|
on Small Business Management |
|
Issue of 2026–07–20
forty papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Baslandze, Salomé; Vardishvili, Ia |
| Abstract: | Large productivity differences across firms reflect substantial ex-ante heterogeneity at entry, yet the origins of this heterogeneity remain poorly understood. This paper shows that innovating spinouts—firms formed by inventors leaving incumbent innovators—are a key endogenous source of high-growth entrepreneurship and aggregate productivity growth. Using inventor mobility in patent data, we document that spinouts systematically outperform other entrants throughout their life cycle, their performance is strongly linked to parent-firm technological strength, and their formation temporarily depresses parent-firm innovation. We develop a Schumpeterian growth model that endogenizes spinout formation and the fundamental tradeoff between knowledge diffusion, creative destruction, and appropriability. Closely disciplined by rich microlevel data, the model implies that spinouts account for a disproportionate share of high-growth firms and nearly forty percent of aggregate productivity growth, but that inventor departures also impose sizable costs on incumbents, generating a fundamental policy tradeoff. Policy counterfactuals show that relaxing non-compete restrictions raises aggregate growth and welfare and amplifies the effectiveness of entry subsidies. |
| Keywords: | Innovation; entrepreneurship |
| JEL: | O30 O43 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21016 |
| By: | E. Marrocu; R. Paci; L. Serafini |
| Abstract: | This paper investigates the determinants of interfirm agreement formation in the context of the twin digital and green transition. We focus on strategic alliances and joint ventures involving at least one Italian firm, using SDC Platinum data on agreements announced between 2000 and 2025. Digital and green agreements are identified through a keyword-based classification of deal synopses. The empirical analysis is conducted at the dyadic level by comparing realised agreements with potential firm pairs within the framework of rare event logit models, focusing on the role of geographical, technological and relational proximity. The results show that technological proximity is the strongest predictor of agreement formation. Firms operating in connected industrial domains are substantially more likely to collaborate, suggesting that compatible knowledge bases and absorptive capacity are central to partner selection. Geographical proximity also matters, mainly through coordination and interaction costs rather than administrative co-location. The comparison between digital and green agreements shows that both domains require technological compatibility, but they rely on different forms of proximity and complementarity. Digital agreements are especially sensitive to broad network-based technological proximity, consistent with the modular and cross-sectoral nature of digital technologies. Green agreements combine compatible but differentiated capabilities with a stronger spatial and implementation-related component, reflecting their connection to infrastructures, regulation, and local coordination conditions. Prior relational proximity increases the probability of agreement formation in the full sample, while network effects are more exploratory in the digital and green subsamples. The paper contributes to the literature on alliances, proximity, and transition-oriented innovation by showing that twin-transition collaboration is shaped by multiple and partially distinct proximity mechanisms. |
| Keywords: | twin transition, strategic alliances, joint ventures, proximities, networks, rare events |
| JEL: | C25 L14 O31 O33 R12 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:cns:cnscwp:202610 |
| By: | Vezina, Pierre-Louis; Aksoy, Cevat Giray; Lewandowski, Piotr |
| Abstract: | We examine business creation by Ukrainian refugees in Poland following the Russian invasion of Ukraine. Using registry data, we show that Ukrainians started 38, 833 firms in 2022–23, accounting for 7% of all new registrations in Poland. We link this entrepreneurship to refugees in two ways. First, our survey shows that 58% of post-invasion Ukrainian founders registered as refugees. Second, cross-county regressions show that a 10% increase in adult male Ukrainian refugees is associated with a 2.71% increase in Ukrainian firm registrations. We then show that new Ukrainian businesses stimulate rather than crowd out Polish entrepreneurship. Using a shift-share strategy based on refugee shocks and Ukrainians’ comparative advantage, we find that a 10% increase in Ukrainian registrations led to 2.31% more Polish firms. Survey evidence suggests two mechanisms: emulation, with 59% of Ukrainian owners reporting Polish entrepreneurs starting similar firms, and supply-chain linkages, with 88% of Ukrainian firms engaged in local business-to-business transactions. |
| Keywords: | Migration; Firms; Multiplier |
| JEL: | F22 L26 O15 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20854 |
| By: | Annie Liu; Riley Sullivan; Jeffrey P. Thompson |
| Abstract: | Small businesses occupy a position of economic and civic importance in New England that is not captured by any single statistic. These firms collectively employ millions of workers, anchor local communities, supply large institutions with goods and services, and are incubators of regional innovation and job growth. Using data from the US Census Bureau’s Business Dynamics Statistics, this brief quantifies the contributions that small businesses made to employment and employment growth in New England during the 2000–2023 period. |
| Keywords: | New England; small business; employment; health care |
| Date: | 2026–07–08 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedbrb:103508 |
| By: | Borsekova, Kamila; Korony, Samuel; Rodríguez-Pose, Andrés; Styk, Michal; Westlund, Hans |
| Abstract: | The importance of institutions and innovation for regional development is well established. How these two factors interact under different historical legacies and urban-regional contexts remains, however, insufficiently understood. This paper identifies which combinations of institutional and innovation indicators most effectively classify regions into distinct developmental archetypes, revealing critical thresholds that redirect regional trajectories. Employing decision-tree analysis on 233 EU NUTS-2 regions, we analyse 15 indicators spanning institutional quality, technological readiness, business sophistication, and innovation. This methodology uncovers non-linear relationships that traditional approaches cannot capture. The findings demonstrate that institutional quality acts as a necessary condition for innovation-led growth. High-performing regions, predominantly in Western and Northern Europe, benefit from robust institutions and strong innovation outputs. Many lower-performing regions, particularly in Central and Eastern Europe, exhibit innovation potential but are constrained by governance deficits. By integrating institutional and innovation indicators within a single analytical framework, we underscore how addressing governance and innovation in tandem can result in balanced and sustainable growth across Europe. |
