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on Small Business Management |
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Issue of 2026–05–18
sixteen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Teresa Fort; Nathan Goldschlag; Jack Liang; Peter K. Schott; Nikolas Zolas |
| Abstract: | Relatively flat US productivity growth versus rising R&D expenditures is often interpreted as evidence that ideas are getting harder to find. We build a new 45-year panel tracking the universe of US firms' patenting to investigate the micro underpinnings of this conclusion, separately examining the relationships between research inputs and ideas (patents) versus ideas and growth. We find that average patents per R&D input are increasing, the elasticity of patents to R&D inputs is flat or rising, and there is not systematic evidence of a secular decline in patenting after controlling for research inputs. We then document a positive, significant, and fairly steady relationship between firms' patent and labor productivity growth rates. Average firm growth after controlling for patent growth, however, declines. Together, these results suggest that firms' innovative efforts play a key role in sustaining growth that has not diminished over the last four decades. |
| Keywords: | innovation, productivity, R&D, patents, firm growth |
| JEL: | O31 O32 O33 O47 D24 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12652 |
| By: | Giordano MION (ESSEC Business School); Aminata SISSOKO (European Commission) |
| Abstract: | In this paper, we have conducted an econometric analysis of the impacts of the Accelerator scheme of the European Innovation Council (EIC), with a particular focus on the EU Blended Finance providing for the first time grant and direct equity - quasi-equity investment, by means of a difference-in-difference framework combined with propensity score matching and using firms who obtained a Seal of Excellence as control group. Our analysis highlights a number of significant impacts of the EIC Accelerator on firm performance measures like sales, capital stock, wage bill, average wage, employment and value of deals. The analysis also highlights the payment of the EIC direct equity investment as a key root of heterogeneous impacts on firm production factors and output and the lack of a differential impact for projects related to health. |
| Keywords: | company growth, direct investment, EU investment, EIC fund, innovation, research and development, start-up |
| JEL: | O31 O33 L26 M13 G24 O38 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-26-025-en-n |
| By: | Domnick Clemens (European Commission - JRC); Compano Ramon (European Commission - JRC); Ponferrada Víctor (European Commission - JRC); Bodgan Tofan; Colombo Massimo; Quas Anita |
| Abstract: | ‣ Relocation of European startups raises concerns about weakening the EU’s innovation ecosystem. A new JRC report provides new evidence on the magnitude and type of startups relocation among European venture capital (VC) backed firms. ‣ The relocation rate of European VC-backed startups is in the order of 3.3% - 4.3%. This number drops down to 0.3% - 0.5% for comparable non-VC backed startups. ‣ Relocation patterns i) differ among startups’ home countries, ii) are higher for asset-light than for manufacturing firms, and iii) happen often in the first years of a startup’s life. ‣ The United States is the dominant destination for relocating startups, in particular the more developed entrepreneurial ecosystems such as San Francisco, Boston, and New York. ‣ Most migrations are not ‘complete’ relocations: 97% of the VC-backed companies that relocate are doing it only partially, i.e., they keep operations in the home country. Only about three-quarters of the CEOs move physically to the new destination when startups relocate. ‣ Startup relocation can be beneficial or detrimental for the country of origin, depending on the context of the firm and its ecosystem. For instance, a ‘virtual’ relocation to tap into VC markets abroad might be positive for firm growth, while losing all activities would be detrimental. Polices ought to accompany startups in their drive to expand to foreign markets, while aiming to retain high-value activities (e.g., R&D) in Europe. These foreign ties will enable positive spillovers to the ecosystem of origin. ‣ To reduce the probability of losing high-value activities framework conditions need to improve. Examples include facilitating access to adequate finance, the supply of skilled human resources, decreasing regulatory complexity, and completing the EU Single Market. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc146239 |
| By: | Teresa C. Fort; Nathan Goldschlag; Jack Liang; Peter K. Schott; Nikolas Zolas |
| Abstract: | Relatively flat US productivity growth versus rising R&D expenditures is often interpreted as evidence that ideas are getting harder to find. We build a new 45-year panel tracking the universe of US firms' patenting to investigate the micro underpinnings of this conclusion, separately examining the relationships between research inputs and ideas (patents) versus ideas and growth. We find that average patents per R&D input are increasing, the elasticity of patents to R&D inputs is flat or rising, and there is not systematic evidence of a secular decline in patenting after controlling for research inputs. We then document a positive, significant, and fairly steady relationship between firms' patent and labor productivity growth rates. Average firm growth after controlling for patent growth, however, declines. Together, these results suggest that firms' innovative efforts play a key role in sustaining growth that has not diminished over the last four decades. |
| JEL: | E0 O36 O40 O41 O47 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35182 |
| By: | Gábor Kátay; Pálma Mosberger; Francesco Tucci |
| Abstract: | The paper evaluates the impact of the European Commission’s Seventh Framework Pro-gramme (FP7) grants on profit-oriented firms’ post-treatment performance. Using a robust quasi-experimental design and a dataset covering applicants from 46 countries, we find that FP7 grants increase firms’ sales and labour productivity by about 18%. However, there is no significant impact on employment levels, pointing to potential growth barriers that prevent firms from scaling production despite improved productivity. The effectiveness of these grants varies significantly based on factors such as financial constraints, project risk profiles, market structure, and the innovation environment. Smaller, less productive firms with tighter financial constraints in technology-intensive sectors operating in concentrated markets and favourable innovation environments, particularly those undertaking longer and riskier projects, tend to benefit more. |
| JEL: | C31 G28 H57 O31 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:238 |
| By: | Wulong Gu; Alla Lileeva; Daniel Trefler |
| Abstract: | Conventional wisdom holds that offshoring intermediates to China stimulates innovation. This is not entirely compelling. On the one hand, (a) offshoring lowers marginal costs and expands sales, thereby increasing the returns to innovation, especially for large firms. On the other hand, (b) offshoring low-quality intermediates reduces the costs of older-generation products, thereby reducing the returns to innovating into newer generations. We examine these two opposing forces over 2002-2011 for 6, 024 Canadian firms. Our empirical strategy regresses measures of innovation, such as R&D, on imports of intermediate inputs. To address endogeneity, we construct a model-consistent shift-share instrument whose shocks are the often-dramatic improvements in the quality of HS6 Chinese intermediate inputs. We find that greater offshoring reduced R&D spending over 2002-2011 by 15% as (1) firms engaged in R&D in 2002 reduced their expenditures, and (2) firms not initially engaged in R&D were discouraged from starting up new R&D projects. Our model explains these findings: Rising quality of Chinese intermediates is a positive supply shock (rather than a negative China shock) that raises profits for all offshorers, raises innovation for the largest offshorers (channel a above), and lowers innovation for all other offshorers (channel b). These predictions are confirmed in the data. |
| JEL: | F1 F14 O3 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35167 |
| By: | Jaime Arellano-Bover; Marco De Simoni; Luigi Guiso; Rocco Macchiavello; Domenico J. Marchetti; Mounu Prem |
| Abstract: | Organized crime groups (OCGs) are often thought to infiltrate firms to benefit from or support criminal activities, such as corruption, false invoicing, and the provision of illicit goods. We show that much of infiltration-especially among large firms-serves a different purpose: firms are infiltrated not to engage directly in criminal activities, but to access valuable connections in the legal economy and politics. We develop a conceptual framework that distinguishes between the classic contaminated motives and the novel pure motive of infiltration and delivers testable predictions to infer these motives from firms' behavior. We test these predictions using the "Mappatura, " a new and highly confidential dataset assembled by the Financial Intelligence Unit of the Bank of Italy. Consistent with the model, we uncover a systematic pattern across firm size: smaller infiltrated firms display the hallmarks of being set up to be used for criminal activities, medium-sized firms benefit from criminal support, and large firms are predominantly consistent with the pure motive. In these firms, infiltration leaves operations largely unchanged but reduces reliance on bank financing and increases liquidity. At the same time, infiltrated firms and infiltrating individuals are significantly more connected to other firms and to politicians. These findings shift the perspective on infiltration, align with recent high-profile investigations, and provide a rare glimpse into the integration stage of money laundering, linking it to the acquisition of economic and political connections. |
| Keywords: | organized crime, legal economy, firms, infiltration |
| JEL: | G3 L2 K4 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:crm:wpaper:26130 |
| By: | Cristelli, Gabriele; Lissoni, Francesco |
| Abstract: | We study the innovation effects of the Agreement on the Free Movement of Persons, signed by Switzerland and the European Union in 1999. We exploit a quasi-experimental setting created by Switzerland’s implementation of the treaty, which initially eased entry restrictions only for commuters from neighboring countries, thereby inducing a large inflow of “cross-border inventors” in regions close to the border. We find that the treaty increased patenting in such regions relative to comparable ones farther away from the border. We find no evidence indicating the displacement of native inventors or a reduction in the patenting activity of Switzerland’s neighboring countries. We also find that incumbent inventors in regions next to the border increased their productivity, thanks to patents in collaboration with cross-border inventors. We provide evidence suggesting that cross-border inventors contributed to Swiss patenting by enabling R&D laboratories to enlarge, albeit without increasing the productivity of local peers outside direct collaborations. |
| Keywords: | immigration; innovation; patents; inventors; free movement of persons |
| JEL: | F22 J61 O31 |
| Date: | 2026–04–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:137441 |
| By: | Daiwei Chen; Pierre-Alexandre Balland |
| Abstract: | China’s high-speed rail (HSR) network, initiated in 2008, now covers nearly all regionsof the country. This paper analyzes the effect of HSR connection on inter-city scientific collaboration and examines whether this e!ect varies systematically with the complexity of scientific fields. Combining the universe of HSR openings between 2008 and 2020 with OpenAlex publication records, we construct a panel spanning 33, 793 Chinese city pairs. Using a staggered difference-in-differences estimator, we find that HSR increases co-publications among city-pairs with existing collaborative ties by 35.2 percent at the city-pair level. Disaggregating across twenty scientific fields, we show that this effect is quite heterogeneous. Field-level treatment e!ects range from 19.8 to 45.1 percent, and their magnitude is positively and significantly correlated with average team size -a proxy of the fields’ complexity. These results are consistent with the view that face-to-face interaction is still important for knowledge production requiring deep divisions of cognitive labour, and they carry direct implications for the design of transportation and innovation policy. |
| Keywords: | High-Speed Rail (HSR), Scientific Collaboration, Knowledge Complexity, Face-to-Face Interaction |
| JEL: | O33 O38 R11 R58 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2605 |
| By: | Nicola Cortinovis; ; |
| Abstract: | Crowdfunding (CF) has emerged as a novel source of entrepreneurial finance, yet its role in shaping regional industrial dynamics remains poorly understood. Adopting an evolutionary economic geography perspective and exploiting a newly developed database, this paper examines the relationship between crowdfunding activity and the emergence of new local industrial specializations. The analysis shows that industries receiving funds through CF are more likely to become part of local specialization patterns, especially when they are related to the existing industrial structure. Moreover, these associations are stronger in counties characterized by higher levels of credit insecurity. |
| Keywords: | Crowdfunding, industrial diversification, relatedness, credit insecurity, US |
| JEL: | O14 O31 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2607 |
| By: | Claudio Barbieri (European Central Bank); Mattia Guerini (Università di Brescia; Fondazione ENI Enrico Mattei); Mauro Napoletano (Université Côte d'Azur, CNRS, GREDEG, France; Sciences Po, OFCE, France; Institute of Economics, Sant'Anna School of Advanced Studies, Pisa) |
| Abstract: | We investigate the structure and evolution of credit growth across Italian provinces. Using an econometric approach based on Random Matrix Theory, we decompose regional credit dynamics into common and idiosyncratic components. We use a longitudinal dataset of credit at the provincial level (NUTS-3 regions) covering the period 2000–2020 and document substantial heterogeneity in the synchronization of credit growth across local economies. Our results suggest that, while aggregate credit growth is largely driven by a strong common component, substantial heterogeneity emerges across disaggregated credit categories. Household mortgage lending displays strong and persistent co-movement across provinces, whereas corporate mortgages and unsecured credit are characterized by higher dispersion and relatively weaker common dynamics. Regional divergence intensifies sharply between 2010 and 2014, coinciding with the European sovereign debt crisis, suggesting a fragmentation of local credit supply and demand. Importantly, divergence does not display any clear geographical pattern, underscoring the role of non-spatial factors in shaping regional credit dynamics. |
| Keywords: | Credit growth, Regional heterogeneity, Local credit markets, Synchronization |
| JEL: | C38 E51 G21 R12 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-13 |
| By: | Compano Ramon (European Commission - JRC); Johanyak Csaba; Testa Giuseppina; Zhen Ni; Testa Giuseppina; Tuebke Alexander (European Commission - JRC) |
| Abstract: | This paper examines whether, and under which conditions, regional entrepreneurial ecosystems mitigate spatial frictions in cross-regional venture capital (VC) investments. Using a dyadic panel of VC flows across 267 European NUTS-2 regions over 2008-2022, we estimate gravity-style regressions with high-dimensional fixed effects, distinguishing investments by stage and investor origin. Our results show that spatial frictions, particularly geographic and economic distance, remain important determinants of VC allocation. At the same time, regions with stronger entrepreneurial ecosystems attract higher VC inflows and exhibit lower sensitivity to institutional and structural differences. Differences across investor origins suggest that ecosystem legibility is most valuable when institutional uncertainty is high, such as for cross-border investors. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:wpaper:202601 |
| By: | Herrero Cesar (European Commission - JRC); Bertoletti Alice (European Commission - JRC); Cosgrove Judith (European Commission - JRC); Lopez Cobo Montserrat (European Commission - JRC) |
| Abstract: | This report provides new information and evidence to support the European strategy for Virtual Worlds and Web 4.0. It describes results of a study that examines skills supply, demand and contextual aspects of the Virtual Worlds (VWs) industry in the EU, drawing on three complementary sources of data: a survey of 32 VWs organisations conducted in autumn 2025; VWs-related education and training offer (2024-2025); and VWs-related skills demand in online job ads (2020-2023). A key finding is the cross-sectoral nature of the VWs industry, with services very commonly provided by small and medium-sized enterprises. The combination of information sources provides contextualised insights into the nature and challenges of meeting skills demand in the VWs industry – which are evident in recruitment, project implementation and retention stages. Five main conclusions arise from the study. First, it is suggested to increase relevant education and training that is targeted at the most-demanded roles identified in this study, particularly through short professional courses, which should enable cross-sectoral applications and incorporate relevant elements of AI skills. Second, results indicate a need to enhance the strategic autonomy of the European VWs industry, through supporting open-source software solutions as well as European infrastructure and standards. Third, given the growing relevance of AI technology to the sector, it is suggested to identify mechanisms by which a beneficial spillover effect to the VWs industry can be supported. Fourth, it is suggested to further examine the challenges and needs of small and medium enterprises working in the VWs industry, given their important role in the VWs ecosystem. Fifth and finally, the emerging nature of the VWs industry and the triangulation of the three data sources confirm the need to avoid reliance on single sources of data for skills demand. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc145833 |
| By: | Kathryn Bonney; Cory Breaux; Emin Dinlersoz; Lucia Foster; John Haltiwanger; Aditya Pande |
| Abstract: | Using novel, nationally representative data from the 2026 AI supplement to the U.S. Census Bureau’s Business Trends and Outlook Survey (BTOS), we characterize AI diffusion across three interconnected layers: overall firm use, deployment across business functions, and worker-task use. This multi-layered approach provides a nuanced picture of business AI adoption. During the supplement reference period (Nov 2025-Jan 2026), 18% of firms used AI in a business function, rising to 32% on an employment-weighted basis; adoption is expected to reach 22% within six months. AI use is substantially higher in large firms and knowledge-intensive sectors, with use rates reaching 50%-60% (60%-70%, employment-weighted) for very large firms in the Information, Professional Services, and Finance sectors. Among adopting firms, the scope of use remains limited: 57% of users integrate AI in three or fewer business functions, most commonly Sales and Marketing (52%), Strategy and Business Development (45%), and IT (41%). In 23% (41%, employment-weighted) of firms, workers use AI in work-related tasks. Writing, document analysis, and information search are the leading Generative AI use in tasks, though 65% of firms limit use to three or fewer tasks. The evidence points to both top-down and bottom-up diffusion channels: worker task use sometimes occurs without formal firm-level adoption, and firm-level adoption sometimes occurs without worker task use. Most users (66%) rely on AI solely to augment tasks, while AI-related employment decreases are rare, occurring in only 2% of firms. Regression analysis shows a robust positive correlation between firm commercial performance and the breadth of AI integration, including functional deployment, task-level use, and operational investment. A distinct divergence emerges, however, with respect to labor outcomes. Functional breadth and operational investment are positively associated with employment decreases, whereas worker-task integration shows no significant link to headcount reduction once functional integration and operational investment are taken into account. |
| Keywords: | Artificial Intelligence, AI, Technology Diffusion, Generative AI |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-25 |
| By: | Wojdan Omran (Queen's Business School); Shumaila Yousafzai (Nazarbayev University Graduate School of Business) |
| Abstract: | This study advances a decolonial understanding of women's entrepreneurship in the Global South by synthesizing how women entrepreneurs resist and navigate patriarchal constraints through infrapolitical strategies. It introduces infrapolitics as a critical lens to theorize subtle, informal, and contextually embedded acts of resistance that often remain overlooked in mainstream entrepreneurship literature. |
| Keywords: | Infrapolitics, Strategic disobedience, Quiet activism, Women entrepreneurs, Palestine, Patriarchy, Bricolage, Islamic feminism, Global South, Systematic Literature Review, Decolonial theory |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:asx:nugsbw:2025-11 |
| By: | Viet Trinh; Tan Nguyen; Minh-Huyen Phan; Quan Luu |
| Abstract: | This study presents a novel, AI-driven framework for assessing Environmental, Social, and Governance (ESG) performance in European small and medium-sized enterprises (SMEs). An initial phase established expert-validated ESG baseline scores from a subset of the Flash Eurobarometer FL549 survey data. In the second phase, a scalable AI agent system, built on the n8n automation platform, applied these baselines to perform automated ESG classification and generate contextual recommendations using large language models (LLMs). The results demonstrate the AI system's high consistency with human-derived outputs, thereby supporting more effective monitoring and intervention strategies aligned with the European Green Deal. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.00841 |