|
on Small Business Management |
|
Issue of 2026–10–19
fourteen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Garg, Prashant (Bocconi University); Lambert, Peter John (University of Warwick & London School of Economics); Martin, Ralf (Imperial College London, Centre for Economic Performance and CEPR); Medvedev, Denis (World Bank) |
| Abstract: | This paper pilots a method for measuring firms' product and process innovation at scale. Our approach uses LLMs to complete a detailed innovation survey for a sample of 600, 000 companies operating across 40 countries. The preliminary results contain 6 million individual instances of innovative activity along with rich textual descriptions. These responses carry signal, for example a one-standard-deviation increase in a firm's product innovation index is associated with a 5% higher measured TFP residual. The data reveal that innovation is widespread: two-fifths of companies engage in product innovation and one-quarter in process innovation, far exceeding the share of patenting firms. Firms are more likely to have labor-augmenting than labor-saving introductions, while about 14% have green product in novation and 12% have green process innovation. Greenness and net labor augmentation are positively associated across countries. Beyond our specific application, this paper illustrates the potential for using LLMs to generate survey-level insights at population scale. |
| Keywords: | Innovation direction; Green innovation; Automation; LLMs; AI measurement; Patents JEL Classification: O30; O31; O33; O34; Q55; J24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cge:wacage:825 |
| By: | Will Aarons; Asani Sarkar |
| Abstract: | There is little consensus on the effect of AI adoption on employment. Economy-wide measures of pay and headcount have moved little even as AI adoption has spread rapidly, yet narrower measures document declining hiring for workers at the start of their careers or in AI-exposed occupations. In this post, we revisit this topic for U.S. small businesses. We use data from the 2025 Small Business Credit Survey (SBCS) to examine the twelve-month-forward employment and revenue expectations of AI users. We find that firms currently using AI are significantly more likely than non-users to expect increased employment and revenues over the next year, even after accounting for firm and owner characteristics and location. Revenue expectations are most optimistic for AI users that report facing operational challenges in utilizing technology. |
| Keywords: | artificial intelligence (AI); small business; employment; revenues |
| JEL: | O3 L2 D2 |
| Date: | 2026–10–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103899 |
| By: | Davide Arnaudo (Bank of Italy); Vincenzo Cuciniello (Bank of Italy); Giorgio Gobbi (Bank of Italy); Federico Guerra (Bank of Italy); Federico Labianca (Bank of Italy); Valentina Nigro (Bank of Italy); Sara Pinoli (Bank of Italy); Massimiliano Rigon (Bank of Italy); Paola Rossi (Bank of Italy); Federico Maria Signoretti (Bank of Italy); Pietro Tramontano (Bank of Italy) |
| Abstract: | This paper analyses the Italian private equity and venture capital market. Although total investment more than doubled between 2015 and 2025, the Italian market remains less developed than those of the other main European economies. Private equity investment is strongly oriented towards technology- and knowledge-intensive sectors, with significant participation by foreign funds. The public sector plays a prominent role in fundraising by Italian operators, whereas the contribution of private institutional investors remains relatively limited. Compared with firms in the same sector, size class and geographical area, private equity target firms are larger, more profitable and better capitalized; after turning to private equity, they record faster growth in total assets, employment, and investment, particularly in intangible assets. The further development of private capital markets in Italy could be fostered by a greater involvement of private investors and a wider availability of patient capital to support firms' growth and innovation. |
| Keywords: | private equity, venture capital, firm growth |
| JEL: | G23 G24 L25 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bdi:opques:qef_1061_26 |
| By: | Mabiso, Athur; Toguem, Robinson; Rosi, Alessandro; Mastroeni, Andrea; Pinca, Vittoria |
| Abstract: | The Youth Agropastoral Entrepreneurship Promotion Programme (AEP-Youth) in Cameroon was implemented to improve livelihood and food security outcomes for young agropastoral entrepreneurs. Implemented from 2015 to 2023 across four regions, the project overcame delays caused by administrative challenges, the COVID-19 pandemic and regional instability. The project’s holistic approach focused on youth business incubators offering technical training, mentorship and start-up support, including interest-free loans, productive grants and tailored financial products. The support combined start-up kits, productive credit and improved access to microfinance via a refinancing mechanism. The investments in rural infrastructure and market linkages aimed to boost the commercial viability of youth agro-pastoral businesses through trade fairs, alliances and improved connections to external markets. This impact assessment employed an ex-post quasi-experimental design, with primary household-level data collected in November and December 2023 supplemented by secondary GIS data on climatic and environmental conditions. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025–07–17 |
| URL: | https://d.repec.org/n?u=RePEc:ags:unadia:413153 |
| By: | Francis Annan; Collin B. Raymond |
| Abstract: | We study how firms choose among incentive contracts and how accurately managers predict their effects. Using a survey of managerial beliefs and a large-scale field experiment, we randomly assign agents at the market level to several widely used, expenditure-equivalent incentive schemes. In the field, the best-performing contract increases agent output and firm revenue by over 20% relative to the status quo, despite being ranked lower by managers, whereas the worst-performing contract performs as predicted. Managers correctly identify underperforming contracts but systematically underestimate top- performing ones. We document the sources of performance di!erences—labor supply responses rather than selection or pricing and the determinants of managerial predictability: contract complexity and managerial hierarchy. Our results highlight the importance of contract design for firm performance and reveal systematic limits to managerial cognition in shaping incentives. |
| JEL: | D86 D91 G23 L21 O12 O16 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35788 |
| By: | Irlenbusch, Bernd; Laske, Katharina; Schröder, Marina; Stoczek, Rika |
| Abstract: | How firms generate and select ideas influences their strategic path and the development of entire industries. To better understand this process, we experimentally analyze the impact of knowledge on idea generation and selection in an incentivized ideation task. Between treatments, we vary whether or not ideators are provided with examples of previous successful ideas before working on the task. We provide causal evidence that knowledge about such example ideas leads to path dependencies, i.e., knowledge increases the similarity of new ideas to those provided. Consistent with the hypothesis that knowledge affects the search for new ideas, we find evidence of path dependencies during idea generation, but do not find statistically significant evidence of additional path dependencies during idea selection. Overall, when knowledge is provided, we observe an increase in selected innovative ideas that are similar to previous ideas and a decrease in selected innovative ideas that are different from previous ideas. |
| Keywords: | idea generation;idea selection;innovation;knowledge;path dependency;real-effort experiment |
| JEL: | R14 J01 J50 |
| Date: | 2026–09–28 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:141263 |
| By: | Marius A. K. Ring |
| Abstract: | Whether imposing higher taxes on business owners adversely affects business activity by constraining investment and inducing capitalist flight is a central question in the ongoing debate on how to tax the ultra wealthy. To shed new light, I exploit a series of related Norwegian reforms during 2021–2024 that increased dividend tax rates, removed migration-related capital gains tax loopholes, and nearly doubled the effective marginal tax rate on business wealth. These reforms spurred international debate and, allegedly, an “exodus” of Norwegian billionaires (Financial Times, 2023). While I document clear effects on migration, these responses are concentrated among the top 0.1% of the wealth distribution and mostly confined to 2022 and 2023. My results indicate that at most 100 individuals left due to the reforms. I find no evidence of significant outmigration or reduced inflows of startup founders or inventors. I estimate that absent any outmigration, wealth tax revenues would have increased by 75% from 2021 to 2024. Reform-driven outmigration lowers the revenue gain to 71.5%. My findings further show that outmigrating owners’ firms remain economically active and do not reduce investment. In a broader set of analyses, I examine whether business outcomes are affected, regardless of whether owners outmigrate, since firms may reduce investment both due to liquidity constraints or distortions to owners’ savings decisions. I compare firms owned by Norwegian individuals subject to the wealth tax with firms owned by foreigners and other tax-exempt entities. By merging historical ownership data from Orbis with the Norwegian shareholder register, I perform these analyses on both Norwegian and foreign-domiciled firms. Across settings, I find no evidence that Norwegian-owned firms pay out more dividends or invest less after the reforms, nor is there any evidence that the reform induced more bankruptcies. These findings indicate that the short-run economic costs of wealth taxation, in terms of migration and firm investment, are more limited than the public debate implies. |