| JEL: | O18 O43 R11 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20988 |
| By: | Ugo Fratesi; Pietro Vicari |
| Abstract: | The concept of ecosystem has gained significant traction, both in academic and policy domains, however, most of the literature adopts given spatial scales, mostly regional statistical units, and then investigates the extent to which those places exhibit ecosystem features. To contribute overcoming this limit, this paper proposes a bottom-up methodology to identify “potential ecosystems†, i.e. clusters of local labour systems aggregated on the basis of firm interactions and territorial networks. The methodology is illustrated and validated with Italian data where identified “ potential ecosystems†are shown to exhibit several of the features that are expected in actual ecosystems. This methodological innovation could provide a support to evidence-based regional policy, e.g. better targeting areas for innovation measures. |
| Keywords: | Ecosystems, Firm Networks, Cluster Identification, Regional Development |
| JEL: | R12 R58 L26 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2612 |
| By: | Udo Kreickemeier; Zhan Qu; Florian Unger |
| Abstract: | We develop a two-country general equilibrium model in which heterogeneous firms have access to offshoring and innovation as two alternative ways of reducing production costs. We use our model to answer the question whether better offshoring opportunities lead to more or less innovation at the firm level. We show that switching into offshoring increases firm-level innovation activities when the level of openness of the economy is high, and reduces them if the economy is less open. Via general equilibrium effects, a reduction in offshoring costs unambiguously reduces the innovation activities of non-offshoring firms, whereas innovation in infra-marginal offshoring firms may go up or down. Our paper provides a rationale for contrasting evidence on the relation between offshoring and innovation found in the empirical literature. |
| Keywords: | offshoring, innovation, productivity effect |
| JEL: | F12 O31 O33 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12789 |
| By: | Bergeaud, Antonin; Nur Gozen, Ruveyda; Van Reenen, John |
| Abstract: | We introduce a methodology to measure cross-country trends in innovation capability- “technological trajectories†and implement this on a new rich dataset covering patents between 1836 and 2016 across multiple countries. Intuitively, trajectories are revealed by a country’s sustained increases in patenting across multiple patent offices. We first describe the data patterns, showing the relative decline of the UK, and the rise first of the US and Germany, and then later of Japan and China. We then econometrically estimate trajectories on (i) the post-1902 period for France, Germany, Japan, the UK and US, and (ii) the post-1960 period for a wider sample of 40 countries. Our trajectories are strongly positively correlated with Total Factor Productivity growth, and also (but less strongly) associated with the growth of labour productivity and capital intensity. We show that future trajectories are predicted by a country’s initial levels of R&D, education and defence spending, classic drivers of innovation in modern growth theory. |
| Keywords: | Patents; Technical progress; Economic history; Innovation |
| JEL: | O31 O33 O34 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21066 |
| By: | Sébastien Houde; Wenjun Wang |
| Abstract: | This paper investigates the relationship between AI adoption and carbon emission intensity. Using micro-level data from Chinese firms, we find that carbon intensity decreases following the adoption of AI. The effect is particularly pronounced among large firms, those headquartered in AI hubs, and those in high-carbon intensity sectors. We investigate several mechanisms and find that AI adoption is also associated with increases in energy management processes, green innovation, inventory efficiency, overall productivity, and the share of specialized labor. We find that AI-induced carbon reductions are subject to a large rebound effect of approximately 70%. |
| Keywords: | artificial intelligence, carbon emissions, energy intensity, green innovation |
| JEL: | D22 L11 O33 Q54 Q55 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12803 |
| By: | Gechter, Michael; Kala, Namrata |
| Abstract: | Firm location decisions have externalities on other firms due to competitive or agglomerative forces, and on the environment. We study an environmental place-based policy that randomly moved 20, 000 firms in New Delhi. Relocation reduces pollution, but firm exit increases. We combine the exogenous assignment of firms to industrial plots with a model to estimate spillovers on neighboring firms, showing that firm survival rates could have been increased by allocating firms to plots accounting for input-output linkages. These results provide causal evidence on how firm presence impacts environmental quality, and how spillovers can be used to minimize costs on regulated firms. |
| JEL: | Q52 Q53 Q56 R11 R38 D22 L25 L51 O12 O13 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21060 |
| By: | Cullen, Zöe; Faia, Ester; Guglielminetti, Elisa; Perez-Truglia, Ricardo; Rondinelli, Concetta |
| Abstract: | We present the first large-scale field experiment test of strategic complementarities in firms' technology adoption. Our experiment was embedded in a Bank of Italy survey covering around 3, 000 firms. We elicited firms' beliefs about competitors' adoption of two advanced technologies: Artificial Intelligence (AI) and robotics. We randomly provided half of the sample with accurate information about adoption rates. Most firms substantially underestimated competitors' current adoption, and when provided with information, they updated their expectations about competitors' future adoption. The information increased firms' own intended future adoption of robotics, although we do not observe a significant effect on AI adoption. Our findings provide causal evidence on coordination in innovation and illustrate how information frictions shape technology diffusion. |
| Keywords: | Innovation |
