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on Small Business Management |
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Issue of 2025–06–16
thirteen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Ufuk Akcigit; Harun Alp; Jeremy Pearce; Marta Prato |
| Abstract: | This paper explores the symbiotic relationship between transformative entrepreneurs and inventors, which is crucial for economic growth. We utilize microdata from Denmark to demonstrate that while the relationship between IQ and general entrepreneurship tends to be negative, it is strongly positive among transformative entrepreneurs. Transformative entrepreneurs, often with higher IQ and education levels, significantly drive R&D and business growth, thereby providing substantial opportunities for inventors. In contrast, average entrepreneurs are more influenced by their family’s entrepreneurship background. Our economic model links these dynamics to overall economic progress, highlighting how higher education influences career paths in entrepreneurship and invention. We identify talent misallocation caused by unequal education access, particularly affecting lower-income families. Our findings indicates the most effective policies strengthen the interplay between higher education, innovation, and entrepreneurship to foster transformative businesses and achieve long-run economic growth. |
| JEL: | J24 O31 O38 O47 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33766 |
| By: | Shinozaki, Shigehiro (Asian Development Bank); Miyakawa, Daisuke (Waseda University and UTokyo Economic Consulting Inc.) |
| Abstract: | Understanding the business environment and structural issues that limit growth is critical when designing an effective national policy framework for private sector development—especially for micro, small, and medium-sized enterprises (MSMEs). Given the limited MSME data available, this paper employs probabilistic principal component analysis to develop a new way to quantitatively assess what affects MSME development nationally, by using granular firm-level panel data for 49, 565 MSMEs in Thailand as a case study. The estimation results found a potential disproportionate effect of MSME policy interventions during and after the coronavirus disease pandemic. Government assistance for MSMEs likely helped Bangkok-based firms ease the negative pandemic effects, especially in manufacturing. However, it did not help local MSMEs— regardless of sector—as their operational performance deteriorated both during and after the pandemic. This underscores the importance of using a focused approach when designing policies for MSME development to facilitate more sustainable, resilient private sector growth. |
| Keywords: | SME development; access to finance; financial inclusion; SME policy; probabilistic principal component analysis; Thailand |
| JEL: | D22 G20 L20 L50 |
| Date: | 2025–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0785 |
| By: | Carpentier Elodie (European Commission - JRC); D'adda Diego (European Commission - JRC); Nepelski Daniel (European Commission - JRC); Stake Johan (European Commission - JRC) |
| Abstract: | The European Digital Innovation Hubs (EDIH) Network of digital innovation intermediaries, established in 2023, aims to accelerate the adoption of advanced digital technologies among SMEs and Public Sector Organisations across European regions. Covering nearly 90% of European regions, the EDIH Network provides tailored digitalisation support services, including AI, cybersecurity, and high-performance computing. As of September 2024, EDIHs have reached over 200, 000 participants and/or companies through 5, 000 events, delivering over 18, 000 services. EDIHs operate close to their customers, with a broad regional but limited international service coverage. The Digital Maturity Assessment Tool (DMAT) reveals that firms' digitalisation processes follow a structured path, with digital business strategy driving development and human-centric digitalisation and data management becoming central at higher levels of maturity. 90% of firms show an increase in their digital maturity level score after EDIH interventions. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc140547 |
| By: | Gabelberger Fabian; Marques Anabela; Doussineau Mathieu (European Commission - JRC) |
| Abstract: | This paper introduces a novel approach to measuring synergies between Horizon 2020 and cohesion policy funding in the field of R&I during the 2014-2020 programming period. Leveraging project-level data, we calculate regional cosine similarity indices based on societal grand challenges (SGCs) addressed to assess alignment between the two EU funding instruments in EU NUTS-3 regions. Results indicate that synergies are less likely in rural areas, emerging innovators, and â though not statistically significant â less developed regions, highlighting the role of business environments and innovation ecosystems. Regression analysis reveals that funding alignment is positively linked to the presence of universities and specialization in knowledge-intensive services, though the latter exhibits a nonlinear effect under certain circumstances. However, a higher number of SGCs addressed in smart specialization (S3) policy objectives is negatively associated with thematic funding similarity, likely due to fragmentation and dilution of focus. Regions that prioritize too many SGCs may reduce their ability to develop strong specialization and align different funding sources effectively. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:termod:202505 |
| By: | Castellacci, Fulvio |
