationship between competition and innovation. We also find that these effects are more pronounced in regions with larger public R&D stocks and in high-tech sectors. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25020 |
| By: | Luca Fontanelli; Mattia Guerini; Raffaele Miniaci; Angelo Secchi |
| Abstract: | While artificial intelligence (AI) adoption holds the potential to enhance business operations through improved forecasting and automation, its relation with average productivity growth remain highly heterogeneous across firms. This paper shifts the focus and investigates the impact of predictive artificial intelligence (AI) on the volatility of firms' productivity growth rates. Using firm-level data from the 2019 French ICT survey, we provide robust evidence that AI use is associated with increased volatility. This relationship persists across multiple robustness checks, including analyses addressing causality concerns. To propose a possible mechanisms underlying this effect, we compare firms that purchase AI from external providers ("AI buyers") and those that develop AI in-house ("AI developers"). Our results show that heightened volatility is concentrated among AI buyers, whereas firms that develop AI internally experience no such effect. Finally, we find that AI-induced volatility among "AI buyers" is mitigated in firms with a higher share of ICT engineers and technicians, suggesting that AI's successful integration requires complementary human capital. |
| Keywords: | Artificial intelligence, productivity growth volatility, coarsened exact matching |
| Date: | 2025–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/12 |
| By: | Flavio Calvino; Luca Fontanelli |
| Abstract: | This study explores how French firms use artificial intelligence, leveraging a uniquely detailed and representative dataset with information on the use of specific AI technologies and how AI systems are deployed across different business functions within firms, in 2020 and 2022. The use of AI is still rare, amounting to 6% of firms, and varies by technology, with sectors often specialising in specific technologies and functions. While most firms specialise in a single AI technology applied to a single business function, larger firms adopt multiple technologies for different purposes. Firms adopting AI technologies are generally larger - except for those using natural language-related AI - and tend to be more digitally intensive, though firms leveraging NLG and autonomous movement AI deviate from this pattern. Firm size appears a relevant driver of AI use in business functions requiring integration with tangible processes, while digital capabilities appear particularly relevant for AI applications in business functions more related to intangible ones. AI technologies widely differ in terms of technological interdependencies and applicability, with machine learning for data analysis, automation and data-driven decision making-related AI technologies resulting as being at the core of the AI paradigm. |
| Keywords: | Technology Diffusion, Artificial Intelligence, Business Function, ICT |
| Date: | 2025–04–07 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/13 |
| By: | Suelene Mascarini; Pierre-Alexandre Balland; Renato Garcia |
| Abstract: | This study examined the effects of intra-regional and transnational linkages on technological diversification in Brazilian regions from 1997 to 2020, highlighting the role of stakeholder collaboration in fostering knowledge and skill development. Our findings reveal that regional linkages positively influence diversification, whereas transnational connections primarily help to preserve existing technological specialisations. These results offer valuable insights for policymakers seeking to promote innovation and diversification in emerging economies, underscoring the importance of both regional and international collaborations for technological growth. This study investigates how intra-regional and transnational linkages affect technological diversification in Brazilian regions between 1997 and 2020. We focus on both the emergence of new technological specialisations and the persistence of existing ones. Using patent data from the Brazilian Patent Office and panel regression models with fixed effects, we examine how the structure of inter-regional and international connections relates to the dynamics of diversification. Our findings suggest that domestic regional linkages promote the entry of new specialisations, while transnational linkages are more closely associated with the retention of existing ones. These results offer insights for policymakers seeking to foster innovation in emerging economies by strengthening both regional networks and global connections. |
| Keywords: | transnational linkages; regional linkages; complementary capabilities; regional diversification. |
| JEL: | O19 O31 R11 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2509 |
| By: | R S, Vaidyanathan; Keswani Mehra, Meeta |
