|
on Small Business Management |
|
Issue of 2025–06–30
seventeen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Yoichiro NISHIMURA; Katsushi SUZUKI |
| Abstract: | This study examines the impact of bank–firm relationships on innovation outcomes by utilizing patent data from Japanese firms. Our results reveal that compared with other firms, (1) firms with closer relationships with banks are less likely to engage in high-risk innovation and that (2) firms that receive board member appointments or equity investment from banks tend to pursue exploitative innovation rather than exploratory innovation. Conversely, firms with greater dependence on loans from specific banks tend to exhibit greater R&D investment but produce fewer patents than do other firms. These findings suggest that while banks with close relationships with firms may encourage higher levels of R&D investment, they simultaneously impede the pursuit of high-quality and exploratory innovation. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25051 |
| By: | Niklas Garnadt; Lena Füner; Konrad Stahl; Joacim Tag |
| Abstract: | Identifying high growth startups ex-ante and fostering their success is an important policy challenge. Using Swedish registry data, we show that previous labor market earnings of entrepreneurs is a simple observable that is strongly correlated with entrepreneurship success. Entrepreneurs from the top decile of income from dependent employment are four times more likely to succeed than those from the lowest decile. Their firms are larger and more productive from the outset, and this effect intensifies over time. This correlation is virtually unaffected by variations in the entrepreneurs’ personal traits. It does also not vary across the business cycle. |
| Keywords: | Entrepreneurship, high-growth startups, labor income, unemployment |
| JEL: | L26 L53 J24 E32 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:bon:boncrc:crctr224_2025_693 |
| By: | Ningzi Li; Shiyang Lai; James Evans |
| Abstract: | As large-scale social data explode and machine-learning methods evolve, scholars of entrepreneurship and innovation face new research opportunities but also unique challenges. This chapter discusses the difficulties of leveraging large-scale data to identify technological and commercial novelty, document new venture origins, and forecast competition between new technologies and commercial forms. It suggests how scholars can take advantage of new text, network, image, audio, and video data in two distinct ways that advance innovation and entrepreneurship research. First, machine-learning models, combined with large-scale data, enable the construction of precision measurements that function as system-level observatories of innovation and entrepreneurship across human societies. Second, new artificial intelligence models fueled by big data generate 'digital doubles' of technology and business, forming laboratories for virtual experimentation about innovation and entrepreneurship processes and policies. The chapter argues for the advancement of theory development and testing in entrepreneurship and innovation by coupling big data with big models. |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2505.08706 |
| By: | Khezri, Mohsen |
| Abstract: | This study explores the impacts of 11 diverse entrepreneurship indicators on green technology innovation (GTI) to determine the optimal environmental regulatory framework that fosters green entrepreneurship. Additionally, the study investigates the impacts of environmental regulations on GTI by utilizing nonlinear panel smooth threshold regression (PSTR) models on data collected from 18 countries from 2002 to 2020. By identifying a critical regulatory threshold of 1.89, the research reveals how varying levels of environmental regulations significantly influence GTI dynamics. The estimation results emphasize that GDP per capita and financial development are critical in fostering GTI. However, stringent environmental regulations can counteract these positive effects. Urbanization and trade openness also positively influence GTI, with environmental regulations complementing their impacts. The transition to a service-oriented industrial structure positively affects GTI. The results underscore the negative impact of entrepreneurship indicators, potentially diverting resources away from GTI. Nonetheless, environmental regulations with stringent enforcement mechanisms can counterbalance the negative impacts of specific entrepreneurship metrics. Among the entrepreneurship indicators analyzed, financing for entrepreneurs, governmental support and policies, and governmental programs exhibit an inverted U-shaped impact pattern, peaking at specific levels of environmental regulation. |
| Keywords: | entrepreneurial indicators; environmental regulations; GTI; Green Technology Innovation; panel smooth threshold regression; PSTR |
| JEL: | R14 J01 |
| Date: | 2025–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128368 |
| By: | Estrin, Saul; Herrmann, Andrea; Levesque, Moren; Mickiewicz, Tomasz; Sanders, Mark |
