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on Small Business Management |
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Issue of 2024‒07‒22
eighteen papers chosen by |
| By: | Bustos, Emil (Research Institute of Industrial Economics (IFN)); Engist, Oliver (Department of Economics) |
| Abstract: | We study how financing constraints affect the cash holdings of small and medium-sized enterprises. There has been little empirical work on this topic, even though these firms often face financial constraints. We contribute by using detailed data on credit ratings in Sweden as a measure of financial constraints. We then use panel regressions and a regression-discontinuity analysis to estimate the relationship between access to credit and cash holdings. Our analysis finds no causal effect of credit ratings on cash holdings. |
| Keywords: | Financial Constraints; Cash; Private Firm; Credit Score |
| JEL: | D22 D25 G32 |
| Date: | 2024–06–25 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1493&r= |
| By: | Diegmann, André; Pohlan, Laura; Weber, Andrea |
| Abstract: | We study how connections to German federal parliamentarians affect firm dynamics by constructing a novel dataset to measure connections between politicians and the universe of firms. To identify the causal effect of access to political power, we exploit (i) new appointments to the company leadership team and (ii) discontinuities around the marginal seat of party election lists. Our results reveal that connections lead to reductions in firm exits, gradual increases in employment growth without improvements in productivity. The economic effects are mediated by better credit ratings while access to subsidies or procurement contracts are documented to be of lower importance. |
| Keywords: | Politicians, Firm Performance, Identification, Political Connections |
| JEL: | O43 L25 D72 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300014&r= |
| By: | Angelino, Pierluigi; Czarnitzki, Dirk; Volckaert, Astrid |
| Abstract: | The Flemish government launched its Spearhead Cluster (SHC) policy in 2017. The aim is to boost strategic sectors by setting up cluster initiatives which coordinate collaborative R&D initiatives. In this paper, we analyze whether becoming a member of such a cluster initiative has an impact on the Total Factor Productivity (TFP) of the firm. We exploit firm-level data between 2013 and 2020 to estimate TFP and apply a difference-in-differences approach to assess the programs' treatment effects. We find that becoming a member of a cluster has an average positive impact on firmlevel TFP of between 1 to 4.4 percent, depending on the econometric specification. These results are the first to provide an insight into the impact of the Flemish SHC policy on productivity. |
| Keywords: | cluster associations, cluster policy, innovation policy, total factor productivity, conditional difference-in-difference |
| JEL: | D24 L25 L52 L53 O25 O38 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:300010&r= |
| By: | Gaetan de Rassenfosse (Ecole polytechnique federale de Lausanne); Gabriele Pellegrino (Catholic University of the Sacred Heart); Emilio Raiteri (Eindhoven University of Technology) |
| Abstract: | This paper provides empirical evidence suggesting that patents may facilitate knowledge disclosure. The analysis exploits the Invention Secrecy Act, which grants the U.S. Commissioner for Patents the right to prevent the disclosure of new inventions that represent a threat to national security. Using a two-level matching approach, we document a negative and large relationship between the enforcement of a secrecy order and follow-on inventions, as captured with patent citations and text-based measures of invention similarity. The effect carries over to after the lift of the secrecy period, suggesting a lost generation of inventions. The results bear implications for innovation and intellectual property policy. |
| Keywords: | disclosure; follow-on invention; knowledge diffusion; patent |
| JEL: | O31 O33 O34 |
| Date: | 2023–12 |
| URL: | https://d.repec.org/n?u=RePEc:iip:wpaper:26&r= |
| By: | Anabela Marques Santos; Francesco Molica; Carlos Torrecilla Salinas (European Commission, Joint Research Centre, Sevilla, Spain; European Commission, Joint Research Centre, Brussels, Belgium; European Commission, Joint Research Centre, Sevilla, Spain) |
| Abstract: | Artificial Intelligence (AI) is seen as a disruptive and transformative technology with the potential to impact on all societal aspects, but particularly on competitiveness and growth. While its development and use has grown exponentially over the last decade, its uptake between and within countries is very heterogeneous. The paper assesses the geographical distribution at NUTS2-level of EU-funded investments related to AI during the programming period 2014-2020. It also examines the relationship between this specialization pattern and regional characteristics using a spatial autoregressive model. Such an analysis provides a first look at the geography of public investment in AI in Europe, which has never been done before. Results show that in the period 2014-2020, around 8 billion EUR of EU funds were targeted for AI investments in the European regions. More developed regions have a higher specialization in AI EU-funded investments. This specialization also generates spillover effects that enhance similar specialization patterns in neighboring regions. AI-related investments are more concentrated in regions with a higher concentration of ICT activities and that are more innovative, highlighting the importance of agglomeration effects. Regions that have selected AI as an innovation priority for their Smart Specialization Strategies are also more likely to have a higher funding specialization in AI. Such findings are very relevant for policymakers as they show that AI-related investments are already highly spatially concentrated. This highlights the importance for less-developed regions to keep accessing to sufficient amounts of pre-allocated cohesion funds and to devote them for AI-related opportunities in the future. |
