Small Business Management http://lists.repec.org/mailman/listinfo/nep-sbm Small Business Management 2026-05-11 Unleashing productivity growth in the age of digitalisation: Evidence from German SMEs https://d.repec.org/n?u=RePEc:zbw:zewdip:340839&r=&r=sbm Recent literature has increasingly focused on deciphering the modern productivity puzzle, with particular attention given to the link between digital technologies and firm-level productivity. So far, much of this research has primarily focused on large and publicly listed firms. Leveraging a panel dataset covering German small- and medium-sized enterprises (SMEs) over the period 2016 to 2021, we investigate whether digitalisation can help revive the sluggish productivity growth and narrow the gap between productivity frontrunners and laggards. We measure digitalisation through firms' digital capital stocks (DK) that we derive from a broad measure of digitalisation expenditures. Building on an augmented Cobb-Douglas production function, we examine the relationship between DK and labour productivity (LP ). Our findings show that higher DK is positively associated with higher LP levels, with the effect being even stronger for firms that are already more digitally advanced. Moreover, higher digitalisation expenditures appear to be related to narrowing the productivity gap between laggards and the frontier. Bertschek, Irene Erdsiek, Daniel Niebel, Thomas Sack, Robin Zimmermann, Volker Heterogeneity of Digitalisation, Productivity, Firm-level Data 2026 Product and Process Innovation: Determinants and Dynamic Effects on Firm Growth https://d.repec.org/n?u=RePEc:ime:imedps:25-e-18&r=&r=sbm The invention of new goods or services, called product innovation, and improvements in production processes, called process innovation, can have distinct impacts on firm performance. By integrating firm-level innovation survey data with financial panel data in Japan, our empirical analysis yields two key findings. First, the increasing prevalence of process innovation over product innovation has been observed over the past two decades. Second, higher market growth stimulates product innovation, which, in turn, contributes to growth in firm sales and employment over several years. In contrast, no such patterns are observed for process innovation. These results suggest that there may be a positive feedback loop between product innovation and firm growth. Yojiro Ito Harumasa Shirakawa Economic Growth, Productivity, Product Innovation, Process Innovation 2025-12 The Productivity Paradox of Corporate Taxation: A Nonlinear Tale of Growth and Constraints https://d.repec.org/n?u=RePEc:mag:wpaper:26006&r=&r=sbm This paper investigates the relationship between corporate income tax rates (CITR) and firm-level productivity growth using AMADEUS data of 304, 410 observations from 79, 842 European firms from 2006 to 2019. The results imply a robust non-linear relationship: higher CITRs are positively associated with productivity growth for high-productivity firms near the technological frontier and negatively associated with the productivity catch-up of less productive firms. Heterogeneity tests suggest a stronger productivity response to tax rate changes of small and medium-sized enterprises (SMEs) and domestic firms, while I do not find a significant productivity response to tax rate changes for large and multinational firms. The main findings are robust across various productivity estimation methods and model specifications and challenge the conventional view that higher business tax rates have a linear and negative effect on productivity growth. The paper contributes to the ongoing debate about the role of corporate taxation in shaping economic competitiveness and long-term growth. Hang T.T. Nguyen 2026-01 Population–employment dynamics in the European Union: Does innovation lead or follow? https://d.repec.org/n?u=RePEc:jau:wpaper:2026/08&r=&r=sbm This article examines the interaction between innovation and employment and population dynamics through the development of a system of simultaneous equations. The model is applied to a panel dataset of 271 European NUTS-2 regions. The results reveal strong bidirectional feedbacks between innovation and employment, while population dynamics operate indirectly through employment rather than exerting a direct effect on innovation. Innovation is found to follow jobs rather than people, indicating that the concentration of economic activity and labor interactions, not demographic size per se, constitute the primary drivers of regional innovative capacity. These mutually reinforcing dynamics give rise to virtuous and vicious cycles that contribute to persistent regional disparities. By opening the black box of employment–population–innovation interactions, the paper provides a structural foundation for designing more effective population, innovation, and employment policies. In particular, the analysis demonstrates that policies targeting a single dimension, whether business climate, quality of life, or innovation support, are unlikely to succeed in isolation. Luisa Alamá-Sabater Joan Crespo Miguel Ángel Márquez Emili Tortosa-Ausina innovation, population-employment dynamics, European Union, NUTS2, spatial effects, territorial development 2026 The Microstructure of AI Diffusion: Evidence from Firms, Business Functions, and Worker Tasks https://d.repec.org/n?u=RePEc:nbr:nberwo:35141&r=&r=sbm Using novel, nationally representative data from the 2026 AI supplement to the U.S. Census Bureau’s Business Trends and Outlook Survey (BTOS), we characterize AI diffusion across three layers: firm-wide adoption, business-function deployment, and worker-task use. During Nov 2025–Jan 2026, 18% of firms used AI in at least one function (32%, employment-weighted), with adoption expected to reach 22% within six months. Use is concentrated in large firms and knowledge-intensive sectors, reaching 50%–60% (60%–70%, employment-weighted) among very large firms in Information, Professional Services, and Finance. Among adopters, scope remains limited: 57% use AI in three or fewer functions, most often Sales and Marketing (52%), Strategy (45%), and IT (41%). Worker-level use appears in 23% (41%, employment-weighted) of firms, primarily for writing, document analysis, and information search; 65% restrict use to three or fewer tasks. Evidence suggests both top-down and bottom-up diffusion: worker use can occur without firm adoption, and vice versa. Most firms (66%) use AI for task augmentation, while employment reductions are rare (2%). Regression results show a positive relationship between firm performance and AI integration breadth. However, functional deployment and operational investment are associated with employment declines, while worker-task use is not once these factors are controlled for. Kathryn Bonney Cory L. Breaux Emin Dinlersoz Lucia S. Foster John C. Haltiwanger Aditya A. Pande 2026-04 Digital Transformation and Innovation in China https://d.repec.org/n?u=RePEc:uwa:wpaper:26-02&r=&r=sbm This paper presents a review of the nexus between digital transformation and innovation using evidence from China. It explores the general literature in this field as well as China-specific studies. The trend of digital transformation and innovation is assessed by using Chinese and global data. It also provides new evidence about the nexus between digital transformation and innovation using Chinese regional data. Yanrui Wu digital transformation, innovation, measurement, nexus, Chinese regions, global perspectives 2026 Rebuilding scale-up support policies: Toward an integrated framework https://d.repec.org/n?u=RePEc:zbw:kdifoc:340872&r=&r=sbm As firms rapidly lose dynamism beyond the early stage, resolving their growth bottlenecks has emerged as a critical policy priority. Empirical analysis shows that successful scale-up is closely tied to R&D investment, AI adoption, and exports in manufacturing, whereas brand strength and design capabilities are key drivers in services. This highlights the limitations of single-track, R&D-centric support and the greater effectiveness of coordinated policy mixes based on firm-specific growth bottlenecks. Achieving this requires pivoting toward a more effective model-one that brings scale-up programs under integrated management and overhauls the performance evaluation framework. Kim, Minho 2026 Analyzing Success Factors in the Independent Workforce Program (TKMP) for First-Time Entrepreneurs in Indonesia https://d.repec.org/n?u=RePEc:gtr:gatrjs:jber277&r=&r=sbm " Objective - Unemployment is a major issue in developing countries, including Indonesia, particularly among young people aged 15–24. One government initiative to address this is the Early-Stage Independent Workers (Tenaga Kerja Mandiri Pemula, TKMP) program by the Ministry of Manpower, which provides business mentoring and support to first-time entrepreneurs. Methodology - However, the program's effectiveness remains debated, as the needs of young entrepreneurs vary widely and are often unmet by general training and support structures. This study aims to identify the key factors influencing the success of TKMP participants, using quantitative and qualitative methods. Findings - The analysis employed descriptive statistics and linear regression to examine the impact of five independent variables, such as business capital, business location, brand, promotion, and entrepreneurial commitment, on business success. Using linear regression, the results indicate that Business Promotion has the strongest influence on business success, with a coefficient of 0.338, followed by Entrepreneurial Commitment at 0.201 and Business Location at 0.139. Conversely, business capital and brand identity had no statistically significant impact on business success. Novelty - However, other factors such as motivation, marketing skills, networking capabilities, and geographical conditions demonstrated notable contributions to entrepreneurial performance. The primary challenges identified in the program include bureaucratic complexity in the fund-disbursement process and participants' limited understanding of the program's operational mechanisms. Type of Paper - Empirical" Sri Susilawati Islam Linear factors, Success factors, TKMP, young entrepreneurs 2026-06-30 When Credit Growth Diverges: Common Dynamics and Regional Heterogeneity in Italy https://d.repec.org/n?u=RePEc:ags:feemwp:399465&r=&r=sbm 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. Barbieri, Claudio Guerini, Mattia Napoletano, Mauro Financial Economics, Risk and Uncertainty 2026-05-04 Public Administration Digitalisation and Microenterprise Productivity in India https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/086&r=&r=sbm We find that public administration digitalisation, carried out state-by-state in India between 2010 and 2015, led to an improvement in micro-enterprise productivities, based on the Unincorporated Non-Agricultural Enterprises Surveys. We categorise the digitalisation of public administration into six groups: tax filing and payments, construction permits, environment and labour regulations, inspections, commercial disputes, and single-window systems. States are ranked according to the subsets of digitalisation carried out by them. Using the difference-in-difference estimations with propensity score matching, we find that the average firm-level productivities have risen in the states carrying out more digitalisation. There, also, dispersions in productivities have become narrower. Somnath Sharma Mr. Kenichi Ueda Productivity growth; productivity dispersion public administration digitalisation; business environments reforms; propensity score matching 2026-05-01