|
on Small Business Management |
|
Issue of 2026–05–25
twenty papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Henrekson, Magnus (Research Institute of Industrial Economics (IFN)) |
| Abstract: | This paper analyzes Sweden’s entrepreneurial performance from an institutional and evolutionary perspective, using the concept of the collaborative innovation bloc. It argues that economic development is driven not by entrepreneurial entry per se, but by the capacity of institutional arrangements to channel entrepreneurial effort into large-scale, productivity-enhancing activities. Sweden provides an instructive case: despite strong performance in innovation and start-up formation, the economy performs less well in turning young firms into globally competitive enterprises. The analysis emphasizes the complementarity between entrepreneurs and key actors—investors, skilled employees, and competent customers—and the role of institutional incentives in coordinating their interaction over time. While past reforms have improved conditions for entry, remaining distortions in taxation, labor market regulation, and capital allocation may bias outcomes toward early exit rather than sustained growth. |
| Keywords: | Collaborative innovation bloc; Entrepreneurial ecosystem; Entrepreneurship policy; Scale-up policy; Innovative entrepreneurship |
| JEL: | H50 I28 L26 O31 P16 R38 |
| Date: | 2026–05–16 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:iuiwop:1559 |
| By: | Daisuke TSURUTA |
| Abstract: | This paper examines the relationship between managerial aging, succession prospects, and credit allocation to small and medium-sized enterprises (SMEs) in Japan. We focus on firms managed by elderly owners without designated successors, which we interpret as exhibiting weakened going-concern prospects. Using comprehensive firm-level data, we investigate firm performance, default risk, and bank lending behavior during normal periods and economic crises, particularly the Global Financial Crisis and the COVID-19 pandemic. We find that firms with elderly managers and those lacking successors exhibit lower profitability, slower growth, and higher probabilities of default and exit, with these adverse effects becoming more pronounced during crises. Despite their weak fundamentals, such firms experience increased reliance on bank borrowing during crisis periods, suggesting potential credit misallocation. This pattern was particularly strong during the COVID-19 crisis, likely reflecting extensive public financial support. Our findings highlight how population aging can distort credit allocation in SMEs and provide new evidence on crisis-driven misallocation in an aging economy. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26039 |
| By: | Nuriye Melisa Bilgin; Gianmarco Ottaviano |
| Abstract: | Do the determinants of technology adoption depend on technological architecture? Using administrative data on Turkish firms from 2021 to 2024, we compare the adoption of traditional and generative artificial intelligence (GenAI).We show that GenAI adoption is driven by workforce skill intensity and is not positively associated with firm size, whereas traditional AI depends on both scale and skills. Firms that adopt both technologies are distinct and represent the most persistent adoption mode. Conditional on adoption, the skill-to-size ratio governs technology choice, and transition dynamics indicate a sequential process in which firms adopt GenAI before expanding to hybrid use. Exploiting the release of ChatGPT as a quasi-experimental reduction in access costs, we find that high-skill firms differentially increased GenAI adoption, while firm size played a limited role. These results suggest that the canonical size-based diffusion pattern is not universal but depends on the cost structure of technologies, with implications for innovation policy and productivity dispersion. |
| Keywords: | artificial intelligence, generative AI, technology adoption, firm heterogeneity |
| Date: | 2026–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2184 |
| By: | Afroza Alam; André Diegmann |
| Abstract: | This paper provides new causal evidence on how patent allowances affect firms and their employees based on quasi-random assignment of patent applications to examiners. Exploiting employer–employee records with newly linked German firm data and web-scraped patent documents, we show that patent-induced shocks reduce firm exit, improve productivity, and increase wages, with rent-sharing elasticities between 0.10 and 0.21. Wage gains are broadly observed across occupational tasks, with high heterogeneity: managers benefit disproportionately in publicly traded firms, whereas broader wage increases accrue to workers in non-traded firms. Our findings highlight the role of institutional features and firm organization in shaping how rents are shared. |
| Keywords: | innovation, firm performance, worker compensation, rent sharing |
| JEL: | O31 O34 J31 D22 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12666 |
| By: | Ruben Gaetani; Alexander T. Whalley |
| Abstract: | The emergence of firms like SpaceX and Blue Origin has made space a leading example of how private enterprise drives innovation, marking what many see as a sharp break between Old Space and New Space. Yet little systematic evidence documents when the transition to this new phase of space innovation occurred and which firms drove it. We use patent data to provide this measurement and find that the largest surge in space innovation occurred in the 1990s, coinciding with demand-side market creation, and preceding the entry of high-profile startups after 2005. Throughout this period and since, incumbent aerospace firms account for most of the space-related patenting, with entrants contributing a growing but minority share. The same geographic regions that dominated space innovation during the post-Apollo era remain dominant today. These patterns are consistent with directed technical change: incumbents direct R&D toward policy-created markets accessible from existing capabilities, while entrants bring science-based insights into domains requiring new paradigms. Our findings suggest that New Space is more closely connected to Old Space than prevailing narratives imply, and that government's most consequential role in space innovation may lie in constructing appropriable markets. We make patent data on space-related technologies available for future research. |
| JEL: | L64 O31 O38 R48 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35212 |
| By: | Goldberg, Pinelopi; Juhász, Réka; Lane, Nathan; Lo Forte, Giulia; Thurk, Jeff |
| Abstract: | The resurgence of subsidies and industrial policies has raised concerns about their potential inefficiency and alignment with multilateral principles. Critics warn that such policies may divert resources to less efficient firms and provoke retaliatory measures from other countries, leading to a wasteful “subsidy race.” However, subsidies for sectors with inherent cross-border externalities can have positive global effects. This paper examines these issues within the semiconductor industry: a key driver of economic growth and innovation with potentially significant learning-by-doing and strategic importance due to its dual-use applications. Our study aims to: (1) document and quantify recent industrial policies in the global semiconductor sector, (2) explore the rationale behind these policies, and (3) evaluate their economic impacts, particularly their cross-border effects, and compatibility with multilateral principles. We employ historical analysis, natural language processing, and a model-based approach to measure government support and its impacts. Our findings indicate that government support has been vital for the industry’s growth, with subsidies being the primary form of support. They also highlight the importance of cross-border technology transfers through FDI, business and research collaborations, and technology licensing. China, despite significant subsidies, does not stand out as an outlier compared to other countries, given its market size. Model estimates suggest the presence of learning-by-doing at the firm-product level as well as economies of scope within a firm and substantial cross-border learning spillovers. These spillovers likely reflect cross-country technology transfers and the role of fabless clients and input suppliers in disseminating knowledge globally through their interactions with foundries. Such cross-border spillovers are not merely accidental but result from deliberate actions by market participants that cannot be taken for granted. Firms may choose to share knowledge across borders or restrict access to frontier technology, thereby excluding certain countries. Future research will use model estimates to simulate the quantitative implications of subsidies and to explore the dynamics of a “subsidy race” in the semiconductor industry. |
| Keywords: | semiconductors; industrial policy; subsidies; learning-by-doing; multilaterism |
| JEL: | F13 L63 N60 O38 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138525 |
| By: | Claudio Barbieri (European Central Bank); Mattia Guerini (Università di Brescia and Fondazione Eni Enrico Mattei); Mauro Napoletano (Université Côte d’Azur, CNRS, GREDEG; Institute of Economics, Sant’Anna School of Advanced Studies and Sciences Po, OFCE) |
| Abstract: | We investigate the structure and evolution of credit growth across Italian provinces. Using an econometric approach based on Random Matrix Theory, we decompose regional credit dynamics into common and idiosyncratic components. We use a longitudinal dataset of credit at the provincial level (NUTS-3 regions) covering the period 2000–2020 and document substantial heterogeneity in the synchronization of credit growth across local economies. Our results suggest that, while aggregate credit growth is largely driven by a strong common component, substantial heterogeneity emerges across disaggregated credit categories. Household mortgage lending displays strong and persistent co-movement across provinces, whereas corporate mortgages and unsecured credit are characterized by higher dispersion and relatively weaker common dynamics. Regional divergence intensifies sharply between 2010 and 2014, coinciding with the European sovereign debt crisis, suggesting a fragmentation of local credit supply and demand. Importantly, divergence does not display any clear geographical pattern, underscoring the role of nonspatial factors in shaping regional credit dynamics. |
| Keywords: | Credit growth, Regional heterogeneity, Local credit markets, Synchronization |
| JEL: | C38 E51 G21 R12 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:fem:femwpa:2026.15 |
| By: | Hyunso Kim; Hyo Kang; Jaeyong Song |
| Abstract: | Recent advances in generative artificial intelligence (AI) are reshaping who enters entrepreneurship, but not who reaches the top of the quality distribution. Using data on over 160, 000 product launches on Product Hunt, we find that entrepreneurial entry increased sharply following the public release of ChatGPT-3.5, driven disproportionately by solo entrepreneurs. This shift toward solo entry is particularly pronounced in categories that historically favored team-based ventures. However, much of this growth reflects low-commitment, experimental entry and does not translate into greater representation among the highest-quality outcomes. Team-based ventures are increasingly dominant in the top tiers of platform rankings. These findings suggest that generative AI lowers barriers to solo entrepreneurship while reinforcing team-based advantages. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.10291 |
| By: | Yimin Wu; Tomoo Kikuchi |
| Abstract: | We study whether and how innovation intensity attracts foreign portfolio investment (FPI) using a panel of 60 countries from 1996 to 2021. Using an instrumental variable strategy based on regional shift-share and global push instruments, we estimate the causal response of debt and equity inflows to innovation intensity in the host country. We find that innovation increases FPI, with larger effects for equity than debt inflow. Moreover, the effect of innovation on equity inflow increases with technological development and institutional quality, whereas the effect on debt inflow is positive and significant only at high levels of these factors. We also find that countries with a higher risk-taking environment attract more FPI and that equity inflow responses are immediate and persistent, whereas debt inflow responses are modest and dampen over time. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2605.17896 |
| By: | Pawel Bukowski; Hannah Yi Wei |
| Abstract: | We investigate the effect of intra-firm gender disparities on innovation using a unique longitudinal dataset of UK companies from 1996 to 2019. Utilising within-industry and within-firm variation, as well as an instrumental variable approach, we examine the effect of gender pay gap and female representation at the top, on patenting activity - measured by their headcount, number of citations, and economic value. In general, our findings indicate that gender parity does not negatively impact patenting. However, in more recent data, we uncover evidence suggesting that a lack of gender parity adversely affects both the quantity and quality of patents. |
| Keywords: | firm diversity, innovation, gender equality, gender wage gap |
| Date: | 2026–05–14 |
| URL: | https://d.repec.org/n?u=RePEc:cep:cepdps:dp2179 |
| By: | Rüdiger Fahlenbrach; Leandro Sanz; René M. Stulz |
| Abstract: | Many startups in the 2000s have remained private after achieving large valuations, a pattern that funding availability alone cannot explain. We propose that startups relying heavily on organization capital to achieve economies of scale and network effects through digital technologies are more likely to become large private firms than exit earlier via an IPO or acquisition. Using LinkedIn data, we construct a novel measure of organization capital intensity for startups. Exploiting a legal shock that strengthened organization capital protection, we provide causal evidence that organization-capital-intensive startups are more likely to remain private and grow large rather than exit early. |