| Abstract: | This paper presents an analytical model that investigates the dynamics of rent-seeking, innovation, and entry policies in a two-sector economy characterized by skilled and unskilled labor. The model explores how incumbent firms in an intermediate goods sector react to the threat of new entrants and how rent-seeking behavior influences innovation and economic productivity. A key feature of the model is the role of a policymaker who sets firm entry policies and responds to bribes offered by incumbent firms seeking to restrict market entry. The analysis distinguishes between advanced and backward incumbent firms. Advanced firms, which operate at the frontier of technological productivity, choose to innovate to retain their competitive position in response to entry threats. In contrast, backward firms face higher barriers to innovation and are more likely to bribe policymakers to deter new competition. The magnitude of the bribes depends on the difference in profits with and without entry threats, as well as the costs of innovation. The model highlights how rent-seeking by backward firms distorts market competition, leading to suboptimal innovation and lower aggregate productivity in the skilled sector. Policymakers, balancing between maximizing bribes and addressing wage inequality, face conflicting incentives. If a policymaker prioritizes welfare, they may restrict entry to reduce wage inequality, thereby lowering competitive pressures and innovation. Alternatively, a policymaker focused on maximizing bribes may encourage higher entry threats, fostering innovation but exacerbating income inequality. This paper contributes to the literature on rent-seeking and economic growth by providing a nuanced understanding of how firm behavior, entry policies, and innovation are interlinked, with important implications for labor markets and income inequality. The model provides insights into the broader economic consequences of rent-seeking behavior and entry regulation, emphasizing the need for balanced policies that encourage innovation while minimizing economic distortions caused by rent-seeking activities. |
| Keywords: | Keywords: Lobbying, Market Structure, R\&D Investment, Growth, Welfare |
| JEL: | H11 I31 O32 O41 P00 |
| Date: | 2025–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124087 |
| By: | Diego Ambasz; Javier Sanchez-Reaza; Pluvia Zuniga |
| Keywords: | Science and Technology Development-Innovation Science and Technology Development-Technology Innovation Science and Technology Development-Research and Development |
| Date: | 2023–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wboper:39826 |
| By: | Marcus Dejardin (UNamur - Université de Namur [Namur], UCL - Université Catholique de Louvain = Catholic University of Louvain); André van Stel (Trinity College Dublin, KU - Kozminski University) |
| Abstract: | One field of research to which David Storey made important contributions is the alleged impact of enterprise policy on regional economic development. In this field, his legacy to entrepreneurship research is perhaps his constant questioning of whether assumptions underpinning enterprise policy are correct. Possibly the most striking example in this regard relates to the assumption that new firms create new jobs. When questions as fundamental as the contribution of new businesses and SMEs to the creation of value and employment are still not clearly resolved; when they lead to questions about what would a priori be identifiable as the "right" type of entrepreneurship and how to promote it, then also comes a questioning about the "right" type of enterprise policy to pursue. David Storey has nourished this field of research with a significant and sometimes radical scope in his questioning. In this chapter, we outline this specific field of research, highlight David's contributions, and sketch enterprise policy options in the context of global sustainability issues. |
| Keywords: | Entrepreneurship, Small Business, Policy |
| Date: | 2025–03–16 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:halshs-05000926 |
| By: | Adrien Deschamps (AU - Avignon Université, •JPEG - Laboratoire des sciences Juridiques, Politique, Economiques et de Gestion - AU - Avignon Université) |
| Abstract: | Public procurement can be defined as the process by which public contracting authorities purchase goods, services, and works from private suppliers, including small and medium enterprises (SMEs). The access of SMEs to public contracts is one of the objectives of public procurement policies, as they suffer from complex procedures and high transaction costs. At the same time, public procurement is increasingly being used as an instrument for environmental policies, through green clauses (i.e. mandatory specifications in the contract performance) and award criteria (i.e. the dimensions of the offers the contracting authority assesses). The objective of this empirical work is to determine whether environmental clauses and criteria have an impact on SME participation in award procedures. This paper assesses for the first time the compatibility between SME accessibility and environmental issues in public procurement with a dataset encompassing approximately 10, 000 award procedures in France between 2022 and 2023. The findings indicate that green public procurement stimulates SME participation. The intensity of this effect may vary between environmental clauses and criteria across sectors, but there is no evidence of a deterrent effect of green public procurement on SMEs. |
| Keywords: | Green Public Procurement Sustainable Development SME Participation Public Procurement Sustainable Public Procurement D22, Green Public Procurement, Sustainable Development, SME, Participation, Public Procurement |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04999776 |
| By: | Lubica Stiblarova (Faculty of Economics, Technical University of Kosice, Slovak Republic); Anna Tykhonenko (Université Côte d'Azur, CNRS, GREDEG, SKEMA Business School, France) |
| Abstract: | his paper explores the intricate relationship between human capital and foreign direct investment (FDI) across 28 European countries from 2003 to 2022. To address this relationship's complex and often ambiguous nature, a Bayesian shrinkage estimator is utilized to capture significant heterogeneity across different regions. The results indicate that the discouraging role of human capital in FDI is most pronounced in the "Eastern bloc, " where cost-effectiveness serves as the primary driver of investment. In contrast, efficiency-seeking motives prevail in Western Europe, where higher levels of human capital contribute to increased FDI. Sectoral analysis further reveals that the critical transition for attracting FDI occurs not between the secondary and tertiary sectors, as traditionally believed, but between the tertiary and quaternary sectors. In these advanced sectors, quaternary FDI leverages innovation potential through high-skilled labor, underscoring the critical importance of human capital. These findings highlight the nuanced and region-specific dynamics of FDI, emphasizing the need for tailored policies to maximize the benefits of human capital in attracting foreign investment. |
| Keywords: | Human capital, foreign direct investment, regional heterogeneity, multi-speed Europe, Bayesian shrinkage estimator |
| JEL: | C11 F21 I25 O14 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2025-11 |
| By: | Julian Tiedtke |
| Abstract: | This paper examines the impact of automation investments on employment dynamics and workforce composition using administrative data from Portugal. I exploit the lumpiness of automation imports in a difference-in-differences event study design. My results show that automation creates jobs in small firms but leads to job losses in larger ones. This pattern holds across a wide range of firm types, industries and types of automation technologies. Most importantly, automation favors low-educated, routine-blue-collar workers in routine-intensive jobs over highly skilled workers like STEM professionals. These findings challenge the view of automation as inherently skill-biased |
| Keywords: | Automation, Employment, Firm heterogeneity, Deskilling |
| Date: | 2025–04–03 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/09 |
| By: | Mr. Serhan Cevik |
| Abstract: | The rise of financial technologies—fintech—could have transformative effects on the financial landscape, expanding the reach of services beyond the confines of geography and creating new competitive sources of finance for households and firms. But what makes fintech grow? Why do some countries have more financial innovation than others? In this paper, I use a comprehensive dataset to investigate the emergence and spread of fintech in a diverse panel of 98 countries over the period 2012–2020. This empirical analysis helps ascertain economic, demographic, technological and institutional factors that enable the development of fintech. The magnitude and statistical significance of these factors vary according to the type of fintech instrument and the level of economic development (advanced economies vs. developing countries). Finally, these findings reveal that policies and structural reforms can help promote financial innovation and cultivate fintech ventures—particularly by strengthening technological and institutional infrastructures and reducing cybersecurity threats. |
| Keywords: | Fintech; financial innovation; technological change |
| Date: | 2025–02–21 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2025/044 |
| By: | Arnemann, Laura; Buhlmann, Florian; Ruf, Martin; Voget, Johannes |
| Abstract: | In this paper, we investigate the effect of higher personal income taxes on CEO and firm performance in publicly traded US firms. In response to higher taxes on compensation, CEOs are less likely to reach performance goals and spend more time working in boards outside of their firm. At the same time, firm performance drops before eventually recovering as investment projects with below average profitability are disregarded and due to adjustments in CEO compensation. |
| Keywords: | Executive Compensation, Personal Income Taxation, Firm Performance |
| JEL: | H24 M12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:313010 |