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on Small Business Management |
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Issue of 2025–05–12
twenty-one papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Fairlie, Robert W |
| Keywords: | entrepreneurship, startups, self-employment, business ownership, entrepreneurs |
| Date: | 2024–01–27 |
| URL: | https://d.repec.org/n?u=RePEc:cdl:ucscec:qt4vv2f0pd |
| By: | Matano, Alessia (University of Barcelona); Naticchioni, Paolo (Roma Tre University) |
| Abstract: | This paper investigates the relationship between China’s import competition and the innovation strategies of domestic firms. Using firm level data from Italy spanning 2005-2010 and employing IV fixed effects estimation techniques, we find that the impact of China’s import competition on innovation varies depending on the type of goods imported (intermediate vs. final). Specifically, imports of final goods boost both product and process innovation, while imports of intermediate goods reduce both. Additionally, we extend the analysis to consider the role of unions in moderating these responses. We find that, in unionized firms, imports' impact on innovation is mitigated, specifically to protect workers' employment prospects. |
| Keywords: | unions, product and process innovation, final and intermediate goods, China’s import competition, IV fixed effects estimations |
| JEL: | C33 L25 F14 F60 O30 J50 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17764 |
| By: | André Diegmann; Laura Pohlan; Andrea Weber |
| Abstract: | We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset linking politicians and election candidates to the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. Adding information on credit ratings, subsidies and procurement contracts allows us to distinguish between mechanisms driving the effects over the politician’s career. |
| Keywords: | politicians, firm performance, identification, political connections |
| JEL: | O43 L25 D72 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_11691 |
| By: | Michael Gechter; Namrata Kala |
| Abstract: | Firm location decisions are a key managerial choice, usually optimized over factors like proximity to customers or suppliers. These decisions may also impose externalities on the environment, and on other firms due to competitive or agglomerative forces. The inherent endogeneity of location decisions makes estimating the impact of firm presence difficult. In this paper, we study an environmental place-based policy that randomly moved over 20, 000 small firms in New Delhi to industrial areas outside the city over several years. We find that a reduction in firm presence improves air quality, reducing industrial pollution by 8% for the average neighborhood. However, industrial relocation is costly for firms, significantly increasing the probability of firm exit. We combine the exogenous assignment of firms to industrial plots with a model of firms playing a game of incomplete information to estimate the effect of neighborhood composition on firm survival through Marshallian agglomeration forces. We find that proximity to neighboring firms with input-output linkages increases the likelihood of firm survival, and taking these into account while determining firm placement in industrial areas would have halved the costs imposed on firms by the policy. These results provide causal evidence on the trade-offs between firm presence and environmental quality, and show that firm spillovers can be a useful force to minimize the costs on regulated firms. |
| JEL: | D22 L20 O10 Q52 Q53 Q56 Q58 R38 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33707 |
| By: | Kumar Rishabh (University of Basel); Roxana Mihet (Swiss Finance Institute - HEC Lausanne); Julian Jang-Jaccard (Swiss Federal Office for Defence Procurement) |
| Abstract: | Does AI make firms vulnerable or resilient to cyber risk? To answer this, we develop a novel measure identifying AI-intensive U.S. public firms using publicly available patents and business-description data. While cyber threats typically suppress innovation, AI-intensive firms neutralize this effect. This protective effect strengthens with greater AI experience. Moreover, firms combining AI innovation and implementation exhibit a stronger buffer protecting their innovation and financial outcomes under cyber stress, whereas firms merely implementing AI without internal innovation gain no such resilience. Our results emphasize internal AI innovation as fundamental in enabling firms to effectively withstand cyber threats. |
| Keywords: | Cyberrisk, artificial intelligence, innovation, resilience, economics of AI, economics of cybercrime |
| JEL: | D8 O3 O4 G3 L1 L2 M1 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2539 |
| By: | , Tabroni |