| JEL: | G24 G32 G34 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35191 |
| By: | Jean-Baptiste Marigo (IEP Strasbourg - Sciences Po Srasbourg - Institut d'études politiques de Strasbourg - UNISTRA - Université de Strasbourg); Laurent Weill (EM Strasbourg - École de Management de Strasbourg = EM Strasbourg Business School - UNISTRA - Université de Strasbourg, LARGE - Laboratoire de Recherche en Gestion et Economie - UNISTRA - Université de Strasbourg, UK - Univerzita Karlova [Praha, Česká republika] = Charles University [Prague, Czech Republic] = Université Charles [Prague, Republique tchèque]) |
| Abstract: | We investigate the effect of folklore on firms' access to credit. Using firm-level data on a large sample of 38, 000 firms covering 124 countries and 274 cultural societies over the 2005–2022 period, we test the hypothesis that oral traditions linking risk-taking to success or failure influence access to credit. We find that folklore affects access to credit. Oral traditions associated with successful challenges increase access to credit, while those associated with unsuccessful challenges decrease access to credit. We further show that folklore influences access to credit through borrower discouragement and loan approval. We also find that foreign-owned firms are less sensitive to the influence of folklore, while more developed legal institutions reinforce its impact. We further observe that folklore explains aggregate credit supply at the country level. Using representations of trust in folklore, we find that more trusting societies are associated with more loan approval but lower loan applications, which results from the fact that higher trust encourages informal credit. |
| Keywords: | Culture Folklore Access |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05621656 |
| By: | OECD |
| Abstract: | This paper examines how subsidies affect competitive outcomes in the global steel industry. Using firm-level data from the OECD MAGIC database covering 2006–2022, the analysis assesses the relationship between government support and market-share developments across steel producers worldwide. Econometric results indicate that subsidies increase recipients’ global market share at the expense of less-subsidised competitors. Firms receiving larger support through cash grants and below-market borrowings tend to gain market share even when they exhibit weaker productivity, cost efficiency and financial performance: subsidies weaken the normal link between firm performance and market-share gains. The analysis also identifies negative spill-overs on competing firms, implying that support granted to some producers can reduce rivals’ market shares and discourage investment by unsubsidised firms. The results are consistent across OECD Members and partner economies, although subsidisation levels are significantly higher in the latter and hence the dampening of market signals is even more pronounced there. Overall, the evidence suggests that subsidies contribute to resource misallocation, persistent steel excess capacity and shifts in global competitive positions. These findings highlight the importance of greater transparency in industrial support and stronger international cooperation to reduce distortions and support a more level playing field in the global steel sector. |
| Keywords: | below-market finance, cash grants, distortions, excess capacity, government ownership, market share, steel industry |
| JEL: | H25 H32 L52 L61 |
| Date: | 2026–05–18 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaac:191-en |
| By: | Peng XU |
| Abstract: | This study investigates the role of turnaround alternative dispute resolution (ADR) in comparison with Civil Rehabilitation. Large firms and firms with more retained losses are more likely to use ADR than Civil Rehabilitation. Highly leveraged firms tend to use Civil Rehabilitation more than ADR. In terms of performance, firms that use ADR firms have lower leverage, better credit scores and higher quick ratios after debt restructuring than firms employing Civil Rehabilitation. Firms that utilize Civil Rehabilitation reduce assets and employment to a greater degree than ADR firms. Operating efficiency improvement and profitability recovery are the same for both treatments. Neither firms utilizing ADR nor those using Civil Rehabilitation reduce trade credit use. These results indicate that economically and financially distressed firms use ADR to restructure their businesses while avoiding financial collapse in bankruptcy. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:dpaper:26040 |
| By: | Bloom, Nicholas; Kawakubo, Taka; Meng, Charlotte; Mizen, Paul; Riley, Rebecca; Senga, Tatsuro; Van Reenen, John |
| Abstract: | We link new forecast and management data on over 20, 000 firms to data on productivity in manufacturing and services. The panel survey was administered in the UK in July 2017 and November 2020, coinciding with two periods of considerable uncertainty from Brexit and Covid. We find that better-managed firms make more accurate forecasts for firm level turnover and macro-level GDP. Uniquely, we show better-managed firms are also aware that they make more accurate forecasts and have greater confidence in their predictions. This highlights how superior forecasting ability enables well-managed firms to make improved operational and strategic choices. |
| Keywords: | management; productivity; expectations; uncertainty; forecasting |
| JEL: | O32 O33 |
| Date: | 2025–12–18 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:138480 |
| By: | OECD |
| Abstract: | Responsible innovation in synthetic biology is reshaping biotechnology policy worldwide. This paper examines how governments are adapting governance frameworks for synthetic biology, using the OECD Framework for Anticipatory Governance of Emerging Technologies as an analytical lens. The analysis reviews national strategies, regulatory initiatives and policy instruments across OECD members and partners, identifying emerging practices across five governance dimensions: guiding values, strategic intelligence, stakeholder engagement, agile regulation and international co-operation. Drawing on examples from national advisory mechanisms and innovation programmes, the paper illustrates how governments are integrating anticipatory governance principles into bioeconomy policy. While these approaches signal a shift toward more forward-looking and adaptive regulation, implementation remains uneven across jurisdictions. The paper concludes with policy considerations for strengthening anticipatory governance and supporting responsible innovation in the emerging bioeconomy. |
| Keywords: | Agile regulation, Anticipatory governance, Bioeconomy policy, Responsible innovation, Synthetic biology governance |
| JEL: | O31 O38 Q55 K23 |
| Date: | 2026–05–21 |
| URL: | https://d.repec.org/n?u=RePEc:oec:stiaac:193-en |
| By: | Brandon Pecoraro; Nicholas C. Hoffman; Martin Lopez-Daneri; Elena C. Derby; Rachel Moore; Shannon E. Sledz |
| Abstract: | Using a panel of confidential corporate tax returns, we provide the first direct estimates of the realized present value of corporate tax benefits from R&D credits and deductions in the United States. Realized tax benefits can deviate from statutory tax benefits because firms in loss status are typically unable to fully utilize credits and deductions to offset current-year taxes and instead must carry these attributes forward. We develop a novel procedure to track the intertemporal firm-level utilization of tax attributes generated by corporate R&D spending, and find that the present value of R&D tax benefits varies substantially with firms’ loss status, age, and size. Old and large firms typically use R&D tax benefits quickly, while young firms – especially those that are small – frequently operate in loss status and use tax attributes more slowly. From 2012–2016, the average firm generated $0.41 in statutory tax benefits per dollar of R&D investment, with a realized present value of $0.36. Young and small firms in a loss position realized only $0.23 per dollar, a 44% decrease relative to the statutory benchmark. |
| JEL: | D22 H25 O30 O38 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35208 |
| By: | De Jonghe, Olivier; Huylebroek, Cédric |
| Abstract: | We study how private equity (PE) buyouts propagate through supply chains using unique firm-to-firm transactions data from Belgium. In normal times, suppliers of PE-backed firms outperform their peers by 5%–10% in employment and sales growth, primarily due to increased input demand from PE-backed customers rather than knowledge spillovers or other mechanisms. In economic downturns, however, this outperformance is attenuated and suppliers compress markups by around 8% as PE investors intensify bargaining pressure and reconfigure supply chains to extract cost savings. Beyond the direct effects on suppliers, we show that as PE-backed firms absorb supplier capacity, they crowd out competitors that rely on the same suppliers. Overall, our findings underscore that supply chains are central to how PE investors create and redistribute value. JEL Classification: D22, D24, G32, G34 |
| Keywords: | bargaining power, firm growth, private equity, spillover effects, supply chains, switching costs |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263234 |
| By: | Werner, Sven; Trotter, Philipp |
| Abstract: | Development finance increasingly funds entrepreneurship in developing countries, but evidence of its impact on entrepreneurship is mixed. Existing studies analyze total development finance flows as entrepreneurship-specific development finance data did not previously exist. By training and validating a machine-learning classifier on development finance project descriptions (2000-2022; 5 million projects; 97% accuracy), we introduce a scalable, replicable measure of specific entrepreneurship-support development finance (ESDF). Crucially, this measure allows us to assess which entrepreneurship margins respond to development finance. In a 19-year panel of 50 developing countries, two-way fixed-effects regressions show that higher ESDF is associated with higher entrepreneurial intentions, while total development finance is not. ESDF is not significantly linked to early-stage entrepreneurial activity, however, suggesting conversion bottlenecks in current entrepreneurial processes. |
| Abstract: | Entwicklungsfinanzierung richtet sich zunehmend auf die Förderung von Entrepreneurship im Globalen Süden. Die makroökonomische Evidenz zur Wirksamkeit dieser Förderung ist bislang jedoch uneinheitlich. Bisherige Studien greifen auf aggregierte Daten zur Entwicklungsfinanzierung zurück, da spezifische Daten zur Entrepreneurship-Förderung bislang nicht verfügbar waren. In diesem Papier entwickeln wir ein skalierbares und replizierbares globales Maß für die Förderung von Entrepreneurship durch Entwicklungsfinanzierung (entrepreneurship-support development finance, ESDF). Dazu trainieren und validieren wir ein Machine-Learning-Klassifikationsmodell auf Basis der Beschreibungen von 5 Millionen Entwicklungshilfeprojekten aus den Jahren 2000 bis 2022 (Genauigkeit des Modells: 97 %). Mit diesem Maß kann die Wirkung von ESDF auf verschiedene Stufen des Gründungsprozesses untersucht werden. Auf Basis eines Panels von 50 Ländern über 19 Jahre zeigen Regressionen mit Länder- und Jahreseffekten, dass ein höheres ESDF-Volumen mit stärkeren Gründungsabsichten einhergeht, während sich für aggregierte Entwicklungsfinanzierung kein entsprechender Zusammenhang zeigt. Zugleich ergibt sich kein signifikanter Zusammenhang zwischen ESDF und der Gründungsaktivität. Dies spricht dafür, dass zusätzliche Förderung zwar die Gründungsneigung erhöht, sich aber nicht automatisch in tatsächliche Gründungen übersetzt. |
| Keywords: | Entrepreneurship-support development finance, international assistance, entrepreneurial intentions, early-stage entrepreneurship, machine learning classification |
| JEL: | F35 O19 L26 C23 C45 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:rwirep:341094 |
| By: | Koji INOUE; Yoshimi YAMADA; Hikaru FUKANUMA |
| Abstract: | This paper examines how trade relationships affect the financing of newly established enterprises, focusing on both credit supply by financial institutions and credit demand by enterprises. While prior research has primarily emphasized entrepreneurs’ human capital and firm attributes, they have paid limited attention to the role of interfirm relationships. Using firm-level data, this paper analyzes whether the characteristics of trading partners and inter-organizational ties influence borrowing and lending behavior. The results show that securing high-performing trading partners is unlikely to increase the probability of obtaining bank loans, but tends to reduce the loan amounts received among enterprises that obtain loans. Additionally, sharing the same main bank with a trading partner actually reduces the likelihood of borrowing, although this negative association is mitigated when the return on assets of the enterprise is high. Furthermore, when the CEO shares the same university affiliation as the trading partner’s CEO, the probability of borrowing decreases, whereas sharing the same prefecture of origin is associated with larger loan amounts. These findings suggest that trade relationships function not only as informational signals to financial institutions but also as alternative channels of financial adjustment, thereby shaping both credit supply and demand for newly established enterprises. |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:eti:rdpsjp:26024 |