| Abstract: | We present a Schumpeterian model of new venture creation, under uncertainty, which explains the tradeoff between speed-to-breakeven and revenue-at-breakeven and relates this to the level of innovation. We then explore the tradeoffs between these outcomes empirically in a sample of 331 information and communication technology (ICT) ventures using a multi-input, multi-output stochastic frontier model. We estimate the contribution of financial capital and labor to the outcomes and the tradeoffs between them, as well as address heterogeneity across ventures. We find that more innovative (and therefore more uncertain) ventures have lower speed-to-breakeven and/or lower revenue-at-breakeven. Moreover, for all innovativeness levels, new ventures face a tradeoff between speed-to-breakeven and revenue-at-breakeven. Our results suggest that it is the availability of proprietary resources (founder equity and founder labor) that helps ventures overcome bottlenecks in the venture creation process, and we propose a line of research to explain the variation in venture creation efficiency. |
| Keywords: | entrepreneurship; innovation; new venture creation; proprietary resource; Stochastic frontier analysis; Schumpeterian growth model |
| JEL: | O31 L29 |
| Date: | 2025–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128098 |
| By: | Marco Vivarelli (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Milano, Italy – UNU-MERIT, Maastricht, The Netherlands – IZA, Bonn, Germany - Global Labor Organization (GLO), Essen, Germany); Mariacristina Piva (Dipartimento di Politica Economica, DISCE, Università Cattolica del Sacro Cuore, Piacenza, Italy); Massimiliano Tani (School of Business, The University of New South Wales, Canberra, Australia – IZA, Bonn, Germany) |
| Abstract: | Labor mobility is considered a powerful channel to acquire external knowledge and trigger complementarities in the innovation and R&D investment strategies; however, the extant literature has focused on either scientists’ mobility or migration of high-skilled workers, while virtually no attention has been devoted to the possible role of short-term business visits. Using a unique and novel database originating a country/sector unbalanced panel over the period 1998-2019 (for a total of 8, 316 longitudinal observations), this paper aims to fill this gap by testing the impact of BVs on R&D investment. Results from GMM-SYS estimates show that short-term mobility positively and significantly affects R&D investments; moreover, our findings indicate - as expected - that the beneficial impact of BVs is particularly significant in less innovative countries and in less innovative industries. These outcomes justify some form of support for BVs within the portfolio of the effective innovation policies, both at the national and local level. |
| Keywords: | Business visits; labor mobility; knowledge transfer; R&D investments |
| JEL: | O31 J61 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:ctc:serie5:dipe0049 |
| By: | Emilio Colombo; Luca Michele Portoghese; Patrizio Tirelli |
| Abstract: | Is the roll-out of (fast)broadband connections a driver of firms' total factor productivity (TFP) growth in the European Union? Does broadband generate convergence or polarisation? In this regard, which firms benefit most from a broadband connection and is the traditional divide between rural and urban deployment areas important? To answer these questions, we estimate the effects of broadband coverage shocks on individual firms' TFP growth, exploiting broad firm-level coverage from the ORBIS dataset and a relatively long time span (2011–2022) over which broadband shocks are observed. Broadband shocks permanently raise firms' TFP, but their effect is uneven: fast-growth firms improve their relative position. They are more beneficial for the TFP of firms in non-digital sectors, supporting the view that internet connectivity is a general-purpose technology. Firms in urban areas are also better equipped to benefit from increased broadband connectivity. TFP responses to fast-broadband shocks are almost muted. |
| JEL: | L25 D24 L9 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:dis:wpaper:dis2504 |
| By: | Miriam Bruhn; Federico Alfonso Diaz Kalan; Nicolo Fraccaroli; Claudia Ruiz Ortega |
| Abstract: | This paper studies the impact of a World Bank program aimed at promoting access to finance for micro, small, and medium-size enterprises in Ecuador. A staggered difference-in-differences method is used to estimate the impact of the program on 2, 035 participant firms during 2019–23. The findings show that the program had a positive effect on these firms, by boosting their financing, number of workers, short-term assets, and sales. This effect is similar when enterprises are female-led and is larger for firms that had no previous access to finance. |
| Date: | 2025–05–13 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:11121 |
| By: | Rikard FORSLID; Toshihiro OKUBO |
| Abstract: | This paper explores how firm’s internalization strategies - specifically exporting and foreign direct investment (FDI) - relate to their product scope. We develop a model incorporating firm heterogeneity and multi-product firms. The most productive firms engage in FDI and produce the broadest range of products. Firms with intermediate productivity levels tend to export, offering fewer product varieties than FDI firms. In contrast, low-productivity firms typically operate domestically and have the smallest product scope. The model also predicts that the ratio of the product scope of exporters and domestic firms and the ratio of FDI firms and exporters should decline as the difficulty of expanding the product scope increases. The Japanese firm-level data support the theoretical predictions. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:25053 |
