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on Small Business Management |
| By: | Deng, Haotian (Ghent University); Desiere, Sam (Ghent University); Cockx, Bart (Ghent University); Bijnens, Gert (National Bank of Belgium) |
| Abstract: | This paper studies how employment subsidies for start-ups shape their performance. We exploit an unexpected policy reform in Belgium that permanently exempted start-ups hiring their first employee from payroll taxes for that employee. Using firm-level administrative data and a regression-discontinuity-in-time design, we find that subsidized post-reform startups employed fewer workers and generated lower output, value added, and profits compared to pre-reform start-ups. However, post-reform start-ups were more likely to survive as employers. These effects emerged within the first year after hiring and remained stable over a medium horizon of three years. Our findings indicate a compositional shift: the subsidy primarily induced low-productivity firms to enter the market. As most firms nowadays are nonemployers, our results meaningfully generalize the theoretical implications of standard neoclassical entrepreneurship models (employee–employer margin) and fill the important gap of the nonemployer–employer margin. |
| Keywords: | entrepreneurship, start-up, employment subsidy, tax reduction, labor demand, small firms |
| JEL: | H25 J23 J24 J38 L25 L26 M51 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18414 |
| By: | Hicham Doghmi (Central Bank of Morocco); Kamal Lahlou (Central Bank of Morocco) |
| Abstract: | Missing firm growth in developing countries: a firm-level analysisWhat are the key determinants of firm growth in developing countries? Using firm-level data from the World Bank Enterprise Surveys (WBES) spanning 2010–2024, we examine the impact of three distinct categories of factors on firm growth dynamics: (1) firm-level characteristics, (2) contextual factors, and (3) access to finance. Our analysis reveals that each category is essential, with both internal capabilities and external conditions playing complementary roles in shaping firm growth trajectories. We find that firms with stronger technological capabilities achieve significantly higher growth. In contrast, firms facing greater exposure to political instability and financing constraints experience markedly slower growth, with small firms being significantly more vulnerable to such constraints than large firms. Access to bank financing at the firm and sector levels is associated with robust growth gains. These findings are not driven by omitted variable bias or reverse causality; they remain robust across a wide range of sensitivity analyses and estimation strategies, including matching techniques and an instrumental variable (IV) strategy. Exploring the mechanism underlying the adverse effects of the business environment, we show that political instability and financing constraints impede the development of firms’ technological capabilities, which in turn undermines their growth potential. Our results underscore the importance of both firm-level capabilities and the broader enabling environment in fostering private sector development in developing economies. |
| Keywords: | Firm growth; Firm characteristics; Institutional quality; Access to credit; MENA countries |
| JEL: | D22 G30 J00 L25 O12 O14 |
| Date: | 2026–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:gii:giihei:heidwp05-2026 |
| By: | Nobuya FUKUGAWA |
| Abstract: | This study examines the commercialization of design rights owned by Japan’s public technology centers, Kohsetsushi, focusing on the factors associated with their subsequent implementation by firms. This study conceptualizes commercialization as a translation process in which protected designs are converted into executable specifications and realized through firm implementation. Using an unbalanced panel of Kohsetsushi, the empirical analysis incorporates regional industrial conditions and treats consultation activity as a key explanatory factor. Because consultation may be endogenous to local demand conditions, this study applies a two-stage control-function approach that first relates consultation intensity to organizational resources and local industrial conditions and then estimates its association with implementation outcomes. The results indicate that consultation is positively associated with subsequent implementation in many industries, although the strength of this association varies across sectors. They also show that industrial agglomeration matters: denser ecosystems tend to raise baseline implementation capacity but often weaken the marginal association of consultation, likely because firms can rely on alternative coordination and problem-solving channels. These findings suggest that public support for design right commercialization is likely to be more effective when consultation capacity is allocated selectively and organized through functional specialization. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26021 |
| By: | Garbers, Julio (LISER); Gregory, Terry (LISER) |
| Abstract: | We develop a novel firm-level indicator of Artificial Intelligence adoption in Europe (MAP-AI) by extracting information from more than three million firm websites in Belgium, France, Germany, and Luxembourg between 2016 and 2024 using a Large Language Model. The indicator captures realized AI use as publicly signaled by firms, rather than potential exposure, and distinguishes firms by their role in the AI ecosystem and the type of AI technologies employed. Validation against human-coded benchmarks and external data confirms high accuracy. We show that the share of AI-active firms increased from 1% in 2016 to 12% in 2024, with a marked acceleration after 2022. This growth reflects a structural shift toward widespread adoption and more integrated AI use, including generative AI. AI adoption is concentrated among larger, younger, knowledge-intensive firms in urban regions, with workforce skills emerging as a key driver. Foundational data skills are necessary for adoption, while specialized AI skills—such as machine learning and natural language processing—act as strong complements, highlighting the central role of human capital in AI diffusion. |
| Keywords: | Artificial Intelligence, firm-level data, Large Language Models, AI diffusion, human capital, skills |
| JEL: | O33 C81 L25 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18434 |
| By: | Catherine Beaudry; Charles Bérubé |
| Abstract: | This paper disentangles the actions that firms took to mitigate financial and nonfinancial innovation barriers and offers a first assessment of the role of government support programs for innovation related activities in relation with these perceived innovation obstacles. Our results show that firms that face financial constraints cannot completely overcome these innovation barriers. When not financially constrained however, firms that choose to be undeterred by the obstacles they face and takes successful measures or use government programs are either equally or more innovative than firms that do not face such innovation obstacles. Firms that have used government assistance programs have a greater propensity to innovate then those that did not use any government support. Ce document distingue les mesures prises par les entreprises pour atténuer les obstacles financiers et non financiers à l'innovation et propose une première évaluation du rôle des programmes de soutien public aux activités liées à l'innovation en relation avec ces obstacles perçus à l'innovation. Nos résultats montrent que les entreprises confrontées à des contraintes financières ne peuvent pas surmonter complètement ces obstacles à l'innovation. Toutefois, lorsqu'elles ne sont pas confrontées à des contraintes financières, les entreprises qui choisissent de ne pas se laisser décourager par les obstacles auxquels elles sont confrontées et qui prennent des mesures efficaces ou utilisent des programmes gouvernementaux sont tout aussi innovantes, voire plus, que les entreprises qui ne sont pas confrontées à de tels obstacles à l'innovation. Les entreprises qui ont eu recours à des programmes d'aide publique ont une plus grande propension à innover que celles qui n'ont bénéficié d'aucune aide publique. |
| Keywords: | Obstacles to innovation, government incentives, innovation performance, mitigating innovation barriers, Obstacles à l'innovation, incitations gouvernementales, performance de l'innovation, atténuation des obstacles à l'innovation |
| JEL: | L6 O32 O34 |
| Date: | 2025–03–05 |
| URL: | https://d.repec.org/n?u=RePEc:cir:circah:2025pr-02 |
| By: | Anabela Marques Santos |
| Abstract: | This paper examines the spatial distribution of European Union research and innovation (R&I) funding, comparing excellence-oriented (Horizon 2020) and cohesion-oriented (Cohesion Policy) instruments, and analysing the role of governance level within Cohesion Policy. Using NUTS3-level data from the 2014-2020 programing period and spatial econometric models, we find that Horizon 2020 funding is concentrated in regions with high patent intensity, GDP per capita, and knowledge-intensive services, reinforcing cumulative advantage and contributing predominantly to within-country inequalities in access to funding. Cohesion R&I funding exhibits stronger between-country redistribution and integrates socio-economic vulnerability, though its internal allocation varies with governance: national management fosters clustering and positive spillovers, while regional management spreads resources more widely but intensifies intra-national competition. The results underscore the trade-offs inherent in EU R&I funding; policies that prioritise excellence, redistribution, or spatial coordination cannot maximise all objectives simultaneously, with governance choices mediating the balance between concentration, spillovers, and territorial equity. |
| Keywords: | R&I funding; Cohesion policy; Horizon 2020; Governance |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ict:wpaper:2013/404059 |
| By: | Cheang, Bryan; Mehrotra, Praharsh |
| Abstract: | This paper explores the limits of mission‐directed entrepreneurial states by drawing on the theory of recombinant innovation and F.A. Hayek's insights on the spontaneous growth of knowledge in society. First, the use of discretionary policymaking curtails the range of knowledge generated in the process of social interaction, limiting the scope for ideas to be fortuitously recombined. Second, by privileging a single overarching mission, the state may foster a social culture that encourages compliance with authority, limiting the epistemic curiosity in individuals necessary for creative innovation. We make this argument through a comparative historical analysis of Singapore and Hong Kong, which adopted divergent approaches to development. Despite rapid growth in both, the former's technocratic governance came at the expense of its creative sectors, while the latter's reliance on spontaneous solutions enabled strong creative industries to develop despite little state support. By using creative performance as a proxy for innovation‐led development, we exemplify the limits of top‐down governance. Rather than fostering creative destruction, the entrepreneurial state may end up being a creative destroyer. |
| JEL: | R14 J01 N0 |
| Date: | 2026–02–24 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137148 |
| By: | Martinez Cillero Maria (European Commission - JRC); Napolitano Lorenzo (European Commission - JRC); Rentocchini Francesco (European Commission - JRC); Seri Cecilia; Zaurino Elena (European Commission - JRC) |
| Abstract: | HIGHLIGHTS ‣ Technological mergers and acquisitions (M&As) increase investors' market power by around 2% beyond standard M&As, with stronger effects concentrated among top R&D investors, US-based investors, and high-tech manufacturing investors. ‣ The increase in market power seems primarily driven by the consolidation of control over existing patents, limiting knowledge diffusion and making it harder for competitors to catch up. ‣ These findings support ongoing policy discussions on updating merger review regulations, as traditional concentration metrics may not fully capture competition risks posed by large technology firms. ‣ Technological assets and innovations are often embedded and masked within larger M&A deals. Separating the technology component of patents would allow regulators to assess competition concerns related to innovation while still allowing the acquisition to proceed. ‣ The analysis draws on a newly constructed firm-level dataset to provide a more systematic picture of technological M&As and market power. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145729 |
| By: | Ignacio Banares-Sanchez; Robin Burgess; Dávid László; Pol Simpson; John Van Reenen; Yifan Wang |
| Abstract: | Do industrial policies that promote clean energy offer a “ray of hope”, increasing a country’s growth and welfare, whilst simultaneously reducing carbon emissions? We study the impact of Chinese solar subsidies whose implementation by city-regions went alongside massive expansion of the sector and a dramatic fall in global solar prices. We construct new city and firm panel data on solar policies, patenting and output. Using synthetic-difference-in-differences 2004-2020, we find production and innovation subsidies were more effective than demand-side (installation) subsidies in generating large and persistent increases in local innovation, net entry, production and exports. Demand policies did, however, reduce local pollution. To examine aggregate effects, we build and structurally estimate a quantitative spatial model with endogenous innovation and heterogeneous productivity across firms and cities, which accounts for business stealing and knowledge spillovers. Counterfactual analysis shows that: (i) local effects remain substantial at the macro level explaining 40%-50% of the aggregate changes in solar innovation, prices and revenues; (ii) social benefits to Chinese citizens exceed subsidy costs by 65% (and double this when environmental benefits are included); and (iii) although all subsidy types increase welfare, innovation subsidies are the most cost-effective. |
| JEL: | H25 L25 L5 L52 N5 O31 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34893 |
| By: | Mathieu Le Moal (MRM-EPME - Montpellier Research in Management - Entrepreneuriat et PME - MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier); Roy Thurik; Olivier Torrès (MRM-EPME - Montpellier Research in Management - Entrepreneuriat et PME - MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier); Guillaume Soenen |
| Abstract: | Abstract We analyze the relationships between daily recovery experiences after work (detachment, relaxation, mastery and control) and mental health (well-being and burnout) based on four surveys among French entrepreneurs (small business owners). First , comparing our results with those of previous studies on employees' recovery experiences, we find that French entrepreneurs have fewer recovery experiences for all four dimensions. Second , we find that experiences of detachment after work have the lowest scores among daily recovery experiences for French entrepreneurs. Third , using many controls, both linear regressions and SEM analysis show that the quality of overall daily recovery experiences increases well-being and reduces burnout. Fourth , we show that the detachment component is not correlated with well-being, and the mastery component is not correlated with burnout. Relaxation and control are most strongly associated with well-being, whereas control has the strongest association with burnout. Many implications (including clinical) are discussed. |
| Keywords: | Burnout, Well-being, Daily recovery experiences, Entrepreneurs, Small business owners |
| Date: | 2025–07–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05507680 |
| By: | Resmini Laura; Fabbri Emanuele (European Commission - JRC); Calogero Vieri |
| Abstract: | This study examines the position of Western Balkan economies within global value chains (GVCs) and their capacity to attract foreign direct investment (FDI), linking the analysis with the broader framework of Smart Specialisation as a key pillar of the EU accession process and a strategic instrument for strengthening regional innovation ecosystems and deepening integration into the European Research Area. The results point to a steady increase in FDI between 2007 and 2022, accompanied by a growing role for services and knowledge-intensive activities, alongside differentiated trajectories of functional upgrading. Across multiple econometric specifications, the analysis shows that: (i) economic size, institutional proximity, EU integration and social connectedness are key drivers of international investment; (ii) obtaining EU candidate status increases FDI from EU countries by approximately 25–35% compared with non-EU sources; and (iii) while overall alignment with Smart Specialisation domains remains limited, it is more strongly driven by EU investors and reinforced by host-country R&D intensity and social connectedness. From a policy perspective, these findings suggest that more sophisticated economies - those more deeply embedded institutionally and relationally - are better positioned to attract strategic investment and support processes of functional upgrading and leverage Smart Specialisation as a mechanism for convergence within the EU integration process. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145544 |
| By: | Nobuya FUKUGAWA |
| Abstract: | Public technology support can raise SME productivity, yet many firms may not use it because they remain unaware of it as a viable option. This study reframes low uptake as a discovery problem and examines transitions from unawareness to awareness of Kohsetsushi, public technology transfer organizations in Japan. Using annual online surveys from 2021 to 2024, this study classifies firms as (0) unaware, (1) aware but not using, or (2) using, and tests whether firms that are unaware in one year become aware in the next year. Because identifying adjacent-year transitions requires consecutive observation and panel retention is nonrandom, stabilized inverse-probability weights based on next-wave response likelihood are used to mitigate attrition bias. The results suggest that discovery depends more on information-processing capacity and institutional touchpoints than on firm size: managers’ STEM background, prior digital investment, and previous receipt of innovation-related subsidies are positively associated with exiting unawareness, whereas firm size and firm age are not robust predictors. Travel time to the nearest Kohsetsushi facility is not a robust predictor, suggesting that cognitive and informational frictions may matter more than physical proximity at the awareness stage. These findings indicate that policy should be assessed not only by user outcomes but also by whether potential users can discover and interpret available support. Effective outreach therefore requires clear entry points, problem-based messaging, repeatable low-cost contact, and low-burden information design. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26022 |
| By: | Luca Repetto; Davide Cipullo; Edward Pinchbeck; Jan Bietenbeck |
