|
on Small Business Management |
|
Issue of 2026–10–26
seventeen papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Knarik Poghosyan; Tobias Büscher |
| Abstract: | This study estimates the effects of research and development (R&D) funding on firm performance and innovation activity in Germany for the period of 2000 to 2020. Since R&D collaborations between funded and non-funded firms can lead to positive externalities, our study accounts not only for the direct effects of the policy on funded firms but also for indirect (spillover) effects on non-funded firms. We use multiple databases (DAFNE, PATSTAT, Förderkatalog) and conduct empirical estimations on both firm and cluster levels. Our findings suggest that, in general, R&D funding has a positive impact on both funded and non-funded firms, which varies with the share of funded firms in the cluster. Interestingly, the indirect impact on innovation is larger than the direct impact. The latter finding points out the advantages of this broad type of R&D funding (no sectoral or regional concentration) in enforcing innovation spillovers, but also highlights its limitation in generating stronger direct effects. |
| Keywords: | R&D funding, spillover effects, policy evaluation, regional innovation, patent data |
| JEL: | O33 O38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:diw:diwwpp:dp2183 |
| By: | Oscar Y. Romero Goyenche; Deyu Li; Ron Boschma |
| Abstract: | There is increasing interest in studying how multi-system innovation (MSI) emerge across regions. Understanding it requires attention to the co-evolutionary dynamics among systems and to their spatial co-location. Integrating insights from the Sustainability Transition and Evolutionary Economic Geography literatures, a framework is proposed to study the critical emergence of innovation at the intersection of digital and green technologies, as outlined in the European twin transition agenda. Despite numerous studies, it remains unclear how specific components and capabilities recombine within regions to support the emergence of twin technologies. This framework is explored empirically in a study of 271 European NUTS-2 regions, using a random forest classification model to identify which configurations of regional technological trajectories most strongly support the emergence of twin technologies during the period 2000-2021. Using patent data, the results show that digital and green follow different trajectories into twin regional specialisation. Digital technologies contribute primarily through relatedness among themselves, while green technologies contribute when co-located with digital ones, with Artificial Intelligence being the most consistent interaction. These findings inform place-based regional innovation strategies by showing that the emergence of twin technologies depends not only on the accumulation of digital and green knowledge bases, but also on the specific configurations through which regions enter the twin technological space. |
| Keywords: | Multi-system innovation; Cross-system interaction; green transition; digital transition; twin transition; Evolutionary Economic Geography. |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2624 |
| By: | Einiö, Elias; Feng, Josh; Jaravel, Xavier |
| Abstract: | What are the implications of unequal access to innovation careers for the direction of innovation and inequality? Leveraging novel linked datasets in the United States and Finland, we document that innovators create products more likely to be purchased by consumers like them in terms of gender, socioeconomic status, and age. Homophily exists both within narrow product categories and across industries, and has been stable in recent decades. Incorporating this “social push” channel into a growth model, we estimate that unequal access to innovation careers has a large effect on cost-of-living inequality and long-run growth. |
| Keywords: | direction of innovation;entrepreneurship;inequality;economic growth |
| JEL: | O31 O33 O41 |
| Date: | 2026–10–01 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130164 |
| By: | Beck, Mathias Oliver Hermann; Dahlke, Johannes; Lehmann, Selina; von Krosigk, Manuel; Wörter, Martin |
| Abstract: | This report examines the developments of digital transformation among Swiss firms focusing on the adoption of digital technologies, their strategic and organisational implications, and the associated challenges, based on a representative enterprise survey conducted in 2020. The digital transformation has been attracting considerable interest, not least because of the significant uncertainties surrounding its potential impact on competitiveness and employment. Moreover, the digital transformation is a matter of particular concern as it is not only linked to the process of digitalisation but also involves strategic and organisational aspects of great importance. Such developments include the creation of new business models, alterations in leadership styles and novel forms of organising businesses that address the changing needs of customers and evolving aspirations of the workforce. The objective of these developments is to enable businesses to respond effectively to new competitive pressures from market peers. |
| Keywords: | Innovation, Digital technologies, Digital Transformation, Artificial Intelligence, Strategy |
| JEL: | O32 O33 O31 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esrepo:344146 |
| By: | Matthew Dey; Emin Dinlersoz; Lucia Foster; Cheryl Grim; John Haltiwanger; Peter B. Meyer; Sabrina Wulff Pabilonia; Aditya Pande; Martha Stinson; Sean Wang; Zoltan Wolf |
| Abstract: | Measures of exposure to artificial intelligence (AI) are widely used to study where AI is likely to affect firm and worker outcomes, yet limited evidence exists on how closely exposure relates to realized AI adoption at the firm level. We examine this relationship by linking 14 firm-level exposure measures, constructed from occupational exposure estimates in the literature and occupational employment shares from the Bureau of Labor Statistics Occupational Employment and Wage Statistics program, to direct measures of firm AI adoption from the Census Bureau’s Business Trends and Outlook Survey. Exposure is positively and statistically significantly associated with adoption, but explains only a modest share of its variation. The strength of the relationship varies considerably across standardized exposure measures: a one-standard-deviation increase in firm-level exposure is associated with a 4–11 percentage point higher firm adoption probability, falling to 1–8 percentage points after controlling for year and sub-sector fixed effects. The exposure–adoption relationship is also heterogeneous across firm-size classes and sectors. Exposure is thus an informative but incomplete signal of adoption. More broadly, the results have implications for the interpretation of exposure-based measures in studies of the economic effects of AI. |
| Keywords: | Artificial Intelligence, AI adoption, AI exposure, firm-level data, occupational mix |
| JEL: | O33 D22 J23 |
| Date: | 2026–09 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-61 |
| By: | Nilsson, Magnus (Department of Business Administration, Lund University) |
| Abstract: | This paper ties together two literatures which explain regional anchoring from different perspectives. One is based on the role of large organizations in anchoring an industry in a region, the other is systemic and deals with anchoring processes that circulate and embed knowledge. Each leaves implicit what the other explains. The aim is to understand how anchor effects and regional anchoring capacity interact across different regional contexts. Illustrative cases from three Swedish regions show how the two both diverge from and reinforce each other, anchor without anchoring and anchoring without an anchor, depending on regional configuration and anchor control. |
| Keywords: | Anchor firms; Anchoring; External control; Resilience; Periphery |
| JEL: | L22 R11 R58 |
| Date: | 2026–10–20 |
| URL: | https://d.repec.org/n?u=RePEc:hhs:lucirc:2026_013 |
| By: | Ethan Barnaby Kapstein; Javier Ospital; Guntram Wolff |
| Date: | 2026–07–01 |
| URL: | https://d.repec.org/n?u=RePEc:ulb:ulbeco:2013/414180 |
| By: | Phurichai Rungcharoenkitkul |
| Abstract: | Transformative AI promises to accelerate growth through productivity enhancement and automation. Yet automation on such a scale would raise the share of investment in output, potentially starving AI innovation of returns from a shrinking consumer market. We propose an endogenous growth framework to study this interaction, featuring research and entry decisions that propel AI advances but whose costs must be paid for by consumer demand. We identify several scenarios, spanning transformative AI, a demand bottleneck outcome where thinning consumer demand stalls AI progress, and intermediate cases in between. When anchored to evidence, the calibrated model points to the demand bottleneck as a highly plausible scenario, and projects more moderate growth in the coming years relative to recent studies such as Korinek et al. (2026). We draw policy implications, including for the natural rate of interest. |
| Keywords: | artificial intelligence, automation, natural rate of interest, demand-pull innovation, market size, endogenous growth, demand bottlenecks |
| JEL: | E22 E43 E52 O31 O33 O41 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1381 |
| By: | Ivan D Hernandez; Rodrigo Alvarez; Catalina Blanco; Andrés Carvajal |
| Abstract: | This paper presents a theoretical framework and a set of instruments for the encouragement of the emergence of a formal market for financing of new technology-based firms (NTBFs). The characterization attempts to determine particular attributes of this demand by doing a qualitative study of demand agents in Colombia and by doing a comparative study of NTBFs in other countries. Imperfections and distortions of the demand are found, giving a wider vision for the emergence of formal finance market for NTBFs. |
| Keywords: | New technology;based firms (NTBFs); public policy; entrepreneurship; technological change |
| JEL: | O25 L26 L38 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:col:000176:023703 |
| By: | Bianca CAVICCHI (European Commission); Igor CZERMAINSKI DE OLIVEIRA (European Commission) |
| Abstract: | This paper analyses how EU Research & Innovation policy can support the transition from knowledge generation to deployment and industrial scaling in strategic technologies. It uses RADAR, a policy simulation model, to test what emergence-oriented and industrial-scaling oriented policies can most effectively foster the translation of R&I outcomes into products that can successfully be commercialised and adopted. Results suggest that these two policy logics affect different outcomes and operate on different timelines. Early emergence support is especially relevant for product development outcomes, while scaling support becomes more important for installed capacity, employment and market capture once an upstream base exists. The results should be read as exploratory scenario evidence rather than as forecasts or optimal policy prescriptions. Their policy value lies in clarifying bottlenecks, sequencing issues and monitoring needs across different technology domains. |
| Keywords: | Research and science, technology, simulation models, industry, product innovation |
| JEL: | O25 O32 O33 O38 L63 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:eug:wpaper:ki-01-26-097-en-n |
| By: | Edoardo M Accabi (University of Mannheim); Andrea Alati (Bank of England); Luca Mazzone (University of Montreal); Marta Morazzoni (University College London and CEPR) |
| Abstract: | This paper studies how entrepreneurs sort into founding teams and how team composition shapes the firm distribution. We develop a theory of career choice and team formation in which skill complementarities make team entrepreneurship attractive for agents with unbalanced skill profiles, while talent similarity makes teaming preferable to other career options. Using matched employer-employee and balance-sheet data from Portugal, we show that teams combining similar talent with diverse specializations create larger, more productive, and longer-lived firms; yet founders with dissimilar skills are less likely to start firms together. We calibrate the model to reproduce these patterns and use it to quantify the cost of imperfect founder matching. Counterfactuals show that reducing founders’ biased exposure reallocates activity from low-productivity solo firms toward more productive teams. An optimal-assignment benchmark reveals that even unbiased random search leaves substantial gains unrealized because high-surplus matches fail to form. |
| Keywords: | Entrepreneurship;sorting;search frictions. |
| JEL: | L26 J24 L25 |
| Date: | 2026–10–09 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:023785 |
| By: | Yuichi FURUKAWA (Chuo University and RIETI); Tat-kei LAI (IESEG School of Management, Univ. Lille, CNRS, UMR 9221 - LEM - Lille Economie Management); Sumiko NIWA (Wakayama University) |
| Abstract: | This study offers a monetary growth theory that can explain the declining business dynamism observed over the past few decades in some developed countries by developing a new R&D-based growth model; the main departure from existing models is the introduction of an entry cost after innovation and an endogenous survival investment that is subject to a cash-in-advance constraint. Due to this, in our model, the entry/exit rates and firm age distribution are all endogenous. The core finding is that, theoretically, the nature of business dynamism at the macro level essentially depends on nominal factors. Specifically, lower inflation leads to declining business dynamism, characterized by lower entry and exit rates and a maturity bias in the firm age distribution, if the entry cost is sufficiently high. Empirically, we also find supportive evidence that, among a set of European countries, firm entry/exit rates are positively associated with nominal interest rates and inflation rates. Then, calibrating the model to the E.U. economy, we verify that lower inflation leads to declining business dynamism under empirically plausible values of entry, exit, and inflation rates. |
| Keywords: | Cash-in-advance constraint, inflation, firm dynamics, R&D-based growth |
| JEL: | E40 O31 O34 O41 |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:ies:wpaper:e202602 |
| By: | Martin Aragoneses; Young Soo Jang; Amir Sufi |
| Abstract: | Venture capital specializes in the financing of customer capital intensive firms—firms with higher sales and marketing expense to revenue ratios, a higher wage bill for sales and marketing employees, and a higher tendency to apply for trademarks—and they do so more than other financial intermediaries. Venture capitalists target high customer capital industries with low knowledge capital but avoid high knowledge capital industries that lack customer capital. Firms tilt investment toward customer capital leading up to the initial venture capital investment, after which their scale accelerates rapidly. Venture capitalists focus on financing customer capital because such investments require tolerance for substantial risks of failure in pursuit of extreme upside potential, as characterized by power law returns. This return profile fits customer capital investments more closely than investments in knowledge capital. Venture capitalists that sprinkle small investments across a large number of firms, colloquially referred to as the “spray and pray” strategy, target customer capital industries for investment, whereas venture capitalists that commit larger amounts to a small number of firms target knowledge capital industries. The venture capital focus on customer capital reflects a shift away from its traditional focus on knowledge capital intensive firms over the past 30 years. |