| Abstract: | Innovation fosters economic growth and the long-run dynamics of national economies. However, recent literature shows that innovation is also a source of increasing income inequalities. Public policies face thus an important trade-off between efficiency and equity effects of innovation. What are the possible policy strategies to address this trade-off? The paper presents a model in which innovations can be developed by both private firms and public companies. Technological change increases the profit share in the long-run, exacerbating income inequalities between firms’ owners, employed workers, and the unemployed. I empirically calibrate the model for the US economy and carry out a simulation analysis to investigate the effects of different policies aimed at reducing the inequality effects of innovation. Specifically, the analysis compares two distinct policy strategies: one is based on a standard economic policy approach that increases taxes to finance welfare spending; the other is based on a new approach – the Entrepreneurial State – in which the profits of innovations developed by public R&D companies are used to finance welfare programs. The results point out the advantages and drawbacks of different strategies and show that the optimal policy strategy largely depends on the policy maker’s preferences regarding the income distribution. |
| Keywords: | Innovation; income inequalities; labor share; public policies; Entrepreneurial State; public R&D. |
| JEL: | O1 O30 O4 O40 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124900 |
| By: | Dandan Xia; Bruno Cassiman; David Wehrheim |
| Abstract: | This study leverages advanced text-analysis techniques to investigate how increased product market rivalry, induced by Chinese import competition, affects innovation among incumbent U.S. firms in the electronic and electrical appliance industry. We measure the similarity between the product descriptions of U.S. firms and those of Chinese importers, thus capturing firm-level competitive pressure. Employing a continuous difference-in-differences framework, we compare innovation outcomes of U.S. firms more directly competing with Chinese importers to those facing lower competitive pressure, over a five-year period before and after initial Chinese market entry. We find that incumbent U.S. firms significantly increase their quality-weighted patent production, create more newproduct patents, and strategically diversify into new technological and business segments when confronted with heightened competition. Our findings highlight the role of import-driven rivalry in stimulating strategic innovation and illustrate how text-based similarity measures can effectively quantify firm-level competition, providing novel methodological tools for strategy scholars. |
| Date: | 2025–05–23 |
| URL: | https://d.repec.org/n?u=RePEc:ete:msiper:765722 |
| By: | Kirui, Oliver K.; Siddig, Khalid; Fisher, Monica; Cavicchioli, Martina; Chamberlin, Jordan |
| Abstract: | The current conflict between the Sudanese Armed Forces and the Rapid Support Forces in Sudan, which began in April 2023, has had a profound impact on the nation’s micro, small, and medium enterprises (MSME). Such enterprises are a vital part of the country’s economy and important to the food security of many Sudanese households. All MSMEs, including those in the agrifood sector, have faced severe disruptions due to the instability, rising inflation, and supply chain breakdowns brought on by the conflict. These challenges have destabilized MSMEs, affecting their financial viability, operations, and capacity to support local food security and provide employment. Agrifood MSMEs, in particular, serve as critical intermediaries between large firms and smallholders, supporting local economies and national food systems.2 The conflict has disrupted every aspect of agrifood value chains in Sudan, from input supplies and production to market accessibility. Agrifood entrepreneurs—especially women—have borne some of the heaviest impacts. Female entrepreneurs already face significant gender-based barriers in operating successful businesses, such as more limited access to finance, restrictive social norms, and mobility constraints. In this period of conflict, they now confront even greater challenges. |
| Keywords: | enterprises; conflicts; food security; food supply chains; economics; gender; Sudan; Africa; Northern Africa |
| Date: | 2024–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:prnote:163749 |
| By: | Grande Sergio (European Commission - JRC); Rufino Asier; Petit Laurence; Basilio Oihana |
| Abstract: | This report, focused on deep tech entrepreneurship in Europe and the crucial role of Research and Technology Organizations (RTOs) in fostering impactful industrial spin-offs, aims to explore the role that deep tech spin-offs and RTOs, through their Technology Transfer Offices (TTOs), play in driving innovation, creating different types of impact including the creation of new value chains, and addressing the high-risk nature of technology commercialization. One of the core objectives of this study is to analyse the challenges and opportunities that deep tech spin-offs face, particularly in terms of team creation and evolution over time, as well as their challenges in attracting talents, and analysing the types of impact generated by industrial deep tech spin-offs.The study methodology includes a comprehensive literature review, a wide stakeholder consultation, data collection from 29 TTO Circle member organizations and 49 of their most impactful industrial deep tech spinoffs, data analysis, synthesis, and recommendations. These recommendations are further validated through stakeholder feedback obtained during validation meetings and webinars.This study, therefore, provides a roadmap for how deep tech entrepreneurship can drive Europeâs economic renewal, directly addressing the concerns and recommendations of the Draghi report, and offering concrete strategies to ensure that Europe remains at the forefront of global innovation. |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc141029 |
| By: | Bruhn, Miriam; Hernandez Mansilla, Johan Rolando; Ortega, Claudia Ruiz |