| Abstract: | This paper studies how World War I mortality shocks to British communities affected long-run innovation. Linking parish-level military deaths to universal patent data (1895–1979) and inventor records, we compare high- and low-mortality areas. A 10 percent increase in deaths reduces the probability that a parish produces any patent by 0.09–0.12 percentage points and the probability that a parish produces a breakthrough patent by three times as much. Mortality depresses both the entry of new inventors and the productivity of established ones, particularly in frontier and technologically complex fields. Mobility, collaboration, and stronger local innovation ecosystems mitigate these effects, albeit only partially. |
| Keywords: | World War, innovation, human capital, patents, lost generation |
| JEL: | D74 O15 O31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12529 |
| By: | Masataka Mori; Juan M. Sanchez |
| Abstract: | Firms with higher R&D spending tend to hold more cash. In recent years, as AI investment has increased, R&D intensity has gone up while cash ratios have declined. |
| Keywords: | research and development; corporate cash holdings; artificial intelligence (AI); internal liquidity management |
| Date: | 2026–03–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00001:102892 |
| By: | Fisman, Raymond; Guriev, Sergei; Ioramashvili, Carolin; Plekhanov, Alexander |
| Abstract: | We empirically investigate the relationship between corruption and growth using a firm-level dataset that is unique in scale, covering almost 88, 000 firms across 141 economies in 2006–20, with wide-ranging corruption experiences. The scale and detail of our data allow us to explore the corruption-growth relationship at a very local level, within industries in a relatively narrow geography. We report three empirical regularities. First, firms that make zero informal payments tend to grow slower than bribers. Second, this result is driven by non-bribers in high-corruption countries. Third, among bribers, growth is decreasing in the amount of informal payments—in both high- and low-corruption countries. We suggest that this set of results may be reconciled with a simple model in which endogenously determined higher bribe rates lead to lower growth, while non-bribers are often excluded entirely from growth opportunities in high-corruption settings. |
| JEL: | D20 O12 |
| Date: | 2024–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123951 |
| By: | Richard Fabling (Motu Economic and Public Policy Research) |
| Abstract: | Auckland – New Zealand’s largest city – was subject to region-specific lockdowns to prevent the spread of Covid-19 during the pandemic. We estimate the impact of these lockdowns on firm sales revenue and expenses using a matched difference-in-difference dataset that covers almost all firms in the private sector, and with a control group of Christchurch firms. Estimated effects assume an unlikely best-case scenario where Covid-19 doesn’t impact the Auckland regional economy in the absence of lockdowns. Under this assumption, we find the initial effect on Auckland sales to be similar in magnitude to the impact of the Canterbury Earthquakes on the most affected firms, though with shorter duration matching the length of the lockdown restrictions. Raw statistics are consistent with the initial nationwide lockdown being more impactful – and relatively well-navigated by Auckland firms – but don’t account for the myriad of factors that prevented business-as-usual during the early stages of the pandemic. |
| Keywords: | Covid-19; lockdown; economic impact; matched difference-in-difference |
| JEL: | D22 H25 I18 |
| Date: | 2026–03–11 |
| URL: | https://d.repec.org/n?u=RePEc:mtu:wpaper:26_03 |
| By: | Sumaya Islam (Paderborn University); Tobias Buchta (Paderborn University); Colin Wooldridge (Texas A&M University-Corpus Christi) |
| Abstract: | Entrepreneurial decision-making often unfolds in an environment of uncertainty, resource constraints, and conflicting value systems, intensifying the tension between mission-oriented ideals and pragmatic economic constraints. In this paper, we analyze entrepreneurs' willingness to compromise on environmental, social, and governance (ESG) criteria and their underlying cognitive justifications. Our study with 79 entrepreneurs combines a conjoint design with validated scales for moral disengagement (MD) and founder identity. We investigate (a) the entrepreneurs' preferences for ESG attributes, (b) their general willingness to compromise on ESG criteria, and (c) the differences between social and commercial entrepreneurs. Our results show that first, entrepreneurs' willingness to compromise on ESG criteria is positively related to their level of MD, second, entrepreneurs' willingness to compromise on ESG criteria depends on their founder identity: missionaries, common among social entrepreneurs, show lower MD and lower willingness to compromise on ESG criteria, while darwinians, common among commercial entrepreneurs, show higher MD and higher willingness to compromise on ESG criteria, and third, entrepreneurs have a blind spot for the governance criterion when making ESG-related decisions. Our study contributes to the literature on entrepreneurship and business ethics by offering a context-specific theoretical model of MD in the new venture creation process and by providing evidence of differences in MD between social and commercial entrepreneurs. Thus, the findings reveal that MD and its interaction with founder identity play a key role in influencing ESG decisions, which in turn impact the legitimation and reputation of new ventures, stakeholder trust, and progress in achieving the United Nations’ Sustainable Development Goals. Besides, they have implications for investors, regulators, and entrepreneurship ecosystem builders who seek to foster sustainable new ventures amid ESG reporting mandates and accountability pressures. |
| Keywords: | Moral Disengagement, Social Entrepreneurship, Ethical Decision, Conjoint Analysis, Founder Identity |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:pdn:dispap:169 |
| By: | Robin Kaiji Gong; Yao Amber Li; Stephen Teng Sun; Shang-Jin Wei |
| Abstract: | While finance theory distinguishes the roles of equity and debt in supporting firm growth, their differential impacts on international trade remain underexplored. This study provides the first empirical analysis of how access to equity financing affects firm exports. We leverage the unique institutional setting in China, where initial public offerings (IPOs) require stringent regulatory approval, ensuring that only qualified firms advance to the final review stage. Our empirical strategy compares the export performance of successful IPO applicants with that of “near misses"—applicants rejected at the final review meetings. To sharpen identification, we utilize meeting records to exclude rejections citing concerns about future revenue growth or profitability risks, as these may entail unobserved shocks to export performance. Our cohort based difference-in-differences analysis reveals that IPO approval leads to a significant annualized increase of more than 6% in firm exports over the subsequent six years. Distinct from previous findings on debt financing, IPO approval primarily affects the extensive margin, enabling firms to expand into more destination-product markets. Mechanism tests suggest that IPOs enhance exports by financing intangible investments and fostering risk-taking activities. |
| JEL: | F1 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:34906 |
| By: | Jongkwan Lee; Seoyoung Kwon; Joan Monràs |
| Abstract: | High-skilled migration programs exist around the world in the hope that immigrants complement native workers, allow firms to grow, and boost innovation. We study the effect of one such program by exploiting the 2016 extension of the Optional Practical Training (OPT) program, which significantly prolonged the work authorization period for international STEM graduates. Using a synthetic difference-in-differences approach, we find that the policy successfully increased the local supply of high-skilled immigrants in exposed Commuting Zones. This local inflow stimulated firm creation and the demand for native high-skilled workers. The program might have also boosted innovation in certain sectors and startup investment, especially in Commuting Zones hosting top-ranked universities, where, overall, the effects tend to be larger. |
| Keywords: | firm dynamics, high-skilled migration, immigration, Labor demand |
| JEL: | F22 J31 J61 R11 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:bge:wpaper:1564 |
| By: | Brodzicki, Tomasz |
| Abstract: | This paper presents an extended framework building on the Melitz model to analyze the impact of artificial intelligence (AI) adoption on firm behavior, market structure, and international trade. We introduce a log-normal distribution of firm productivity and model heterogeneous AI adoption by incorporating fixed costs and a free-rider effect, where non-adopters benefit indirectly from technological diffusion. A key innovation lies in including AI productivity gains, either symmetric in a simplified manner or stochastic, allowing for firm-level variation in implementation success. This addition generates realistic dispersion in post-adoption outcomes and alters firm dynamics near critical survival, investment, and export activity thresholds. We compare deterministic AI adoption trajectories (sigmoid and exponential) with stochastic scenarios, highlighting how uncertainty in AI outcomes can amplify competitive asymmetries and increase market volatility. Under high fixed adoption costs and weak spillovers, the model exhibits strong endogenous concentration effects, especially when adoption follows an exponential path reinforced by feedback loops, potentially approaching scenarios of artificial superintelligence (ASI) or singularity. A sigmoid adoption trajectory implies bounded gains and a more stable equilibrium. The paper also explores the potential breakdown of monopolistic competition assumptions, suggesting oligopolistic drift in concentrated AI-intensive markets. These dynamics give rise to targeted policy implications to promote inclusive technological diffusion and reduce systemic risk. |