| Keywords: | Artificial intelligence; Public subsidy; Territorial specialization; Europe |
| JEL: | O31 R58 R12 O52 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:mde:wpaper:181&r= |
| By: | Rozi Kumari (Guru Gobind Singh Indraprastha University); Rupayan Pal (Indira Gandhi Institute of Development Research) |
| Abstract: | Level playing field for women to participate in decision making and leadership positions is key to progress of a nation. Analysing widely used nationally representative datasets from the World Bank Enterprise Survey (WBES), we document that women ownership and participation in top management of registered private firms in India has drastically decreased, from low to a very meagre level, during the period from 2014 to 2022, despite sustained GDP growth and launch of several government programs to promote entrepreneurship. The pattern of decline is consistent across sectors (manufacturing and services) and size-groups (small, medium, and large) of firms, barring some variations. This is true regardless of the measure of women ownership considered and is not due to entry and exit of firms. |
| Keywords: | Firm ownership, Women, Private registered firms, Decision rights, Leadership, Entrepreneur |
| JEL: | O10 G32 J54 L26 B54 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:ind:igiwpp:2024-008&r= |
| By: | Nguyen, Quang Khai |
| Abstract: | In the context of emerging countries trying to attract foreign investors, building governance strategies and risk management of firms is an increasing concern. This study investigates the impact of financial flexibility strategies on the risk management effectiveness of firms and mechanism of these impacts by focusing on Vietnamese listed firms by applying the fixed effect and system GMM methods on a sample of 635 Vietnamese listed firms during the 2010–2021 period to derive empirical models under the high risk-high return approach. We also applied robustness tests to ensure that the results are reliable. We also investigate the level of risk management effectiveness among these firms during the 2010–2021 period. We found that financial flexibility strategies negatively impact risk management effectiveness of firms through reducing both firm risk and firm performance. Furthermore, we found that the degree of risk management effectiveness differs between low- and high-risk firms in Vietnam, with low-risk firms displaying more effective risk management compared to high-risk firms. Our research shows that financial flexibility strategies are not conducive to risk management effectiveness; however, firms can control the impact of flexibility strategies on risk management by controlling firm performance and risk. |
| Keywords: | financial flexibility, risk management effectiveness, listed firm, Vietnam |
| JEL: | G13 G18 G3 |
| Date: | 2024–05–01 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121162&r= |
| By: | Annika Nivala (VATT Institute for Economic Research) |
| Abstract: | Finland had a large regional wage subsidy for hiring the first employee in 2007–2011. In this paper, I show that the take-up of the subsidy was very low: only 2% firms that became employers used the subsidy. The subsidy was restricted to hiring a full-time employee, which reduced the take-up. However, even among full-time employers the take-up rate was only 6%. Hence, a large majority of firms left thousands of euros on the table by not using the subsidy. Based on the descriptive evidence, the low take-up seems to be explained by low awareness in addition to costs of using the subsidy. Using a regional difference-in-differences identification strategy, I estimate the effect of the subsidy on the probability of becoming an employer and other firm outcomes. As a consequence of the low take-up, the estimated effect is zero. |
| Keywords: | Business subsidies, Wage subsidies, Firm behavior, Labor demand, Entrepreneurship, Small Business |
| JEL: | H25 H32 J23 J38 M51 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:fit:wpaper:23&r= |
| By: | Eslava, Marcela; Meléndez, Marcela; Ulyssea, Gabriel; Urdaneta, Nicolás; Flores, Ignacio |
| Abstract: | The relationship between firms and inequality has been a focus of recent attention globally. This chapter summarizes basic facts about this relationship for Latin America. Unlike advanced economies where superstar firm growth has prompted concerns over disproportionate income growth at the top, the facts we summarize illustrate that the main concern for Latin America is the extreme prevalence of tiny businesses whose workers and owners tend to populate the bottom income segments. The empirical likelihood that these businesses improve their productivity and grow to hire more workers and pay better wages is also very low. The region displays a deficit of employment generation in SMEs, by contrast to both microbusinesses (including self-employment) and large corporations. While the former tend to remunerate both workers and owners with very low incomes, the latter pay high wages but also exhibit low labor shares. |
| Keywords: | Inequality;Business Development;Latin America;Labor Force and Employment |
| JEL: | E02 J21 O54 |
| Date: | 2024–04 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13480&r= |
| By: | Lee, Neil; Ni, Metta; Boey, Augustin |
| Abstract: | The Singaporean state has played a crucial role in the country’s economic development. This led to concerns that a state-steered economy would be unable to develop fast-changing, disruptive sectors that are reliant on individual entrepreneurship, such as digital technology. Yet Singapore has become a world leader in the scaling of digital technology firms. In this paper, we consider how this happened. We show that advances in ICT opened a window of locational opportunity in digital tech, which was spotted by Singaporean policymakers open to experimentation. A distinctive ‘Singapore model’ developed to take advantage of this opportunity, exploiting Singapore’s geographical position, open economy, and business environment but combining this with active state intervention. To address coordination problems in the creation of an entrepreneurial ecosystem, Singaporean policymakers worked through a process we term ‘network coordination’ across the whole of government. While overall rates of entrepreneurship remain low, the country has been successful at scaling firms in the digital technology sector. These primarily focused on consumer applications and non-Singaporean markets, but there has been little development in frontier ‘deep tech’. |
| Keywords: | digital technology; Singapore; developmental states; industrial policy; entrepreneurial ecosystems |
| JEL: | R14 J01 L81 |
| Date: | 2024–06–14 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:123885&r= |
| By: | Jose M. Gonzalez-Varona; Natalia Martin-Cruz; Fernando Acebes; Javier Pajares |
| Abstract: | In this paper, we apply a case study approach to advance current understanding of what effects public co-funding of R&D projects have on project team members' perceived complexity. We chose an R&D project carried out by an industrial SME in northern Spain. The chosen research strategy was a qualitative approach, and sixteen employees participated in the project. We held in-depth semi-structured interviews at the beginning and end of the co-funded part of the project. NVivo data analysis software was used for qualitative data analysis. Results showed a substantial increase in perceived complexity. We observed that this was due to unresolved tension between the requirements of the project's co-financing entity and normal SME working procedures. New working procedures needed to be developed in order to comply with the co-financing entity's requirements. However, overall perceived complexity significantly decreased once the co-financed part of the project was completed. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.00076&r= |
| By: | Paulo Barbosa; João Cortes; João Amador (ISEG - University of Lisbon and Portugal Trade & Investment; Portugal Trade & Investment; Banco de Portugal and Nova SBE) |
| Abstract: | This paper estimates how distant a firm is from becoming a successful exporter. The empirical exercise uses very rich data for Portuguese firms and assumes that there are non-trivial determinants to distinguish between exporters and non-exporters. An array of machine learning models - Bayesian Additive Regression Tree (BART), Missingness not at Random (BART-MIA), Random Forest, Logit Regression and Neural Networks – are trained to predict firms’ export probability and shed light on the critical factors driving the transition to successful export ventures. Neural Networks outperform the other techniques and remain highly accurate when we change the export definitions and the training and testing strategies. We show that the most influential variables for prediction are labour productivity, firms’ goods and services imports, capital intensity and wages. |
| Keywords: | Machine learning, Forecasting exporters, Trade promotion, Micro level data, Portugal |
| JEL: | F17 C53 C55 L21 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:mde:wpaper:182&r= |
| By: | Parisa Ghasemi (University of Coimbra, Faculty of Economics); Paulino Teixeira (University of Coimbra, Centre for Business and Economics and Faculty of Economics); Carlos Carreira (University of Coimbra, Centre for Business and Economics and Faculty of Economics) |
| Abstract: | In this study, we investigate the impact of the share of the foreign labor force on the labor productivity of firms operating in Portugal between 2010 and 2019, drawing on data from two main sources: linked employer-employee data from Quadros de Pessoal and firm-level balance sheet data from SCIE-Sistema de Contas Integradas das Empresas. The empirical analysis, conducted using Fixed Effects Two-Stage Least Squares, shows that immigrants do not contribute to the productivity of firms in which they are employed. We further investigate whether the productivity response to increased immigrant labor varies across different subsamples. Notably, low-productivity firms experience adverse effects when the share of immigrants rises, whereas smaller firms benefit from their presence. Furthermore, our analysis shows a positive and statistically significant impact on labor productivity from foreign-born workers with 5 to 9 years of formal education. This finding suggests that this particular demographic brings valuable skills and contributions to the workforce, enhancing overall productivity levels. |