| JEL: | O33 D22 C93 L21 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20894 |
| By: | Sergio Petralia; Ron Boschma |
| Abstract: | The patent system rests on a fundamental bargain: temporary monopoly rights in exchange for the disclosure of technical knowledge. Yet, the complexity of transferring technical know-how often limits the effectiveness of disclosure, keeping innovation highly localized. We study whether actionable disclosure in the form of publicly available executable code can overcome these frictions. We rely on a novel dataset linking two decades of patenting activity in the United States to contributions in public code repositories by 1, 556 organizations. Using neural language models, we measure the semantic similarity between patent descriptions and public code contributions by these firms to identify patents with high digital disclosure. We find that these patents attract citations from inventors located approximately 17% farther away than those citing a group of control patents, suggesting that actionable disclosure in the form of executable code reduces spatial barriers to knowledge diffusion. |
| Keywords: | patent disclosure, knowledge diffusion, open-source software, geography of innovation, spatial spillovers |
| JEL: | O31 O33 O34 R12 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2611 |
| By: | Aldasoro, Inaki; Gambacorta, Leonardo; Pál, Rozália; Revoltella, Debora; Weiss, Christoph; Wolski, Marcin |
| Abstract: | This paper provides new evidence on how the adoption of artificial intelligence (AI) affects productivity and employment in Europe. Using matched EIBIS-ORBIS data on more than 12, 000 non-financial firms in the European Union (EU) and United States (US), we instrument the adoption of AI by EU firms by assigning the adoption rates of US peers to isolate exogenous technological exposure. Our results show that AI adoption increases the level of labor productivity by 4%. Productivity gains are due to capital deepening, as we find no adverse effects on firm-level employment. This suggests that AI increases worker output rather than replacing labor in the short run, though longer-term effects remain uncertain. However, productivity benefits of AI adoption are unevenly distributed and concentrate in medium and large firms. Moreover, AI-adopting firms are more innovative and their workers earn higher wages. Our analysis also highlights the critical role of complementary investments in software and data or workforce training to fully unlock the productivity gains of AI adoption. |
| Keywords: | Artificial intelligence; Firm productivity; Europe; Digital transformation |
| JEL: | D22 J24 L25 O33 O47 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21082 |
| By: | Rodríguez-Pose, Andrés; Xiang, Leiboyu; Lee, Neil |
| Abstract: | This paper presents the first systematic city-level mapping of global scientific talent, analysing the top 200, 000 star scientists across 3, 635 cities worldwide annually between 2019 and 2023. We use a novel Knowledge Generation Index (KGI) that combines researcher quantity with research impact to reveal extreme spatial concentration in knowledge production. Just four cities — New York, Boston, London and the San Francisco Bay Area — host 12% of the world's star scientists, while much of the Global South remains virtually excluded from frontier research. Beijing's ascent into the global top ten represents a rare challenge to established hierarchies. Our analysis uncovers striking disciplinary variations. Resource-intensive fields like clinical medicine cluster heavily and traditionally dispersed disciplines are increasingly gravitating toward major hubs. Despite these differences, concentration is intensifying across most scientific fields. Even the pandemic's remote collaboration experiment failed to level the playing field. Established innovation centres continued strengthening their advantages while peripheral regions fell further behind. Overall, we find that geography remains destiny, with profound implications for innovation policy confronting widening spatial inequalities in global scientific capacity. |
| JEL: | O25 O31 R12 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20970 |
| By: | Bijnens, Gert; Konings, Jozef; Putseys, Aaron |
| Abstract: | This paper identifies a firm-level Productivity J-curve induced by intangible investments. Using novel microdata on business-to-business transactions for Belgian firms, we construct a comprehensive measure of intangible investment covering software, R&D, design, training, and organizational capital. Our analysis shows that returns on intangibles substantially exceed those of traditional production factors, highlighting their central role in value creation. However, because intangible expenditures are rarely capitalized and are often recorded as intermediate inputs, they are not properly accounted for in conventional measures of total factor productivity (TFP). This misclassification creates systematic mismeasurement, whereby inputs are overstated relative to output in the short run, leading to an underestimation of TFP. Exploiting the lumpy nature of intangible expenditures within a difference-in-differences event-study framework, we document that such mismeasurement results in a persistent underestimation of TFP, by about 3% over a seven-year horizon. Given average measured TFP growth of 1% annually, this represents a substantial distortion. The bias is strongest among small, young, and low- capital intensive firms, reflecting slower absorption of intangible assets. By clarifying how intangible capital and emerging technologies such as AI systematically distort measured productivity, our findings provide new empirical insights into the productivity slowdown and the role of mismeasurement in modern economies. |
| Keywords: | Productivity |
| JEL: | E01 E22 E23 O32 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20825 |
| By: | José Luis Moraga-González (Vrije Universiteit Amsterdam); Evgenia Motchenkova (Vrije Universiteit Amsterdam) |
| Abstract: | We investigate the impact of mergers on R&D incentives within a framework of R&D competition where effort can influence both the probability of innovation and the payoff conditional on success. Our framework nests the results of two classes of existing models and reveals assumptions that are restrictive. In models where R&D effort increases the probability of innovation but does not directly affect the payoff upon success, we show that the assumption of zero payoff upon innovation failure is restrictive. In models where R&D effort influences the payoff conditional on success, but not the probability of success itself, the assumption of deterministic innovation success (i.e., a success probability of one) is similarly restrictive. Across both modeling approaches, we offer a novel insight: the shape of investment costs, and by implication the pre-merger level of innovation, can be pivotal in determining whether a merger strengthens or weakens firms’ incentives to invest in R&D. In an extensions section, we further examine the role of R&D input and output synergies, firm asymmetries, as well as the implications for consumer surplus. |
| Keywords: | Merger Policy, R&D Investments, Innovation |
| JEL: | K21 L13 L40 |
| Date: | 2026–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:tin:wpaper:20260001 |
| By: | Kwon, Seoyoung; Lee, Jongkwan; Monras, Joan |
| Abstract: | High-skilled migration programs exist around the world in the hope that immigrants complement native workers, allow firms to grow, and boost innovation. We study the effect of one such program by exploiting the 2016 extension of the Optional Practical Training (OPT) program, which significantly prolonged the work authorization period for international STEM graduates. Using a synthetic difference-in-differences approach, we find that the policy successfully increased the local supply of high-skilled immigrants in exposed Commuting Zones. This local inflow stimulated firm creation and the demand for native high-skilled workers. The program might have also boosted innovation in certain sectors and startup investment, especially in Commuting Zones hosting top-ranked universities, where, overall, the effects tend to be larger. |
| Keywords: | Immigration |
| JEL: | F22 J31 J61 R11 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21224 |
| By: | Lenzu, Simone; Rivers, David; Tielens, Joris; Hu, Shi |
| Abstract: | We study the interconnection between the productivity and pricing effects of financial shocks. Combining administrative records on firm-level output prices and quantities with quasi-experimental variation in credit supply, we show that a tightening of credit conditions has a persistent, yet delayed, negative effect on firms’ long-run physical productivity growth (TFPQ) but also induces firms to change their pricing policies. Commonly used revenue-based productivity measures (TFPR) — which conflate price and productivity — offer biased predictions regarding the consequences of financial shocks for firms’ productivity growth, underestimating the long-run elasticity of physical productivity to credit supply by half. We also show that the pricing adjustments themselves have productivity implications. Firms use low pricing as a source of internal financing, allowing them to avoid cutting expenditures on productivity-enhancing activities, thereby softening the impact of financial shocks. We incorporate these forces into a quantitative model of firm dynamics to quantify the importance of productivity and pricing dynamics (and their interplay) in driving the scarring effects of financial crises on aggregate productivity and welfare. |
| Keywords: | Productivity; Pricing; Innovation |
| JEL: | D22 D24 E31 E44 G01 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21218 |
| By: | Tamilina, Larysa; Akaliyski, Plamen |
| Abstract: | Innovation constitutes a key driver of long-term economic and societal prosperity, motivating extensive research on its underlying determinants. Although culture is acknowledged as being of utmost importance, it has predominantly been examined in isolation from institutional contexts. This study explores how individualist and collectivist cultures contribute to cross-national differences in innovation performance, and how these cultural effects interact with formal institutions. Fuzzy-set qualitative comparative analysis is used on data from 80 countries to identify multiple configurations of cultural and institutional conditions associated with high and low innovation output. Our empirical findings show that individualism and robust formal institutions independently function as necessary and sufficient conditions for high innovation performance; nevertheless, their simultaneous presence is essential for maximizing innovation output. In contrast, the absence of individualism alone emerges as sufficient to severely constrain innovation. We use these asymmetric results to propose a novel typology of national innovation regimes. |
| Keywords: | Innovation, individualism-collectivism, formal institutions, national culture, fsQCA. |
| JEL: | C1 O3 Z1 |
| Date: | 2026–01–28 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127893 |
| By: | Ã lvarez, Inmaculada C.; Barbero, Javier; Orea, Luis; Rodríguez-Pose, Andrés |
| Abstract: | Most studies of institutional quality and regional growth assume uniform effects across territories. However, this may mask crucial regional heterogeneity, with direct policy implications. We use a latent class framework applied to 230 EU regions over 2009-2017 to identify institution-driven regional parameter groups, and to examine both average effects and catching-up effects associated with changes in the institutional environment. We demonstrate that institutional quality generates highly variable returns to investment in physical capital and innovation. Nordic and Central European regions show highest returns to physical capital and R&D investment, whereas less-developed regions benefit most from education spending. Crucially, we find that improving government quality not only raises average returns but also promotes territorial cohesion. By contrast, regional autonomy shows limited impact on returns. Our findings challenge the one-size-fits-all approach to cohesion policy and indicate that cohesion policy should explicitly promote institutional improvements in addition to capital deployment. |
| Keywords: | Institutional quality; European funds; investment |
| JEL: | O43 E61 H54 R11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20969 |
| By: | Flora Bellone (Université Côte d'Azur, CNRS, GREDEG, France); Edwin Fourrier-Nicolaï (Université Côte d'Azur, CNRS, GREDEG, France); Simone Vannuccini (Université Côte d'Azur, CNRS, GREDEG, France) |
| Abstract: | We study how imported input price shocks affect both the intensity and direction of innovation. Using comprehensive French firm-level data combining accounting records, ownership structures, customs transactions and patents over the period 2014-2023, we construct firm-level exposure to input price shocks based on structural breaks in product-level import unit values from non-EU countries, aggregated using a shift-share design. Innovation intensity is measured using priority patent applications, while the direction of innovation is characterized by mapping patents to products and embedding them in a production network to distinguish innovations directly related to affected inputs from those connected through upstream, downstream, or technologically adjacent linkages. We find that input price shocks primarily affect the direction rather than the level of innovation. Exposed firms reallocate innovative activity toward connected technological domains, consistent with network-based directed technological change. This reallocation is strongest among firms at the technological frontier, while smaller and less productive firms adjust more through overall innovation intensity. We provide evidence for specific industries, showing that the shock-innovation impact-response is heterogeneous. We interpret our results as firms' resorting to what we label defensive innovation. Our findings can inform policy making and firm strategy in a context of increasing trade fragmentation and geopolitical risk. |
| Keywords: | input trade shocks; directed innovation; trade fragmentation; patents |
| JEL: | F14 O31 O33 F18 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:gre:wpaper:2026-17 |
| By: | Rabia Bashir (Management and Science University, Shah Alam, Malaysia Author-2-Name: Muhammad Ahmad Author-2-Workplace-Name: Management and Science University, Shah Alam, Malaysia Author-3-Name: Imran Arshad Author-3-Workplace-Name: Riphah School of Leadership, Riphah International University, Islamabad, Pakistan Author-4-Name: Sultan Rehman Sheri Author-4-Workplace-Name: Department of Management and Law, Faculty of Business Management and Professional Studies, Management and Science University, Shah Alam, Malaysia Author-5-Name: Author-5-Workplace-Name: 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 examines how financial constraints and financial resilience influence financial distress among Malaysian listed firms from 2015 to 2024. It additionally compares distressed and non-distressed firms to examine their performance with respect to financial constraints and financial resilience. Also, the study examines whether these patterns differ in large versus small firms. Methodology/Technique - Using panel data on Malaysian-listed firms, the study measures financial distress with the modified Altman Z-score and classifies firms as distressed or non-distressed. To examine differences in financial constraints and resilience, the research uses the Kruskal-Wallis test. Then, to further investigate the direct effects of financial constraints and financial resilience on financial distress, the study uses dynamic panel Generalized Method of Moments (GMM) estimation. Findings - Distressed firms face tighter financial constraints and show less resilience than their non-distressed counterparts. The dynamic GMM results further indicate that financial constraints increase financial distress, whereas financial resilience decreases it. The heterogeneous analysis shows that, for large firms, financial resilience matters most, whereas for small firms, financial constraints matter most. Contribution - This study contributes to the literature on financial distress by simultaneously testing the roles of financial constraints and financial resilience within a unified empirical framework, whereas past research has tended to focus separately on financing frictions, the prediction of distress, or indicators of resilience. Additionally, it provides new empirical evidence from an emerging market, Malaysia, where firms' financing structures, information asymmetry, and institutional environment differ considerably from those in developed economies. It extends previous findings by demonstrating that financial constraints and financial resilience affect firms differently across firm sizes. It shows that financial constraints influence financial distress more in small firms, while financial resilience influences financial distress in large firms. Type of Paper - Empirical" |
| Keywords: | Financial constraints; financial resilience, financial distress, Malaysia, GMM |
| JEL: | M13 M40 M49 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:gtr:gatrjs:afr249 |
| By: | Moraga-González, José-Luis; Motchenkova, Evgenia |
| Abstract: | We investigate the impact of mergers on R&D incentives within a framework of R&D competition where effort can influence both the probability of innovation and the payoff conditional on success. Our framework nests the results of two classes of existing models and reveals assumptions that are restrictive. In models where R&D effort increases the probability of innovation but does not directly affect the payoff upon success, we show that the assumption of zero payoff upon innovation failure is restrictive. In models where R&D effort influences the payoff conditional on success, but not the probability of success itself, the assumption of deterministic innovation success (i.e., a success probability of one) is similarly restrictive. Across both modeling approaches, we offer a novel insight: the shape of investment costs, and by implication the pre-merger level of innovation, can be pivotal in determining whether a merger strengthens or weakens firms’ incentives to invest in R&D. In an extensions section, we further examine the role of R&D input and output synergies, firm asymmetries, as well as the implications for consumer surplus. |
| Keywords: | Product innovation; Cost-reducing investment |
| JEL: | K21 L13 L40 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20986 |
| By: | Will Aarons; Asani Sarkar |
| Abstract: | How has the recent implementation of tariffs affected small businesses? Due to lack of data, little is known about this issue. In this Liberty Street Economics post, we use data from the 2025 edition of the Small Business Credit Survey (SBCS) to explore this question for businesses nationally and in the Second District (defined, for the purpose of this study, as New York, New Jersey, and Connecticut). We find that the majority of national firms in the goods and retail sectors reported experiencing financial challenges due to tariffs in 2025, with even larger shares of regional firms doing so. In response, about 80 percent of national and regional firms passed on at least some of the higher costs of imported inputs to customers, while about 60 percent absorbed some of the costs, as many firms did some of both. Firms that faced greater tariff challenges in 2025 were more pessimistic about employment and revenues in 2026. |
| Keywords: | tariffs; small business performance; Second District |
| JEL: | F13 L1 G0 |
| Date: | 2026–07–09 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103509 |
| By: | Hvide, Hans K.; Meling, Tom G. |
| Abstract: | We study how entrepreneurs respond to investment opportunities created by new technologies. Using the staggered rollout of broadband internet in Norway as a natural experiment, we find that access to the new technology increases startup rates by about 25% without reducing their quality. The effects are strongest in ICT-intensive industries, and treated entrepreneurs are more likely to invest in complementary assets such as computers. Consistent with existing literature, established firms show a more muted response to the new technology. Our findings suggest that entrepreneurs play a key role in adapting the economy to technological change. |
| Keywords: | Broadband; entrepreneurship; Technology adoption; Technology diffusion |
| JEL: | D21 D24 J23 L11 L25 G39 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21200 |
| By: | Akcigit, Ufuk; Chikis, Craig A.; Dinlersoz, Emin; Goldschlag, Nathan |
| Abstract: | We construct a novel dataset linking academic publication records to U.S. Census employer–employee data to track 42, 000 AI researchers over two decades. We document systematic changes in the allocation of AI talent. Industry increasingly attracts younger and foreign-born researchers, while gender representation improves more in academia. The top 1% of publishing industry scientists now earn $1.5 million more annually than comparable academics, a fivefold increase since 2001. Rising wage premia coincide with greater sorting into large incumbent firms. Researchers who move to industry publish less but patent more, consistent with a shift from open science toward proprietary innovation. |
| Keywords: | Artificial intelligence; open science; Innovation; Research and development |
| JEL: | I23 J45 L33 O31 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21293 |
| By: | Heller, David; Kim, Daehyun; Harhoff, Dietmar |
| Abstract: | The benefits and challenges of accessing international markets as a key strategy for many entrepreneurial ventures are well-known. But how can we effectively support startups’ expansion into foreign markets? This study takes an initial step to answer this question, arguing that entrepreneurial training can provide crucial experiential learning opportunities that foster startup internationalization. To empirically test our predictions, we explore a unique combination of proprietary application data from the German Accelerator (GA), a government-financed program that offers startups an international learning journey, and detailed startup- and founder-level information from Crunchbase and Revelio Labs, as well as qualitative evidence from a survey of GA alumni. We find that the average GA participant raises significantly more funding and hires more employees in the GA’s target countries, but not in their home markets, relative to a comparison group of startups that were admitted but did not attend for exogenous reasons. Quantitative and qualitative evidence suggests that in-person interactions in the target country are essential for eliciting these effects and that startups with limited prior international experience benefit most from participating in the program, both of which support our theoretical considerations about experiential learning. |
| Keywords: | New venture internationalization; Startup growth strategies; Entrepreneurial training; Experiential learning; Startup growth strategies |
| JEL: | F23 G24 L26 M13 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20888 |
| By: | Rachid Maghniwi (UM5 - Université mohamed 5, Rabat) |
| Abstract: | This study investigates the determinants of e-entrepreneurship intention among Generation Z in Morocco using an extended Theory of Planned Behavior (TPB) framework integrated with digital-specific constructs. Drawing upon entrepreneurship intention literature and adapting models to the digital context, this research proposes a comprehensive structural equation model incorporating digital literacy, technological self-efficacy, perceived digital opportunity, family and peer support, entrepreneurial education, and economic motivation as key predictors. The theoretical framework is grounded in Ajzen's Theory of Planned Behavior, extended to address the unique characteristics of digital entrepreneurship and the Moroccan socio-cultural context. This article presents a rigorous statistical modeling approach applicable to empirical validation, providing a foundation for understanding how Generation Z in Morocco forms intentions toward e-entrepreneurship in an increasingly digitalized economy. |
| Keywords: | Theory of Planned Behavior, Structural Equation Modeling, Digital entrepreneurship, Youth entrepreneurship, Morocco, Generation Z, E-entrepreneurship intention, E-entrepreneurship intention Generation Z Morocco Theory of Planned Behavior Structural Equation Modeling Digital entrepreneurship Youth entrepreneurship |
| Date: | 2026–01–06 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05453373 |
| By: | Kiyoung Jeon (Department of International Trade, Chungnam National University, Daejeon, Korea); Zeynep Yom (Department of Economics, Villanova School of Business, Villanova University) |
| Abstract: | This paper studies whether global value chain (GVC) participation improves firm-level carbon productivity and why the effects differ by firm size. We develop a heterogeneous-firm model in which firms face fixed costs of adopting abatement capacity. Backward GVC participation can raise domestic carbon productivity by reducing domestic processing per unit of value added, while the effect of forward participation is theoretically ambiguous. We test these predictions using Korean manufacturing firms subject to the emission trading system during 2011--2021, combining firm-level emissions and financial data with industry-level GVC measures. To ensure empirical rigor, our design examines baseline dynamics via system GMM estimation, establishes primary causal identification through a shift-share instrument approach, and implements alternative specifications for exhaustive sensitivity checks. The results show that backward GVC participation is associated with higher carbon productivity mainly among large firms. Small and medium-sized enterprises show little response to GVC exposure or emission trading system (ETS) dummies, consistent with fixed costs limiting green adjustment. Further exploration of possible reasons behind this pattern suggests that large firms' gains are associated with both cost-driven sourcing from developing partners and technology-related links to advanced-economy partners, especially when financial constraints are weaker. |
| Keywords: | Carbon productivity; Carbon neutrality; SMEs; Firm-level data; Global value chains |
| JEL: | Q56 F18 F14 L25 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:vil:papers:67 |
| By: | Bustamante, Maria Cecilia; Zucchi, Francesca |