| Abstract: | This research investigates effective sales enhancement strategies for UMKM Kripik Pisang, focusing on the interplay of price discounts and service excellence. By analyzing the impact of pricing strategies on consumer behavior and the role of superior service quality in fostering customer satisfaction and loyalty, the study offers actionable insights for small and medium-sized enterprises. Drawing on existing literature, the findings emphasize that well-calibrated price discounts can stimulate sales, while high service standards enhance customer retention and long-term relationships. The research underscores the importance of aligning pricing and service quality with broader business objectives to ensure sustainable growth. Practical recommendations include optimizing pricing models to balance revenue and profitability and elevating service standards to differentiate UMKM Kripik Pisang in a competitive market. Additionally, the study highlights the need for innovative marketing strategies to maintain competitiveness, particularly in the dynamic online marketplace. By integrating these elements, UMKM can achieve increased sales, improved customer loyalty, and greater resilience against market challenges. This research serves as a valuable guide for UMKM Kripik Pisang and similar enterprises seeking to strengthen their market position through strategic pricing and service improvements, contributing to their long-term success in a cutthroat business environment. Keywords: Price Discounts, Service Quality, Sales Growth, Customer Loyalty, UMKM Kripik Pisang |
| Date: | 2024–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:wbx4j_v1 |
| By: | Ashish Arora; Sharon Belenzon; Jungkyu Suh; Hansen Zhang |
| Abstract: | We study the post-World War II “Golden Age” of American corporate research from 1945 to 1980, using multiple indicators of corporate research activity. We use an ensemble learning approach to classify firms as either Science Leaders, Absorbers or Followers. Our analysis reveals that only a small fraction of firms, whom we call Leaders, invest in internal research that is on the scientific frontier, with the objective to generate breakthrough inventions. Absorbers invest in research principally to absorb external scientific discoveries to fuel their inventive activity. Followers typically generate incremental innovations, using older scientific knowledge. Consistent with this, we find Leaders were more likely to be at the technological frontier, enjoy greater market power, and benefit from government procurement contracts. As universities and startups began to commercialize academic discoveries, the need for “absorptive corporate labs” declined. The shift ultimately transformed the American innovation landscape, deepening the division of innovative labor between universities, startups, and incumbent corporations, with only a select group of Leader firms continuing to invest in basic science. |
| JEL: | O3 O31 O33 O34 O35 O36 O38 O39 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33713 |
| By: | Zhangfeng Jin (Zhejiang University of Technology); Klaus Prettner (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | This paper examines the impact of technology transfers on long-term innovation. We propose an extended Schumpeterian growth framework to characterize the channels by which technology transfers impact on innovation. Exploiting variations in the adoption of Soviet-aided industrialization programs across Chinese cities, we find that firms located in cities affected by 156 major industrial projects of the Soviet Union witness fewer Investments in research and development on average after nearly half a century. The effect is particularly pronounced for non-state-owned firms. The decline in innovation inputs is further supported by a lower probability of patenting in these localities. A likely underlying mechanism is the low adoption of performance-based reward systems that influence labor reallocation within firms, rather than inadequate capital and skilled workers. Despite prior successes during the planned economy era, the adoption of such foreign aid tends to impede innovation as China transitions towards a more market-oriented economy. |
| Keywords: | Foreign Aid, Technology Transfers, Innovation Inputs, Pay for Performance, China |
| JEL: | F35 O30 M52 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp379 |
| By: | Mertz, Mikkel (Rockwool Foundation Research Unit); Ronchi, Maddalena (Northwestern University); Salvestrini, Viola (Bocconi University) |
| Abstract: | This paper shows that exposure to entrepreneurs during adolescence increases women's entry and performance in entrepreneurship and improves the allocation of talent in the economy. Using population-wide registry data from Denmark, we exploit idiosyncratic within-school, cross-cohort variation in early exposure to entrepreneurs, measured by the share of an adolescent's peers whose parents are entrepreneurs at the end of compulsory school. Early exposure, particularly to the entrepreneur parents of female peers, encourages girls' entry and tenure into this profession, while it has no impact on boys. This effect is associated with the creation of successful and female-friendly firms. Furthermore, early exposure reduces women's probability to discontinue education at the end of compulsory school and to hold low wage jobs through their lives. Finally, we find evidence in support of three main channels: (i) access to specific information; (ii) changes in aspirations and goals; (iii) increased consideration of entrepreneurship as a potential career. Together these results challenge the view that the most successful female entrepreneurs would enter this profession regardless of early exposure. |
| Keywords: | occupational choice, talent allocation, entrepreneurship, gender |
| JEL: | J24 J16 L26 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17801 |
