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on Small Business Management |
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Issue of 2011‒09‒05
thirteen papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Andersson, Martin (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Braunerhjelm, Pontus (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Thulin, Per (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology) |
| Abstract: | Schumpeter claimed the entrepreneur to be instrumental for creative destruction and industrial dynamics. Entrepreneurial entry serves to transform and revitalize industries, thereby enhancing their competiveness. This paper investigates if entry of new firms influences productivity amongst incumbent firms, and the extent to which altered productivity can be attributed sector and time specific effects. Implementing a unique dataset we estimate a firm-level production function in which the productivity of incumbent firms is modeled as a function of firm attributes and regional entrepreneurship activity. The analysis finds support for positive productivity effects of entrepreneurship on incumbent firms, albeit the effect varies over time, what we refer to as a delayed entry effect. An immediate negative influence on productivity is followed by a positive effect several years after the initial entry. Moreover, the productivity of incumbent firms in services sectors appears to be more responsive to regional entrepreneurship, as compared to the productivity of manufacturing firms. |
| Keywords: | entrepreneurship; entry; business turbulence; incumbent firms; productivity; region; business dynamics |
| JEL: | D20 L10 L26 O31 R11 |
| Date: | 2011–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0256&r=sbm |
| By: | Gebreeyesus, Mulu (UNU-MERIT); Mohnen, Pierre (UNU-MERIT, Maastricht University) |
| Abstract: | This study focuses on innovation in a cluster of informal shoemaking firms in Ethiopia - namely the Mercato footwear cluster. It examines how differently those firms are embedded in networks and how heterogeneous they are in absorptive capacity, and how this heterogeneity affects their innovation performance. Business interactions with buyers, suppliers and other producers are the major channels through which knowledge flows into the cluster. These business networks are mainly built on trust and long-term relationships and tend to be selective. The study reveals that despite homogeneity in social background the firms in the cluster behave and perform differently. Based on econometric analysis we document a positive and strong effect of local network position and absorptive capacity on innovation performance. |
| Keywords: | industrial clusters, networks, innovation performance, informal sector, Africa, Ethiopia |
| JEL: | O17 O31 O33 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2011043&r=sbm |
| By: | Priit Vahter; Jaan Masso |
| Abstract: | The emerging literature on the characteristics of innovation processes in the service sector has paid relatively little attention to the links between innovation and productivity. In this paper we investigate how the innovation-productivity relationship differs across various subbranches of the service sector. For the analysis we use the CDM structural model consisting of equations for innovation expenditures, innovation output, productivity and exports. We use data from the community innovation surveys for Estonia. We show that innovation is associated with increased productivity in the service sector. The results indicate surprisingly that the effect of innovation on productivity is stronger in the less knowledge-intensive service sectors, despite the lower frequency of innovative activities and the results of earlier literature. Non-technological innovation only plays a positive role in some specifications, despite its expected importance especially among the service firms. An additional positive channel of the effects of innovation on productivity may function through increased exports. |
| Keywords: | innovation, services, productivity |
| JEL: | O31 O33 L80 |
| Date: | 2011–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2010-1012&r=sbm |
| By: | Lucio Cassia; Tommaso Minola; Stefano Paleari |
| Abstract: | The objective of this article is to analyze the relationship between entrepreneurship and change in technological domains, with the focus on possible causal relations in both directions. It aims at investigating how technological changes generate opportunities that entrepreneurs or entrepreneurial organizations can properly exploit, and shedding light on how entrepreneurial behavior can be a promoter of change in both technology-intensive and technology-adopting businesses. Finally, we contribute to the literature on technology entrepreneurship by suggesting an explicit theoretical relationship between innovation dynamics (or techniques) and the entrepreneurial behavior of firms. |
| Keywords: | technology entrepreneurship, technological change, knowledge-base innovation, entrepreneurial orientation |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:brh:wpaper:1103&r=sbm |
| By: | Marco Corsino; Roberto Gabriele; Sandro Trento |
| Abstract: | This paper empirically investigates gross job flows and the growth patterns of continuing limited liability companies in Italy over the period 1996-2004, using original data on work forces and other characteristics of the firm. The descriptive analysis reveals that the magnitude of gross job flows among small and medium-sized companies in Italy is lower than what observed in Anglo-Saxon countries, but it is consistent with evidence for the Euro area. Alongside, the magnitude of job flows significantly shrunk in the aftermath of the economic downturn in 2001: firms fared worse than in the late nineties and the labour market became less efficient in allocating job opportunities. The econometric analysis shows that size negatively affects firms. net employment growth, even though the negative correlation vanishes among companies with more than 24 employees. The impact of age on growth is complex: new ventures and firms that are at most 14 years old outperform the average firm in the sample. On the contrary, age does not have any bearing on the growth of units aged 15 years and more, and it even represents a burden among the oldest firms in the sample. |
| Keywords: | Gross job flows, firm growth, firm size, firm age |
| JEL: | J62 L25 L60 |
| Date: | 2011–07 |
| URL: | http://d.repec.org/n?u=RePEc:trt:disawp:1015&r=sbm |
| By: | Priit Vahter |
| Abstract: | This paper studies learning-by-exporting, based on survey data of knowledge flow indicators. Most of the earlier related papers investigate the effects of exporting on productivity of firms, and often find little evidence of learning effects. This study looks more in detail into the mechanism of these effects. It investigates whether exporting is associated with increase in intensity of knowledge flows to the firm from the firm’s clients, relative to other knowledge sources. I use measures of learning about the new technologies from two pooled innovation surveys and firm level exporting data of manufacturing firms in Estonia. Unlike the majority of earlier studies that use productivity data, I find evidence consistent with learning-by-exporting. Exporting in the past is associated with more learning from the firm’s clients in next periods. |
| Keywords: | exporting, learning, knowledge transfer, Central and Eastern Europe |
| JEL: | F12 L1 |
| Date: | 2011–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:wdi:papers:2010-1011&r=sbm |
| By: | John P. Weche Geluebcke (Institute of Economics, Leuphana University Lueneburg, Germany) |
| Abstract: | This study provides first comprehensive analyses of foreign-controlled enterprises in the German service sector based on new micro data from official statistics. Various performance measures were examined by comparing unconditional and conditional means and quantile regression techniques were applied. Results reveal persistently superior performance for foreign-controlled affiliates when compared to German-owned affiliates. In contrast, the relationship for profitability is exactly the opposite. Labor productivity becomes insignificant when the comparison group consists of domestically-owned affiliates with a high degree of internationalization. A breakdown by country of origin shows that European affiliates pay lower wages and export less compared to other foreign affiliates and that there is no productivity advantage in favor of US firms like in manufacturing. |
| Keywords: | foreign ownership, firm performance, inward FDI, service sector, multinational enterprise |
| JEL: | F15 F21 F23 |
| Date: | 2011–08 |
| URL: | http://d.repec.org/n?u=RePEc:lue:wpaper:213&r=sbm |
| By: | Narula, Rajneesh (Henley Business School, University of Reading); Santangelo, Grazia D. (Facoltà di Scienze Politiche, University of Catania) |
| Abstract: | This paper takes a closer look at the role of location advantages in the spatial distribution of MNE R&D activity. In doing so, we have returned to first principles by revisiting our understanding of L and O advantages and their interaction. We revisit the meaning of L advantages, and offer a succinct differentiation of L advantages. We emphasise the importance of institutions, and flesh out the concept of collocation L advantages, which play an important role at the industry and firm levels of analysis. Just because a country possesses certain L advantages when viewed at a macro-level, does not imply that these are available to all industries or all firms in that location without differential cost. When these are linked to the distinction between location-bound and non location-bound O advantages, and we distinguish between MNEs and subsidiaries it allows for a clearer understanding of the MNE's spatially distributed activities. These are discussed here in the context of R&D, which - in addition to the usual uncertainties faced by firms - must deal with the uncertainties associated with innovation. Although prior literature has sometimes framed the centralisation/decentralisation, spatial separation/collocation debates as a paradox facing firms, when viewed within the context of the cognitive limits to resources, the complexities of institutions, and the slow pace of the evolving specialisation of locations, these are in actuality trade-offs firms must make. |
| Keywords: | FDI, foreign investment, direct investment, multinationals, transnational corporations, MNEs, eclectic paradigm, collocation, locational advantage, country specific advantages |
| JEL: | F23 L52 O14 O19 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:unumer:2011045&r=sbm |
| By: | De Silva, Dakshina G.; McComb, Robert P. |
| Abstract: | If localization economies are present, firms within denser industry concentrations should exhibit higher levels of performance than more isolated firms. