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on Small Business Management |
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Issue of 2025–12–15
eleven papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Nicola Cortinovis |
| Abstract: | Entrepreneurs in rural areas face much greater difficulties than those located in cities, also with respect to the access to entrepreneurial finance. Recent developments in the provision of capital, however, have opened new opportunities for small firms and start-ups to obtain funding. In this empirical work, I hypothesize that crowdfunding provides crucial resources and support for rural-based entrepreneurs and that rural areas characterized by greater (bridging) social capital are better positioned to benefit from the opportunities of crowdfunding. Using a newly developed database linking crowdfunding campaigns to industry and counties in the U.S. (KIUS), county-level information on social capital and official U.S. census data, I test these hypotheses. My findings indicate that crowdfunding is indeed positively related to the number of ventures operating in the industry-location in the following period. In addition, this relationship is stronger for counties with higher levels of bridging social capital and of civic engagement. The results are robust to a number of checks, including a placebo test and matching exercises. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2535 |
| By: | Paolo Pedotti |
| Abstract: | The paper is related to the identification of firm's features which serve as determinants for firm's total factor productivity through unsupervised learning techniques (principal component analysis, self organizing maps, clustering). This bottom-up approach can effectively manage the problem of the heterogeneity of the firms and provides new ways to look at firms' standard classifications. Using the large sample provided by the ORBIS database, the analyses covers the years before the outbreak of Covid-19 (2015-2019) and the immediate post-Covid period (year 2020). It has been shown that in both periods, the main determinants of productivity growth are related to profitability, credit/debts measures, cost and capital efficiency, and effort and outcome of the R&D activity conducted by the firms. Finally, a linear relationship between determinants and productivity growth has been found. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2511.19627 |
| By: | Cruz, Ronize (University of Coimbra); Nobre, Francisco (Kingston University London); Pereira dos Santos, João (ISEG) |
| Abstract: | We analyze how the proliferation of short-term rentals (STRs) affects firm survival, performance, and entry in two European cities with high STR density. Using administrative firm-level accounting data, a shift-share instrument, and an event-study design, we find that STR growth increases exit rates among underperforming firms, while surviving firms experience relative gains in sales and profits, with minimal effects on employment or investment. Operational costs, particularly rents and liabilities, also rise. STR expansion stimulates entrepreneurship, though new entrants face higher costs and lower initial profitability. These findings underscore the nuanced impacts of tourism-driven demand shocks on urban economic ecosystems. |
| Keywords: | tourism, local businesses, short-term rentals, Portugal |
| JEL: | R12 L25 L83 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18295 |
| By: | Heng-fu Zou (IAS, Wuhan University and World Bank) |
| Abstract: | We replace Weber's "spirit of capitalism" with a constitutional-cultural framework we call the republican spirit of innovism operating within a re-public of entrepreneurs. In such an order, ordinary people repeatedly propose, test, and lawfully imitate improvements under general, impersonal rules-secure property, open entry and exit, credible contract, and freedoms of speech and association. Building on Mises(calculation and residual claimancy), Hayek (discovery and dispersed knowledge), Kirzner (alertness and equilibration), and the historical evidence assembled by Mc Closkey, Mokyr, and Phelps, we argue that modern prosperity stems less from elite R&D or capital deepening and more from creative construction by the many. We derive empirical signatures-proposal density, feedback speed, and diffusion breadth-and outline a policy agenda favoring open standards, disclosure-oriented intellectual property, contestability, and re producibility. Case evidence from Britain (since 1700), the United States (since the 1780s), and contemporary technological and biomedical sectors shows that when rules keep feedback honest and imitation lawful, total factor productivity rises persistently. |
| Keywords: | republican spirit of innovism, republic of entrepreneurs, dispersed knowledge, entrepreneurial discovery, lawful imitation, diffusion, Industrial Enlightenment, bourgeois dignity, grassroots dynamism |
| JEL: | O31 O33 L26 O43 N10 |
| Date: | 2025–11–02 |
| URL: | https://d.repec.org/n?u=RePEc:cuf:wpaper:804 |
| By: | Ibadoghlu, Gubad |
| Abstract: | The Information and Communication Technologies (ICT) sector holds strategic importance for Azerbaijan's ambitions to diversify beyond hydrocarbons and modernize its national economy. Yet, despite extensive public investment and infrastructure development, the sector's contribution to GDP, employment, and exports remains limited. Drawing on official statistics and policy documents for 2020-2025, this study examines the performance, structure, and constraints of Azerbaijan's ICT and digital economy. In 2024, ICT accounted for only 1.8 percent of GDP, 0.036 percent of total exports, and 1.4 percent of national employment. Research and development (R&D) expenditure remained below 0.3 percent of GDP, while Azerbaijan ranked 94th in the 2025 Global Innovation Index-well behind regional peers. The paper attributes the sector's underperformance to low innovation intensity, weak private-sector participation, and overreliance on state-led infrastructure projects such as Azercosmos, which, while symbolically important, have not produced broad technological spillovers. At the same time, Azerbaijan has made measurable progress in digital finance, with non-cash payments rising from 30 percent in 2021 to 64.2 percent in 2024. These advances, however, have not translated into a robust, innovation-driven ICT ecosystem. The findings suggest that Azerbaijan's digital transformation remains infrastructure-heavy but innovation-light, requiring a shift toward policies that promote R&D investment, entrepreneurial capacity, and integration into global digital value chains. |
| Keywords: | Azerbaijan, Digital Economy, ICT Sector, Innovation, R&D, Diversification, Azercosmos, E-Governance, Non-Cash Payments, Digital Transformation |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:333330 |
| By: | Thi Kim Cuong Pham (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre); Ngoc-Sang Pham (EM Normandie - École de Management de Normandie = EM Normandie Business School, CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre); Cuong Le Van (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, TIMAS, Thang Long University); Tin Nguyen-Trong (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre) |
| Abstract: | We develop a dynamic endogenous-growth model with an R&D sector in which the elasticity of innovation with respect to existing knowledge can be negative. We prove the existence and uniqueness of a balanced growth path (BGP) and derive closed-form growth factors, showing that productivity and output growth are semi-endogenous and population-driven. We also establish the global stability under general production function. Under testable parameter restrictions, the economy converges to the BGP. When the knowledge elasticity is sufficiently low, a Jacobian-based condition implies instability, and an N-period innovation cycle can emerge. Comparative statics are conducted to show the role of several factors, including research efficiency, elasticity of inputs and population growth. Calibrated simulations map out transitions and mark the points at which stability is lost. They make clear when innovation frictions endanger balanced growth and provide practical guidance for R&D and demographic policy. |
| Keywords: | endogenous growth, population-driven growth, balanced growth path, stability, instability, innovation, monotone dynamical system |
| Date: | 2025–11–29 |
| URL: | https://d.repec.org/n?u=RePEc:hal:cesptp:halshs-05388671 |
| By: | Giuseppe Simone |
| Abstract: | This paper investigates the structural foundations of regional productivity divergence in Italy through the lens of economic complexity. Leveraging a newly constructed Economic Complexity Index (ECI) at the NUTS-3 level, we examine how the sophistication and diversity of local productive structures shape long-run productivity trajectories of Italian provinces over the period 2000–2021. Empirical approach combines panel data models with instrumental variable (IV-GMM) techniques, spatial econometrics, and simultaneous equation systems (3SLS) to capture the direct, spatial, and bidirectional relationships between complexity and productivity. The findings reveal that economic complexity is a robust and consistent predictor of regional labour productivity. This association is particularly strong in Northern provinces, where institutional density and in- novation ecosystems amplify the returns to complexity, and where spatial spillovers from neighbouring territories enhance local outcomes. In contrast, Southern regions experience lower returns and limited externalities, reflecting persistent development traps. Crucially, I provide the first integrated empirical evidence of a cumulative, self-reinforcing loop between complexity and productivity: more complex regions become more productive, and more productive regions are better equipped to diversify into complex activities. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2536 |
| By: | Tomoya MORI |