| By: | Domnisoru, Ciprian (Aalto University); Miller, Robert A. (Carnegie Mellon University) |
| Abstract: | Sons succeed their exiting CEO parents more often than daughters. How do entrepreneurial families reach this gender imbalance, and how does it affect the prospects of their firms and their offspring? Using Finnish administrative data on firms linked to population register data on shareholders and their extended families, we trace the steps leading to the succession decision, and its outcomes. We examine fertility patterns, finding evidence of son preference in natural births and adoptions by entrepreneurs. In families that appear to follow son-biased fertility stopping rules, we also find noticeable differences in human capital accumulation between sons and daughters. The transmission of human capital is also mediated by the extent to which women are employed in the industry of the entrepreneur parent. Gaps in income, board membership, and share ownership between sons and daughters of exiting CEOs emerge well before succession. Turning to firm outcomes, we find evidence that other family members, but not the children of exiting CEOs, appear to diminish firm performance relative to the results of professional CEOs. Overall, our results show family succession is a protracted process that begins with the birth of the first child. |
| Keywords: | gender differences, CEO transition, son preference, family firms, human capital |
| JEL: | G32 L25 J13 J24 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17800 |
| By: | Nava Ashraf; Alexia Delfino; Edward L. Glaeser; Irene Solmone |
| Abstract: | In the World Bank Enterprise Survey, the share of entrepreneurs who are women first rises and then falls with national income, which reverses the well-known U-shaped relationship between female labor force participation and economic development. This paper presents a model of entrepreneurship in which women face disadvantages, including discrimination from workers and household demands on their time, that deter firm formation in the poorest countries. In richer countries, these forces mean that women are less likely to start more complex organizations. In the model, women face the most level playing field in middle-income countries, where the returns to entrepreneurship are high enough to offset gender-based costs and both sexes typically form simple forms. We document three facts that are compatible with the model: male-owned firms are typically much larger than female-owned firms, large firms yield far higher revenues per employee and female-owned firms are more usually in industries with low levels of skilled workers. Despite the entrepreneurship rate’s reversal of the U-shaped link between female labor-force-participation and economic development, female labor-force-participation and the entrepreneurship rate are highly correlated across countries. The female entrepreneurship rate is also strongly associated with female education, weak kinship ties and Buddhism. |
| JEL: | J70 L26 O14 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33608 |
| By: | Rafik Abdesselam (ERIC - Entrepôts, Représentation et Ingénierie des Connaissances - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon, COACTIS - COnception de l'ACTIon en Situation - UL2 - Université Lumière - Lyon 2 - UJM - Université Jean Monnet - Saint-Étienne); Malia Kedjar (LARSH - Laboratoire de Recherche Sociétés & Humanités - UPHF - Université Polytechnique Hauts-de-France - INSA Hauts-De-France - INSA Institut National des Sciences Appliquées Hauts-de-France - INSA - Institut National des Sciences Appliquées); Patricia Renou-Maissant (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | The purpose of this paper is to identify the drivers of eco-innovation in start-ups. Firstly, a discriminant analysis (DA) is applied to study what is distinctive about eco-innovative start-ups as compared to non-eco-innovative start-ups. Secondly, a typology of eco-innovative start-ups is developed using a hierarchical ascendant clustering (HAC). Analyses are carried out using original data from a survey of 120 eco-innovative and non-ecoinnovative French start-ups.Discriminant analyses reveal that the founders of eco-innovative start-ups are differentiated by characteristics related to their environmental education and professional experience. Furthermore, eco-innovative start-ups are distinguished from the non-eco-innovative start-ups by voluntary environmental practices, such as the adoption of corporate social responsibility policies. Finally, we show that there is a diversity of profiles of eco-innovators. In fact, firms cluster into five main profiles and exhibit different eco-innovation drivers. We highlight that the different types of eco-innovators do not face the same difficulties in accessing funds. These findings have important implications for the implementation of public policy designed to promote eco-innovative activity, and they highlight the need to design policies that take into account the distinctive character of each profile. |
| Keywords: | Eco-innovation Start-ups typology Data analysis methods |
| Date: | 2024–01 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05019865 |
| By: | Ufuk Akcigit; Raman Singh Chhina; Seyit M. Cilasun; Javier Miranda; Nicolas Serrano-Velarde |
| Abstract: | Beginning in January 2021, over less than two years, credit card usage by small U.S. businesses nearly doubled, interest payments rose by 60%, and delinquencies reached 2.8%. In this paper, we utilize near real-time QuickBooks data from over 1.6 million small businesses and a targeted survey to highlight the critical role that credit card financing plays in small business activity. We find, first, monthly credit card payments were up to three times higher than loan payments during this time. Second, we use targeted surveys of these small businesses to establish credit cards as a key financing source in response to firm-level shocks, such as uncertain cash flows and overdue invoices. Third, we highlight the critical role of credit cards as a key financial transmission mechanism. Following the Federal Reserve’s rate hikes in early 2022, banks cut credit card supply, leading to a 15.75% drop in balances and a 10% decline in revenue growth, as well as a 1.5% decrease in employment growth among U.S. small businesses. These higher rates also rendered interest payments unsustainable for many, contributing to half of the observed increase in delinquencies. Lastly, a simple heterogeneous firm model with a cash-in-hand constraint illustrates the significant macroeconomic impact of credit card financing on small business activity. |
| JEL: | G3 O4 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33618 |
| By: | Joshua S. Gans |
| Abstract: | This paper examines how the introduction of artificial intelligence (AI), particularly generative and large language models capable of interpolating precisely between known data points, reshapes scientists' incentives for pursuing novel versus incremental research. Extending the theoretical framework of Carnehl and Schneider (2025), we analyse how decision-makers leverage AI to improve precision within well-defined knowledge domains. We identify conditions under which the availability of AI tools encourages scientists to choose more socially valuable, highly novel research projects, contrasting sharply with traditional patterns of incremental knowledge growth. Our model demonstrates a critical complementarity: scientists strategically align their research novelty choices to maximise the domain where AI can reliably inform decision-making. This dynamic fundamentally transforms the evolution of scientific knowledge, leading either to systematic “stepping stone” expansions or endogenous research cycles of strategic knowledge deepening. We discuss the broader implications for science policy, highlighting how sufficiently capable AI tools could mitigate traditional inefficiencies in scientific innovation, aligning private research incentives closely with the social optimum. |
| JEL: | D82 O30 O34 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33566 |
| By: | Ceballos, Francisco; Aguilar, Francisco; de Brauw, Alan; Nguyen, Trang; van den Berg, Marrit |
| Abstract: | Concurrent with its rapid economic growth, Viet Nam has been experiencing a food systems transformation. Broad changes in the food environment have been a key part of this transition. While the availability of processed food is ubiquitous, the food environment continues to be largely dominated by micro, small, and medium enterprises (MSMEs). So, to build strategies to improve the availability and affordability of healthy foods, MSMEs are a key entry point. In this paper, we use primary survey data to separate key sources of variation in MSMEs’ organizational dimensions and business practices by type of outlet, rural-urban location, and gender of the owners. We focus on outcomes related to employment, food sources, business finance, good business practices, and nutrition knowledge and attitudes. We find limited differences in this set of outcomes in terms of whether an outlet is located in a rural, peri-urban, or urban area, or in terms of the gender of its owners. Instead, most of the variation in outcomes can be linked to the type of outlet, raising specific types of outlets as a key focus when seeking to foster the supply of healthier foods in the food environment. |
| Keywords: | enterprises; food environment; food systems; gender; Vietnam; Asia; South-eastern Asia |
| Date: | 2025–04–08 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:ifprid:174099 |
| By: | Pablo Sanguinetti; Andres Feroce |
| Date: | 2025–01 |
| URL: | https://d.repec.org/n?u=RePEc:udt:wpecon:2025_01 |
| By: | Naudé, Wim (RWTH Aachen University) |
| Abstract: | This paper provides a primer on climate technology entrepreneurship, recognizing its limitations and potential adverse consequences. Climate technology entrepreneurship is needed to contribute to mitigation of and adaptation to climate change, and to help decouple economic growth from resource use. This paper identifies and describes three climate technology gaps: (i) an energy climate tech gap, an (ii) overshoot climate tech gap; and (iii) a resilience climate tech gap. The paper furthermore argues that policies for supporting climate technology entrepreneurship, including entrepreneurial ecosystems and mission-oriented approaches, have significant shortcomings. Furthermore, the paper concludes that Artificial Intelligence (AI) is unlikely to make a difference to the world’s climate change predicament. Hence, climate technology entrepreneurship is no panacea for climate change and ecological overshoot caused by human activity. On its own it will not save the world. |