| By: | Peter Persoon |
| Abstract: | Technological knowledge evolves not only through the generation of new ideas, but also through the reinterpretation of existing ones. Reinterpretations lead to changes in the classification of knowledge, that is, reclassification. This study investigates how reclassified inventions can serve as renewed sources of innovation, thereby accelerating technological progress. Drawing on patent data as a proxy for technological knowledge, I discuss two empirical patterns: (i) more recent patents are more likely to get reclassified and (ii) larger technological classes acquire proportionally more reclassified patents. Using these patterns, I develop a model that explains how reclassified inventions contribute to faster innovation. The predictions of the model are supported across all major technology domains, suggesting a strong link between reclassification and the pace of technological advancement. More generally, the model connects various, seemingly unrelated knowledge quantities, providing a basis for knowledge intrinsic explanations of growth patterns. |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2506.08656 |
| By: | Lövgren, Linda (Department of Real Estate and Construction Management, Royal Institute of Technology); Söderberg, Inga-Lill (Department of Real Estate and Construction Management, Royal Institute of Technology); Vigren, Olli (Stanford University) |
| Abstract: | The lack of affordable housing is a longstanding global challenge. Addressing this issue requires not only technical solutions but also new social practices – social innovation. This article explores the role of social innovation in increasing access to affordable housing through a theory-focused literature review. We find that the concepts often lack clarity and theoretical grounding, making it difficult to measure innovation outcomes or guide practical implementation. We adopt the social innovation ecosystem framework developed by Audretsch et al. (2022) and discuss policy, finance, culture, supports, human capital, and market perspectives. We propose an expanded version of the framework, adapted specifically for affordable housing. It introduces two key additions: explicit identification of the social innovator and the integration of spatial concepts—space and place—to capture the inherently local nature of housing initiatives. This contribution aims to advance both social innovation theory and housing research, while also informing policy and practice. |
| Keywords: | social innovation; innovation; affordable housing; social housing |
| JEL: | O35 R21 R31 R38 R58 |
| Date: | 2025–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:kthrec:2025_006 |
| By: | Ando, Yoshiki; Bessen, James; Wang, Xiupeng |
| Abstract: | R&D investment has grown robustly, yet aggregate productivity growth has stagnated. Is this because “ideas are getting harder to find”? This paper uses micro-data from the US Census Bureau to explore the relationship between R&D and productivity in the manufacturing sector from 1976 to 2018. We find that both the elasticity of output (TFP) with respect to R&D and the marginal returns to R&D have risen sharply. Exploring factors affecting returns, we conclude that R&D obsolescence rates must have risen. Using a novel estimation approach, we find consistent evidence of sharply rising technological rivalry. These findings suggest that R&D has become more effective at finding productivity-enhancing ideas but these ideas may also render rivals’ technologies obsolete, making innovations more transient. |
| Keywords: | R&D, innovation, productivity, obsolescence |
| JEL: | L10 O32 O33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:124764 |
| By: | Crescenzi, Riccardo; Ganau, Roberto |
| Abstract: | Global connectivity is necessary for innovation to thrive. However, in response to external shocks, economies reduce external exposure and focus resources on internal markets. This closure is in contrast to the need for innovative solutions for recovery. We explore this paradox by looking at regional innovation in the United States in the aftermath of the Great Recession. We compare foreign direct investment (FDI) with similar domestic, inter-state investment to assess whether a ‘local innovation premium’ is associated with global connectivity vis-à-vis domestic linkages. We show that what matters for post-crisis innovation is active internationalisation through outward FDI and congruence in technological capabilities between connected territories. |
| Keywords: | innovation; foreign direct investment; domestic investment; great recession; regions; USA |
| JEL: | F21 O30 O19 O51 R12 |
| Date: | 2025–06–16 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128136 |
| By: | Enriques, Luca; Nigro, Casimiro A.; Tröger, Tobias |
| Abstract: | A vast literature has examined the contractual technology that venture capital (VC) funds and entrepreneurs deploy in the U.S. to define an agency cost-minimising structure of their relationship, leading many to conclude that U.S. VC contracts are the best real-world solution to the challenges bedeviling the financing of high-tech innovative startups and a model for VC transactional practice worldwide. Yet, whether VC funds and entrepreneurs can replicate the allocation of cash-flow and control rights resulting from U.S. VC contracts in non-U.S. jurisdictions has long been open to discussion. Research by financial economists and legal scholars have reached diverging conclusions. The existing literature exhibits three limitations, though. First, it has generally investigated at most only how a subset of the individual components of U.S. VC contracts fare under non-U.S. corporate laws. Second, it has typically considered the law on the books as opposed to the law in action. Third, it has relied on a loose definition of what qualifies as an effective substitute. This article examines how U.S. VC contracts fare under the corporate law regimes in force in two important European jurisdictions: Germany and Italy. It does so by taking a new approach to the matter. First, it considers the entire set of arrangements included in U.S. VC contracts rather than a sample. Second, it assesses the legality of those arrangements in the light of the applicable corporate law in action rather than the law on the books. Third, in assessing arrangements that deviate from U.S. private ordering solutions due to restrictive corporate law, it focuses on contract functionality rather than contract design. The results of the inquiry are straightforward: German and Italian corporate laws literally crash contracting parties' ambition to transplant U.S. VC contracts into their own jurisdictions and only allow for alternative arrangements that, if available at all, are costlier and/or less functional. |
| Keywords: | Comparative Corporate Law, Comparative Corporate Governance, Entrepreneurship, Financial Contracting, Private ordering, Start-ups, Venture Capital |
| JEL: | G38 K22 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:lawfin:319632 |
| By: | Ronald B. Davies; Mahdi Ghodsi (The Vienna Institute for International Economic Studies, wiiw); Francesca Guadagno (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | The hope that multinational firms will improve local employment and productivity is a driving force behind policy efforts to attract investment. Such spillovers are often motivated by technological spillovers from foreign to domestic firms. We address this possibility by using the patenting activity of foreign multinationals in Europe as a measure of affiliate activity alongside more traditional proxies. We find that local firms’ employment and labour productivity is higher when FDI activity increases, particularly when those multinationals are upstream of locals. Furthermore, this effect is particularly significant among domestic patenting firms. Thus, it seems that the benefits of inbound investment are greatest for local innovators who are exposed to inbound innovating foreigners. |
| Keywords: | spillovers; Foreign Direct Investment; Patents |
| JEL: | F23 O24 O33 O34 Q55 |
| Date: | 2025–06 |
| URL: | https://d.repec.org/n?u=RePEc:wii:wpaper:265 |
| By: | Kertesi, Gabor (Institute of Economics, Budapest); Köllő, János (Institute of Economics, Budapest); Károlyi, Róbert (HUN-REN Centre for Economic and Regional Studies); Szabó, Lajos Tamás (Central European University) |
| Abstract: | Hungary's sizeable Roma minority is hit by massive prejudice. Using 2011 Census data and supplementary sources, we study how ethnic bias translates to employment discrimination in local labor markets. The male ethnic employment gap, adjusted for a rich battery of controls, was 20-40 percent wider than average if, and only if, the local population strongly supported an openly anti-Roma far-right party and, at the same time, small firms had a substantial share in the local economy. Roma women's (very low) employment is less responsive to prejudice and the small firm share. The results for men, the sole breadwinners in most Roma families, survive robustness checks and confrontation with alternative explanations. Since small firms easily elude the anti-discrimination regulations, the results draw attention to the limits of legal instruments and call for active policy. |
| Keywords: | minorities, discrimination, regional labor markets, small firms |
| JEL: | J15 J71 R23 D22 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp17901 |
| By: | Aghion, Philippe; Bunel, Simon; Jaravel, Xavier; Mikaelsen, Thomas; Roulet, Alexandra; Søgaard, Jakob |
| Abstract: | Using French firm-level data on AI adoption from 2017-2020, we find that, first, firms adopting AI are larger and more productive and skill intensive. Second, difference-in-difference estimates reveal an increase in firm-level employment and sales after AI adoption, suggesting that the induced productivity gains allow firms to grow and outweigh potential displacement effects. Third, occupations classified in recent work as substitutable with AI expand. Fourth, AI usage is a relevant dimension of heterogeneity in the labor demand response: We find positive employment growth for certain uses (e.g., information and communications technology security) and negative for others (e.g., administrative processes). |
| JEL: | R14 J01 |
| Date: | 2025–05–31 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:128375 |