| Abstract: | This paper conducts a meta-analysis of 24 studies evaluating the impact of formal loans on small and medium-sized enterprise performance. Using a Bayesian hierarchical model, the paper estimates that formal loans increase small and medium-sized enterprise employment by 12 percent, sales by 18.3 percent, and profits by 17.6 percent. Subgroup analyses show that the effects of credit on employment are larger when loans are issued by public rather than private banks, and the effects are broadly similar across firm size, country income levels, and guarantee structures. The larger impact of public bank loans suggests that private lenders’ profit-maximizing incentives may not always align with providing funds to the most credit-constrained firms that have the highest returns to capital. |
| Date: | 2025–06–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11140 |
| By: | Cui, Jun |
| Abstract: | This study examines how competition in the banking sector affects the financial capabilities of non-financial enterprises in China, with a particular focus on the moderating role of shadow banking's financial innovation. Using panel data from 7, 250 firm-year observations of Chinese private banks collected from CNRDS, Wind, and CSMAR databases from 2017 to 2022, we apply a fixed-effects model to investigate this relationship. Our findings indicate that increased banking competition significantly enhances non-financial enterprises' financial capabilities, particularly in terms of financing flexibility and capital allocation efficiency. Moreover, shadow banking's financial innovation positively moderates this relationship, strengthening the positive effect of banking competition on firms' financial capabilities. The results are robust across various alternative specifications and endogeneity tests. This study contributes to the literature on financial market competition, corporate finance, and the evolving role of shadow banking in China's financial ecosystem, providing important implications for policymakers and corporate financial management. |
| Date: | 2025–05–19 |
| URL: | https://d.repec.org/n?u=RePEc:osf:osfxxx:7jtwc_v1 |
| By: | Rouvinen, Petri; Kässi, Otto; Pajarinen, Mika |
| Abstract: | Abstract Finland’s future prosperity hinges on intangible assets such as software, data, brands, and organizational capital. While research and development (R&D) is a central intangible asset, other types collectively hold greater significance. The growth trajectory of Finland’s intangible investments stalled with the 2008–2009 financial crisis and resumed only after the COVID-19 pandemic. This “lost decade” partly explains Finland’s sluggish economic and productivity performance. Innovation policy should broaden its focus beyond R&D to encompass other forms of intangible investment, as well as the adoption and diffusion of innovations. Policy should prioritize quality over quantity, encourage bold experimentation, and support scaling. This necessitates a shift towards equity financing and fostering skilled labor mobility. Mergers and acquisitions are vital for leveraging and disseminating intangible capital, but anti-competitive “killer acquisitions” are not in the national interest. |
| Keywords: | Intangible capital, Investments, Productivity, Innovation policy, Economic growth, Spillovers |
| JEL: | D24 E22 G32 O34 |
| Date: | 2025–06–05 |
| URL: | https://d.repec.org/n?u=RePEc:rif:report:164 |
| By: | Antonin Bergeaud; Adam B. Jaffe; Dimitris Papanikolaou |
| Abstract: | Innovation is central to models in economics, strategy, management, and finance, yet it remains difficult to measure due to its intangible and knowledge-based na ture. Recent advancements in Natural Language Processing offer new methods to analyze textual artifacts, providing empirical insights into previously hard-to-measure aspects of innovation. This paper provides an overview of the current applications of these methods in empirical innovation research, highlights their transformative potential for reshaping how researchers study and quantify innovation, and discusses the critical challenges that accompany their use. |
| JEL: | C80 O30 O31 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33821 |
| By: | Joanna Wolszczak-Derlacz (Gdansk University of Technology, Gdansk, Poland); Aleksandra Parteka (Gdansk University of Technology, Gdansk, Poland); Sabina Szymczak (Gdansk University of Technology, Gdansk, Poland); Piotr Platkowski (Gdansk University of Technology, Gdansk, Poland) |
| Abstract: | Relatively poor transfer of knowledge from higher education to the market remains a concern in Europe, universities being involved in at most 10% of all patented inventions. We examine the role of university funding in patenting, addressing three key research gaps: (i) the limited, country-specific samples rather than pan-European data used in most patent-funding studies; (ii) scarce evidence on the impact of the funding structure on patent quality; and (iii) the lack of precise estimates of interactions between university patenting, funding structures, and regional systems. We fill these gaps thanks to a micro-level database of almost 2, 900 higher education institutions (HEIs) in 31 European countries and 295 NUTS2 regions (2011-2019), containing detailed information on their activity as direct patent applicants and various institutional characteristics, including financial records. We show that universities with a greater share of third-party funds (research grants, contracts) apply for more patents and have better quality patents than those that rely mainly on core funding, i.e. national/regional allocations. The HEIs that do patent are richer and have more than twice the share of third-party revenues. This indicates that the very marked core-periphery pattern of university patenting in Europe is related both to the amount of university funding and to its sources. Additionally, we find that regional economic systems also influence the way in which the funding structure impacts university patenting. The positive effect of third-party funding is strongest in the wealthy European regions, less so in developed areas, and negligible in the poorest regions. |
| Keywords: | Patents, Higher Education Institutions, University, Funding |
| JEL: | O31 O34 I23 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:gdk:wpaper:75 |