| JEL: | H0 H2 H3 H31 H32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35854 |
| By: | Thomas Drechsel; Daniel Lewis; Davide Melcangi; Laura Pilossoph |
| Abstract: | To study monetary policy transmission at the firm level, researchers typically consider heterogeneity along a small number of firm characteristics, such as size or leverage. We instead estimate the full distribution of firms’ investment responses to monetary policy, using a clustering regression framework. Our novel approach captures multidimensional and unobservable heterogeneity across firms and time. We find that investment by most firms in most time periods responds little to monetary policy. Only about 5% of firm-time observations are associated with a strong response. We then investigate the sources of heterogeneity ex post. We find that most of the variation in investment sensitivity arises within firms over time. Although several firm characteristics predict responsiveness to monetary policy, the majority of heterogeneity remains unexplained by firm observables. We demonstrate that our empirical estimates provide new targets for disciplining structural models of firm heterogeneity. |
| JEL: | D25 E22 E32 E52 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35867 |
| By: | Banu, Elena; Vinci, Francesca; Best, Lea |
| Abstract: | This paper develops novel firm-level measures of shareholder geographical concentration and examines how elevated home bias in equity holdings affects investment resilience in the euro area. We combine security-level holdings data from the ECB’s Securities Holdings Statistics (SHS-S) with firm-level financial-statement data from Compustat, and document that equity ownership remains strongly concentrated domestically, with limited cross-border diversification within the monetary union. Using a difference-in-differences design around the COVID-19 shock, combined with a propensity score matching approach, we then analyse whether equity home bias shapes firms’ responses to macroeconomic disruptions. Against an average 16% decline in exports among the firms in the sectors most affected by the pandemic, those with more concentrated, home-biased shareholder bases reduced investment by 20% more than their more diversified peers after the shock. The effect operates mainly through weaker equity resilience, with equity declining by 13%, while sales and bank financing remain comparable. Our findings highlight the benefits of deeper cross-border equity integration for corporate resilience. JEL Classification: F36, G32, G15, D22, E44 |
| Keywords: | COVID-19 shock, cross-border equity integration, difference-in-differences, firm resilience, macroeconomic shocks, shareholder geographical concentration |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263296 |
| By: | Yuting Chen; Xuancheng Qin |
| Abstract: | Administrative boundary reforms in China alter the assignment of local authority and growth incentives without changing physical geography. We study two reforms with opposite institutional content---county-to-district (centralization: a county absorbed into a municipality as an urban district) and county-to-city (empowerment: a county upgraded to a county-level city)---using a firm-year pollution panel (1998--2013) and a border-pair research design that compares firms on opposite sides of the same county border. Centralizing reform lowers local NOx intensity by 14.8% through cleaner production, without shrinking output or employment; empowering reform raises COD, dust, and wastewater levels by 87--95\% through dirty growth. The local abatement is not net abatement: NOx rises in same-prefecture neighbor counties (+0.77, p |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.06374 |
| By: | Mabiso, Athur; Hossain, Marup; Zhanuzakova, Rakhat |
| Abstract: | The Agricultural Services Programme for Innovation, Resilience, and Extension (ASPIRE) was implemented nationwide in Cambodia between 2015 and 2022, with the objective of demonstrating an enhanced model of agriculture services provision and to assist smallholder farmers in achieving profitable and resilient businesses. The project covered over 143, 000 households through extension services, financial inclusion programs and infrastructure development tailored to the needs of Cambodian agriculture. Through its holistic approach, the project focused on evidence-based policy making, strengthening extension services' capabilities, enhancing extension services and building climate-resilient infrastructure. This impact assessment of ASPIRE was conducted using publicly available survey and geospatial household data from 2020 and 2021. |
| Keywords: | Community/Rural/Urban Development |
| Date: | 2025–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:ags:unadia:413152 |
| By: | Cristina Rossetti; Nicola Caravaggio; Giovanni Lamura; Giuliano Resce |
| Abstract: | The study of the factors driving the dynamics of healthcare spending is of paramount importance to guide policymakers in the allocation of resources and to measure the effectiveness of the healthcare system under consideration. The identification of these drivers can be supported by the use of machine learning techniques, which enable the discovery of hidden patterns within vast amounts of data. In contrast to black-box methods, Symbolic Regression (SR) is an approach that allows for the identification of analytical models that explicitly capture the functional relationships within the data, thus enhancing interpretability. In this paper, we present the use of SR for identifying the drivers of healthcare expenditure in Italian regions. Given the dynamic and complex nature of this phenomenon, we generated several models based on distinct temporal windows, enabling us to analyze the drivers across different time horizons. In addition to identifying the main drivers based on variable frequency in the generated models, we also conducted a study on recurring substructures. The results show that SR was able to generate models with a good level of predictive accuracy for private healthcare expenditure, enabling a reliable analysis of its driving factors, but failed to do so for public healthcare expenditure. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2610.04439 |
| By: | Thomas Drechsel; Daniel J. Lewis; Davide Melcangi; Laura Pilossoph |
| Abstract: | It is well known that monetary policy affects firms’ investment decisions. But which firms are the most responsive to changes in interest rates? And does this responsiveness vary over time? The literature has given diverse answers to this question, focusing on characteristics such as firm size, age, and financial position, and mostly studying these traits in isolation. In this post based on a recent Staff Report, we explore how investment responsiveness to monetary policy changes across firms and over time. We find that investment by most firms in most time periods responds little to monetary policy. For some firms in some periods, however, investment is very responsive to changes in interest rates. While these instances of strong sensitivity correlate with several firm traits, there is substantial variation that cannot easily be linked to specific characteristics of firms. Our findings therefore underscore the importance of considering the entire distribution of investment responses rather than focusing on the average effect. |
| Keywords: | monetary policy; investment; firms |
| JEL: | E22 E32 |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103898 |
| By: | Suswati Nasution (Economic and Business Faculty, University of Bengkulu, Indonesia Author-2-Name: Praningrum Author-2-Workplace-Name: Doctoral Program in Management, University of Bengkulu, Indonesia Author-3-Name: Anggri Puspita Sari Author-3-Workplace-Name: Doctoral Program in Management, University of Bengkulu, Indonesia Author-4-Name: Gustini Author-4-Workplace-Name: Doctoral Program in Management, University of Bengkulu, Indonesia Author-5-Name: Lydia Gustina Putri Author-5-Workplace-Name: Doctoral Program in Management, University of Bengkulu, Indonesia Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | " Objective - This study aims to examine the role of coping optimism as a psychological mechanism linking self-efficacy and self-acceptance to adaptive performance among public sector employees. Specifically, the study investigates whether coping optimism functions as a full mediator in transforming personal psychological resources into adaptive workplace behavior. Methodology/Technique - A quantitative cross-sectional survey was conducted involving 206 civil servants employed in regional government institutions. Data were collected using structured questionnaires and analysed using Partial Least Squares Structural Equation Modelling (PLS-SEM) with bootstrapping procedures to assess the measurement and structural models. Findings - The results indicate that self-efficacy and self-acceptance significantly enhance coping optimism. In turn, coping optimism has a significant positive effect on adaptive performance. The mediation analysis demonstrates that coping optimism fully mediates the relationships between self-efficacy, self-acceptance, and adaptive performance, suggesting that personal resources contribute to employee adaptability through optimistic coping processes. The model explains 52.5% of the variance in adaptive performance and demonstrates satisfactory predictive relevance. Novelty - This study extends the adaptive performance literature by positioning coping optimism as a full mediating mechanism rather than merely an antecedent of adaptive performance. By integrating Social Cognitive Theory, Stress Appraisal Theory, Conservation of Resources Theory, and the Broaden-and-Build Theory, the study provides a comprehensive explanation of how personal psychological resources are transformed into adaptive workplace behavior within public sector organizations. Type of Paper - Empirical" |
| Keywords: | adaptive performance, coping optimism, self-efficacy, self-acceptance, full mediation, public sector. |
| JEL: | M12 M19 |
| Date: | 2026–09–30 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:jmmr368 |