| JEL: | G2 G24 G3 G32 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:35919 |
| By: | Karin Klieber (Oesterreichische Nationalbank, Monetary Policy); Michael Sigmund (Oesterreichische Nationalbank, Research Section); Maria Teresa Valderrama (Oesterreichische Nationalbank, Economic Analysis Division) |
| Abstract: | We study how monetary policy affects firm-level total factor productivity in the presence of financial frictions using a panel of Austrian non-financial firms. A dynamic firm model and causal empirical framework show that tighter monetary policy reduces productivity-enhancing investment and firm-level TFP. The effects are stronger for highly leveraged firms and are more pronounced for persistent changes in financing conditions than for transitory highfrequency policy surprises. |
| Keywords: | total factor productivity, monetary policy shocks financial frictions |
| Date: | 2026–10–07 |
| URL: | https://d.repec.org/n?u=RePEc:onb:oenbwp:284 |
| By: | Jeremy Pearce |
| Abstract: | From the Great Recession until 2019, U.S. labor productivity growth disappointed. Nonfarm-business output per hour grew about 1 percent a year from 2010 to 2019, down from 3 percent in the late 1990s. This slowdown was especially pronounced in manufacturing, and it coincided with a slowdown in the growth of revenue per worker among public firms. However, since 2019, growth has picked up to twice the 2010s rate, around 2 percent. In this post, I use data from firms’ 10-K filings to unpack this recent acceleration. I first show that the acceleration appears in public firms’ revenue per worker, then document how the gains went into profit margins, and finally, what firm characteristics predicted significant profit margin increases. The increase in profit margins is consistent with ongoing declines in the labor share of output. |
| Keywords: | productivity; markups; innovation |
| JEL: | L2 O3 |
| Date: | 2026–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fednls:103947 |
| By: | Tarikua Erda |
| Abstract: | Disasters devastate economies, yet productivity can improve in their wake. Why? Using confidential plant-level microdata from the US Census Bureau and an event study design, I trace the creative destruction process that follows large federally declared floods. Exits are concentrated among the least productive plants, whose used machines are then acquired by high-productivity entrants. Survivors upgrade their machinery as they rebuild and see productivity gains. Federal disaster spending facilitates this process by expanding financing access for nimble young and small firms that disproportionately fuel productive reallocation. Without it, financing constraints stifle creative destruction and productivity declines. Ultimately, the relative income gains from federal disaster assistance generate tax revenues far exceeding the policy's upfront cost, making it both efficiency-enhancing and fiscally sound. My findings reveal a novel allocative efficiency channel through which government spending supports post-disaster recovery, with critical implications for a warming world. |
| Keywords: | Natural Disasters; Disaster Aid; Firm Dynamics; Creative Destruction; Allocative Efficiency |
| JEL: | Q54 H84 R11 L26 |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:cen:wpaper:26-52 |
| By: | Antonio Minniti (Department of Economics, University of Bologna); Klaus Prettner (Department of Economics, Vienna University of Economics and Business); Francesco Venturini (Department of Economics, University of Urbino) |
| Abstract: | We study whether AI innovation changes labor-market polarization by weakening the relative position of high-skilled workers. We develop a CES production framework showing how AI affects the wage-cost ratio between high- and low skilled workers through wage and employment margins. We test the model's predictions using European regional labor-market data and find that AI reduces the relative wage-cost ratio by nearly 7 percent on average, with effects broadly split between wage and employment adjustments. These results are primarily driven by regions in countries highly specialized in AI technologies. Overall, our evidence suggests that AI may counteract the polarization effects associated with over two centuries of technological change. |
| Keywords: | AI, Wage-cost ratio, Employment, CES, DiD |
| JEL: | O3 R1 |
| Date: | 2026–10 |
| URL: | https://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp400 |