| Keywords: | climate change, entrepreneurship, climate technology, sustainable development |
| JEL: | L26 Q54 O31 L53 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17794 |
| By: | Chahine, Salim (Banque du Liban); Daher, Mai (Bank of England) |
| Abstract: | We investigate the impact of ‘learning from peers’ on the fundraising abilities of start-up companies. Employing data on the financing rounds of privately owned portfolio companies, we find that companies observe the round amounts of their most successful peers and learn to negotiate higher round amounts with venture capital investors. We further show that the number of common directors or venture capital firms between portfolio companies and their most successful peers has a positive impact on the round amounts of these portfolio companies, which supports the existence of conversational learning. Moreover, observational learning from peers is higher in hot markets, where investors rely on less costly information on peers. Our findings confirm that both observational and conversational learning allow portfolio companies to be in a better negotiating position, thus enhancing their ability to secure funding and invest in their growth. |
| Keywords: | Peer effect; portfolio companies; learning; venture capital funding; exit |
| JEL: | G24 G32 G41 |
| Date: | 2025–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1121 |
| By: | Michael Koch; Antonella Nocco |
| Abstract: | This paper introduces a novel mechanism by emphasizing benefits for firms through participation in buyer networks among firms that source the same locally produced inputs. In a first step, we utilize register-based data from Denmark to generate a firm-specific buyer network variable which relies on firms’ industrial input structures and imports. Utilizing this proxy we provide evidence of cost savings from network participation, as larger buyer networks reduce firms’ input demand. Subsequently, we develop a trade model incorporating vertical linkages and introduce network effects that result in savings in intermediate costs. Our theory posits that the magnitude of these savings may be associated with the effectiveness of knowledge transmission among network participants. Consequently, firms operating in regions with efficient knowledge transmission networks may realize greater savings in intermediate input costs, leading to increased profits from local and export sales. In a last step, we provide empirical evidence supporting our theoretical predictions by demonstrating the positive impact of buyer networks based on relationship-specific products on domestic firm revenues. |
| Keywords: | new trade theory, vertical linkages, network effects. |
| JEL: | F12 F15 R12 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_117815 |
| By: | Pablo Sanguinetti; Andrés Feroce |
| Abstract: | Latin America and the Caribbean have underperformed in economic growth compared to other developing regions like Southeast Asia or Eastern Europe. This has implied a low rate of income convergence with developed economies. For example, the average income per capita was around 0.20 of that of the USA in 1960 and went up to only 0.26 at the end of the second decade of the XXI century. Most growth accounting exercises (see Jones, 2019; Alvarez et al., 2018) show that weakened productivity dynamics is a critical immediate cause of this lack of convergence. In other words, the LAC countries have not improved their efficiency when using their resources at the firm level, sectors, and the aggregate economy. |
| Date: | 2024–12 |
| URL: | https://d.repec.org/n?u=RePEc:udt:wpecon:2025_04 |
| By: | Roxana Mihet (Swiss Finance Institute - HEC Lausanne); Kumar Rishabh (University of Lausanne - Faculty of Business and Economics (HEC Lausanne); University of Basel, Faculty of Business and Economics); Orlando Gomes (Lisbon Polytechnic Institute - Lisbon Accounting and Business School) |
| Abstract: | Artificial intelligence (AI) is transforming productivity and market structure, yet the roots of firm dominance in the modern economy remain unclear. Is market power driven by AI capabilities, access to data, or the interaction between them? We develop a dynamic model in which firms learn from data using AI, but face informational entropy: without sufficient AI, raw data has diminishing or even negative returns. The model predicts two key dynamics: (1) improvements in AI disproportionately benefit data-rich firms, reinforcing concentration; and (2) access to processed data substitutes for compute, allowing low-AI firms to compete and reducing concentration. We test these predictions using novel data from 2000–2023 and two exogenous shocks—the 2006 launch of Amazon Web Services (AWS) and the 2017 introduction of transformer-based architectures. The results confirm both mechanisms: compute access enhances the advantage of data-intensive firms, while access to processed data closes the performance gap between AI leaders and laggards. Our findings suggest that regulating data usability—not just AI models—is essential to preserving competition in the modern economy. |
| JEL: | L13 L41 O33 D83 E22 L86 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:chf:rpseri:rp2537 |