| Abstract: | Carbon regulation poses the corporate challenge of developing optimal carbon management policies. We provide a unified model characterizing how firms manage emissions through production, heterogeneous green investment, and the trading of carbon credits. We show that carbon pricing incentivizes firms to reduce emissions through immediate yet transient abatement projects, but has an ambiguous impact on green innovation. In economies where carbon pricing discourages innovation, subsidies to green innovation complement — rather than substitute — carbon pricing, jointly lowering current emissions through abatement projects and accelerating the transition to greener technologies through innovation. |
| JEL: | G30 G31 G12 D62 O33 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21300 |
| By: | Dan Cao; Henry Hyatt; Toshihiko Mukoyama; Erick Sager |
| Abstract: | Since the 1990s, the Bureau of Labor Statistics (BLS) has reported much more rapid growth in U.S. private sector employer establishments than has the Census Bureau – the gap reached roughly 1.6 million by 2023. Using linked BLS-Census microdata, we document two main drivers. First, a large and growing number of employers providing services to the elderly and persons with disabilities are in scope for the BLS frame but not the Census Bureau’s. Second, many firms appear with substantially more establishments in the BLS frame. These discrepancies substantially affect the measured establishment size distribution and quantitative policy analysis. |
| Keywords: | establishments; multi-unit firms; concentration |
| JEL: | E24 J21 L11 O31 |
| Date: | 2026–06–22 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:103440 |
| By: | Sandra Valentina Lizarazo |
| Abstract: | Canada’s innovation performance has been strong but shows limited upward momentum despite generous research and development (R&D) subsidies. This paper develops an endogenous innovation, multisector, heterogeneous-agent model calibrated to the Canadian economy to evaluate fiscal policies that promote innovation and growth. The impact of R&D subsidies depends critically on the supply of high-skilled labor. When the supply of scientists is inelastic, subsidies raise research wages, crowd out private R&D, and can reduce long-run growth. When labor supply is more elastic, subsidies generate substantial gains in innovation and output. The analysis also compares alternative policy instruments. Investment tax reductions and education spending foster innovation through capital deepening and an expanded supply of highskilled labor, delivering more robust gains when talent constraints bind, while personal income tax changes have more limited effects. R&D subsidies also increase inequality by disproportionately benefiting high-skilled workers, although these effects are mitigated when labor supply responds. Overall, effective innovation policy requires combining R&D incentives with policies that expand human capital and reduce distortions to investment. |
| Keywords: | Innovation; Human Capital; Taxation; Heterogeneous Agents; Multi-Sector Economy; Spillovers; IMF working papers; innovation policy; R&D subsidy; research wage; policy instrument; Labor supply; Income; Wages |
| Date: | 2026–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/116 |
| By: | OECD |
| Abstract: | As finance is being reshaped by a range of technological, regulatory and market developments, AI and open data-sharing are two particularly influential trends. However, dynamics of their intersection remain relatively understudied. This paper examines the interplay of AI innovation with data-sharing environments, highlighting mutually reinforcing benefits alongside increased complexity, trade-offs and amplified risks. It also explores a forward-looking theoretical scenario of agentic AI in an environment of growing data-sharing. The paper aims to support the responsible and scalable deployment of AI innovation within open finance ecosystems. |
| Date: | 2026–07–16 |
| URL: | https://d.repec.org/n?u=RePEc:oec:comaaa:61-en |
| By: | Rudy Fernandez-Escobedo |
| Abstract: | Regional industrial structures are shaped by path dependence and resist rapid change, yet fine-grained evidence on their dynamics through major shocks remains scarce. This paper analyses the persistence and mobility of industrial concentration across 1, 320 NUTS3 regions in the EU-27 and UK over 2017–2023, a window bracketing the COVID-19 pandemic. Using a purpose-built firm-level panel of approximately 2.04 million firms drawn from Orbis, aggregated to NACE4 × NUTS3 resolution, the analysis combines Herfindahl-Hirschman concentration indices, Theil inequality decomposition, and Markov transition matrices to characterise structural change at a granularity not previously available. Three findings emerge. First, industrial concentration is highly persistent: approximately half of all regions retained their relative concentration quintile across the period, and rank ordering was strongly preserved even through the pandemic shock, confirming the core prediction of evolutionary economic geography. Second, change operated through distributional compression rather than rank disruption, with mean reversion concentrated at the extremes of the distribution while the relative ordering of regions held. Third, structural mobility is systematically patterned by regional typology: capital metropolitan regions diversified faster than their national context, while island regions moved toward greater concentration. The island result reveals a structural concentration trap with direct implications for Smart Specialisation policy, since the regions least able to diversify are precisely those for which place-based innovation strategy is documented to be weakest. The paper introduces a coverage filter benchmarked against Eurostat Labour Force Survey data, separating genuine structural change from database artefacts. |
| Keywords: | Industrial concentration; regional persistence; economic geography; Smart Specialisation; NUTS3; firm-level data; path dependence |
| JEL: | R11 R12 L16 R58 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2610 |
| By: | Otrachshenko, Vladimir (National Bank of Slovakia (NBS)); Vasil’, Roman (National Bank of Slovakia, Bratislava, Slovak Republic; Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic) |
| Abstract: | This paper examines the impact of weather conditions on firms' performance in Slovakia. By employing a unified framework that analyzes the outcomes, mechanisms, and coping strategies of firms across the entire economy, we contribute to a better understanding of the microeconomic foundations of weather's impact on economic development. Specifically, combining data on the universe of firms from 2013 to 2023 with temperature and precipitation data in a panel framework, we find that annual losses in sales, revenue, and profit associated with a 1â °C increase in temperature are substantial in heat-sensitive industries, whereas firms in non-heat-sensitive industries are generally unaffected. The findings suggest that the main mechanism underlying these relationships is a decline in total factor productivity driven by rising temperatures. To cope with the adverse impact of temperature, firms in heat-sensitive industries primarily adopt cost-reduction strategies. Future projections suggest a sharp decline in firms' performance, implying significant future economic losses for the economy. |