| Abstract: | This study presents a microeconomic framework explaining the formation, size variation, and spatial arrangement of cities. Differences in firm market areas across industries and the tendency of firms to co-locate to gain mutual benefit from a shared consumer base generate a nested core-periphery structure, where cities of varying size and industrial diversity encompass one another. This approach allows for analysis of how changes in population and other fundamental economic conditions affect regional structure. |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rpdpjp:25017 |
| By: | Frederik Rech (School of Economics, Beijing Institute of Technology, Beijing, China); Fanchen Meng (Faculty of Economics, Shenzhen MSU-BIT University, Shenzhen, China); Hussam Musa (Faculty of Economics, Matej Bel University, Bansk\'a Bystrica, Slovakia); Martin \v{S}ebe\v{n}a (Faculty of Arts and Social Sciences, Hong Kong Baptist University, Hong Kong, China); Siele Jean Tuo (Business School, Liaoning University, Shenyang, China) |
| Abstract: | This study investigates whether firm-level artificial intelligence (AI) adoption improves the out-of-sample prediction of corporate financial distress models beyond traditional financial ratios. Using a sample of Chinese listed firms (2008-2023), we address sparse AI data with a novel pruned training window method, testing multiple machine learning models. We find that AI adoption consistently increases predictive accuracy, with the largest gains in recall rates for identifying distressed firms. Tree-based models and AI density metrics proved most effective. Crucially, models using longer histories outperformed those relying solely on recent "AI-rich" data. The analysis also identifies divergent adoption patterns, with healthy firms exhibiting earlier and higher AI uptake than distressed peers. These findings, while based on Chinese data, provide a framework for early-warning signals and demonstrate the broader potential of AI metrics as a stable, complementary risk indicator distinct from traditional accounting measures. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.02510 |
| By: | Mattia Guerini (Università degli Studi di Brescia and Fondazione Eni Enrico Mattei); Giovanni Marin (Università degli Studi di Urbino Carlo Bo, Fondazione Eni Enrico Mattei and SEEDS, Sustainability Environmental Economics and Dynamics Studies); Francesco Vona (Università degli Studi di Milano, Fondazione Eni Enrico Mattei and OFCE Sciences-Po) |
| Abstract: | We study how monetary policy shapes firm level carbon emissions. Our identification strategy exploits the European Central Bank’s July 2012 move to the zero lower bound as a plausibly exogenous easing of credit supply, combined with rich administrative and survey data on French manufacturing firms from 2000–2019. Using a difference-in-differences design with debt-to-asset ratios as exposure, we find that financially constrained firms cut emissions by about 9.4% more than unconstrained ones. This effect primarily stems from improvements in energy efficiency, lower carbon intensity of energy, and general productivity improvements associated with capital deepening that outweighed modest scale effects. Small and medium firms drive these results, while large and EU ETS regulated firms show no significant response. On average, emissions fell by 3.3% per year, summing up to 5.3 million tonnes of CO2 saved. Despite the smaller marginal effects, total carbon savings due to the monetary easing are comparable to the savings from the EU ETS, highlighting the untargeted nature of the policy. |
| Keywords: | Financial constraints, credit supply, firm level carbon emissions, climate policies |
| JEL: | Q52 Q48 D22 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2025.31 |
| By: | Jorge Cisneros Paz; Timothy Wojan; Matthew Williams; Jennifer Ozawa; Robert Chew; Kimberly Janda; Timothy Navarro; Michael Floyd; Christine Task; Damon Streat |
| Abstract: | Public-use microdata samples (PUMS) from the United States (US) Census Bureau on individuals have been available for decades. However, large increases in computing power and the greater availability of Big Data have dramatically increased the probability of re-identifying anonymized data, potentially violating the pledge of confidentiality given to survey respondents. Data science tools can be used to produce synthetic data that preserve critical moments of the empirical data but do not contain the records of any existing individual respondent or business. Developing public-use firm data from surveys presents unique challenges different from demographic data, because there is a lack of anonymity and certain industries can be easily identified in each geographic area. This paper briefly describes a machine learning model used to construct a synthetic PUMS based on the Annual Business Survey (ABS) and discusses various quality metrics. Although the ABS PUMS is currently being refined and results are confidential, we present two synthetic PUMS developed for the 2007 Survey of Business Owners, similar to the ABS business data. Econometric replication of a high impact analysis published in Small Business Economics demonstrates the verisimilitude of the synthetic data to the true data and motivates discussion of possible ABS use cases. |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2512.05948 |