| Keywords: | Artificial Intelligence; AI; Market Structure; Global Trade; Productivity; Firm Heterogeneity; Technological Change |
| JEL: | D24 F12 F61 L11 O33 |
| Date: | 2024–08–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127767 |
| By: | Kaila, Matias; Pajarinen, Mika; Rouvinen, Petri; Ylhäinen, Ilkka |
| Abstract: | Abstract We analyze recent shifts in the financial conditions of Finnish enterprises, utilizing the European Central Bank’s survey data that captures the perspectives of both financial providers and targets. Our findings indicate that the financial environment for enterprises operating in Finland has recently tightened, both in absolute terms and relative to Nordic and European peers. These shifts have disproportionately affected growth-oriented and innovative enterprises that are pivotal to the structural renewal of the economy. The primary drivers of this contraction include Finland’s sluggish economic performance relative to its peers, a shift in risk appetite concerning future outlooks, and the realization of geopolitical risk following Russia’s war of aggression in Ukraine. Even by European standards, the Finnish business finance system remains exceptionally bank-centric. It is ill-suited for financing a future-facing economy rooted in intangible capital, high-risk ventures, and active ownership. To safeguard long-term renewal, the financial system must evolve toward a more market-driven structure with a greater emphasis on equity-based finance. |
| Keywords: | Business finance, Financial constraints, Banks, Creative destruction |
| JEL: | G21 G32 O16 G18 |
| Date: | 2026–03–06 |
| URL: | https://d.repec.org/n?u=RePEc:rif:briefs:176 |
| By: | Florian Horky (National Bank of Slovakia, Zeppelin University); Jarko Fidrmuc (Zeppelin University); Jan Klacso (National Bank of Slovakia); Reiner Martin (National Bank of Slovakia) |
| Abstract: | Non-application behavior for bank loans among European SMEs is economically more prevalent than loan application rejections by banks. Therefore, it should not be treated as a residual state but disentangled by its different reasons. Using microdata from the Survey on the Access to Finance of Enterprises (2014–2025), we document how firms choose and switch between loan application, discouragement, reliance on internal funds, and other non-application reasons. We combine an expected-utility framework with empirical estimations through multinomial and standard logit models. The main novelty is our ability to simultaneously investigate different types of non-application for bank loans, which are driven by differing forces. Discouragement manifests as a belief-driven channel of non-application, loan costs and the supply side drive another, cost-driven channel of non-application. By disentangling driving forces of non-application for bank loans as core element of the analysis, our study provides new evidence on why SMEs choose not to apply for bank loans. We highlight that these decisions can reflect diverse and contradictory underlying conditions. Our results are important for understanding and addressing these differing driving forces of SMEs bank loan application behavior. |
| JEL: | D22 E51 F33 G21 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:svk:wpaper:1133 |
| By: | Fabbri Emanuele (European Commission - JRC); Innocenti Niccolò; Bole Domen; Šćepanović Biljana; Rakčević Balša; Vojinović Ivana; Jabučanin Boris; Latinović Nedeljko; Kojić Jovana; Radulović Valentina; Laušević-odalović Maja; Morić Ilija; Zvizdojević Jelena; Nikolić Ratko; Vujičić Savica; Fabbri Emanuele (European Commission - JRC); Janković Mijanović Ivana |
| Abstract: | The Smart Specialisation Strategy (S3) is a place-based economic agenda that Montenegro, as the first non-EU country to adopt a strategy based on this framework, is now updating for the 2026–2031 period. This new iteration elevates S3 to a national ‘umbrella’ strategy, utilizing comprehensive quantitative and qualitative mapping to identify the country’s economic, scientific, and innovative strengths. The resulting report serves as an analytical foundation for the upcoming Entrepreneurial Discovery Process (EDP), where stakeholders collaborate to finalize Montenegro’s strategic priority domains. The analysis identifies five preliminary priority areas for Montenegro’s 2026–2031 S3 strategy: Construction, Energy and Sustainable Environment, Sustainable Agriculture and Food, Digital Innovation and Transformation, and Innovative and Sustainable Tourism. While sectors like Construction and Energy are highlighted for their roles in infrastructure and green transitions, the ICT and Tourism sectors stand out as high-growth pillars, contributing significantly to GDP and export potential. |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145542 |