| Keywords: | coping strategies, firms, mechanisms, temperature, Slovakia |
| JEL: | D22 D24 Q54 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18746 |
| By: | Hoekman, Bernard; Prosi, Daniel; Sanfilippo, Marco; Ticku, Rohit |
| Abstract: | This paper provides evidence of spillover effects from foreign direct investment (FDI) through forward linkages, a relatively neglected channel to enhance national competitiveness that is likely to become more important as countries seek to bolster domestic competitiveness and resilience to geo-economic shocks. Using granular information on the universe of firm-to-firm transactions and inward FDI in Rwanda, we find substantial and persistent effects on value-added, employment, and productivity of domestic firms after beginning to source from foreign-owned enterprises. These effects are more pervasive than those associated with selling to foreign-owned firms – the backward linkages emphasised in the literature. Suggestive evidence reveals that foreign-owned firms provide higher-quality intermediate inputs than domestic suppliers, particularly in specialized business and professional services that are difficult to import, and that these inputs complement rather than crowd out domestically sourced inputs. |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21298 |
| By: | Feyler, Emilie; Heim, Sven; Szücs, Florian; Spiegel, Yossi |
| Abstract: | We study the effect of horizontal minority stake acquisitions on firms’ innovation incentives and patenting behavior. Using patent data from 34 countries between 2001 and 2019, we employ a staggered, matching-based difference-in-differences approach, complemented by an event study. We find that such acquisitions lead to a decline in both the number of patents granted and the number of citations received, indicating a reduction in innovation activity. These results suggest that horizontal minority acquisitions can serve as a mechanism to soften rivalry, not only in product markets, but also in innovation. |
| Keywords: | Innovation; Merger policy; Patents; Minority shareholdings |
| JEL: | D22 G14 L13 L40 O31 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20917 |
| By: | Bernardo Ribeiro (Einaudi Institute for Economics and Finance) |
| Abstract: | This paper proposes a semi-endogenous growth theory that incorporates technology vintages and the endogenous evolution of multiple technological paradigms through innovation. It provides a characterization of both balanced growth equilibrium and transitional dynamics in an environment where new technologies continuously emerge. From a positive perspective, the model rationalizes two distinct empirical patterns. Using two centuries of US patent data, I first document that the age profile of patents has a pronounced hump shape: most contemporary patents build upon technologies that are between 50 and 100 years old. Second, this age profile has remained stable throughout the past century. From a normative standpoint, the theory underscores a misallocation of research effort induced by the tendency among profit-maximizing firms to overinvest in further developing mature technologies. This yields a suboptimally slow development of emerging technologies. According to a calibrated version of the model, correcting such misallocation could generate welfare gains of 7%. |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:cwl:cwldpp:2515r1 |
| By: | Adam, Klaus; Renkin, Tobias; Züllig, Gabriel |
| Abstract: | We use data on firm-level prices and output to estimate the dynamics of markups, marginal cost and prices over the life-cycle of Danish manufacturing firms. Markups increase by 8 percentage points over the first 20 years of firms’ lives. This reflects a substantial decrease of marginal cost that is only partially passed on into prices. The increase in markups coincides with increased product turnover — both introductions and discontinuations — among young firms. We show that despite the strong age profile in markups, and an increasing average firm age due to declining entry, the direct effect of firm aging on recent markup trends is small. Our findings have implications for a number of other macroeconomic theories and trends. |
| JEL: | D22 E23 L11 L16 |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20805 |
| By: | Imane Boukhaled (UM6P - Université Mohammed VI Polytechnique = Mohammed VI Polytechnic University [Ben Guerir]); Noureddine Kouaissah (UM6P - Université Mohammed VI Polytechnique = Mohammed VI Polytechnic University [Ben Guerir]); Mohammed Benlemlih (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie = EM Normandie Business School) |
| Abstract: | Sustainable investing has experienced rapid growth over the past two decades, resulting in an expanding body of research examining its financial implications. This systematic literature review, conducted using the Preferred Reporting Items for Systematic Reviews (PRISMA) framework, examines the growing body of research on the impact of sustainability on financial performance at both the firm level and the equity based portfolio level. We contribute to the literature by systematically analyzing the sources of heterogeneity underlying divergent empirical findings and by distinguishing between firm-level effects and portfolio-level performance outcomes. Through a comprehensive search of studies published over the last two decades, we identified notable differences in reported outcomes by reviewing more than one hundred eligible articles. Our findings indicate that approximately sixty-five percent of the selected studies report positive effects of sustainable investing on firm-level financial performance, compared to thirty-six percent at the portfolio level. We document several key sources of variation across studies, including differences in financial performance proxies, modeling frameworks, sustainability data providers, and geographic contexts. Future researchers are recommended to incorporate the evolving integration of sustainable factors into financial decisions from both theoretical and empirical perspectives. |
| Keywords: | Literature review, Portfolio’s financial performance, Firm’s financial performance, ESG, Sustainable responsible investing |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05659045 |