| Keywords: | Firms, Immigration, Low skilled Immigrants, Productivity |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:gmf:papers:2024-01&r= |
| By: | HONJO Yuji; IKEDA Yuya; KURIHARA Koki |
| Abstract: | This study investigates whether founder-chief executive officer (founder-CEO) presence is associated with initial public offering (IPO) survival. Using 1, 393 IPOs listed on Japanese junior stock markets, we examine the impact of founder-CEO presence on the time to involuntary delisting, voluntary delisting, and graduation from junior stock markets. We find that founder-CEO-led firms are less likely to voluntarily delist through mergers and acquisitions (M&A) and buyouts, while they are more likely to graduate to main stock markets than non-founder-CEO-led firms. Our findings suggest that founder-CEOs at the time of the IPO have ambitions to advance the firms beyond the initial IPO, despite their resistance to strategic delisting through M&A. In addition, we find that while younger firms are more likely to delist, regardless of whether the manner is involuntary or voluntary, they are more likely to graduate from junior stock markets. Furthermore, our analyses reveal that firms with CEO retention after the IPO are less likely to delist involuntarily and voluntarily, while they are more likely to graduate from junior stock markets. |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:24060&r= |
| By: | Fatica, Serena (European Commission); Grammatikopoulou, Ionna (European Commission); Hirschbuehl, Dominik (European Commission); La Notte, Alessandra (European Commission); Pisani, Domenico (European Commission) |
| Abstract: | Nature-related financial risks have emerged as critical concerns for policymakers and financial actors. Central to this issue are ecosystem services, which play an integral role in various production processes but may be interrupted due to nature degradation. This article delves into the vulnerability of European SMEs by combining firm-level exposures to ecosystem service dependencies with regional information on the relative abundance of ecosystem services provisioning and the risk of natural hazards. Focusing on long-term debt positions to gauge financial stability implications, the results reveal moderate nature risks for European SMEs at the current stance but also highlight a possible concentration of risks and a need to further refine the use of available indicators. |
| Keywords: | ecosystem services, natural capital, nature degradation, physical risks, environmental risks, ENCORE, risk management, SMEs |
| JEL: | G21 G38 Q5 |
| Date: | 2024–03 |
| URL: | https://d.repec.org/n?u=RePEc:jrs:wpaper:202403&r= |
| By: | Jose M Gonzalez-Varona; Adolfo Lopez-Paredes; Javier Pajares; Fernando Acebes; Felix Villafanez |
| Abstract: | Large companies are fully engaged in their digital transformation, specifically in developing strategic Business Intelligence (BI) projects. They have a Digital Strategy and top-level executives managing the change. BI projects are also being carried out in SMEs. In this paper, we present the results of an interpretative study conducted on a sample of SMEs from different sectors carrying out BI projects. We study whether BI maturity models are valid for SMEs and their usefulness for analysing the projects and evaluating the results at the end of the project. |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2406.01616&r= |
| By: | Gnekpe, Christian; Coeurderoy, Regis; Mulotte, Louis (Tilburg University, School of Economics and Management) |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:tiu:tiutis:8f11908f-00fd-4ab3-b93f-ddf3556f7782&r= |
| By: | Alain Mujinga Kapemba (UPC - Université protestante au Congo); Jean-Claude Nkashama Mukenge (UPC - Université protestante au Congo, Université Pédagogique Nationale); Véronique Mwamba Tshiala Bebel (Université Pédagogique Nationale); Divine Mosunga Toambili (UPC - Université protestante au Congo) |
| Abstract: | The purpose of this study was to analyze the need for the establishment of a Guarantee Fund to promote the expansion of SMEs in the DRC. Based on a sample of 300 SMEs from the City of Kinshasa, the survey results from the estimation of a multinomial logistic regression model indicate that sociodemographic factors (sex, level of education, marital status and profession), socio-economic factors (number of commercial activities, daily income, and type of financing) and the socio-cultural factor (belonging to an association) determine the use of the guarantee fund or the joint guarantee in the event of failure to repay by SMEs. |
| Abstract: | La présente étude avait pour objet d'analyser la nécessité de la mise en place d'un Fonds de garantie pour promouvoir l'expansion des PME en RDC. Sur base d'un échantillon de 300 PME de la Ville de Kinshasa, les résultats d'enquêtes issus de l'estimation d'un modèle de régression logistique multinomiale renseignent que les facteurs sociodémographiques (sexe, niveau d'étude, statut matrimonial et la profession), les facteurs socio-économiques (nombre d'activités commerciales, recette journalière, et type de financement) et le facteur socio-culturel (appartenir à une association) déterminent le recours au fonds de garantie où à la caution solidaire en cas de défaillance de remboursement par les PME. |
| Keywords: | Déterminants, Fonds de garantie, IMF, Kinshasa, Logistique Multinomiale, PME |
| Date: | 2023 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04602805&r= |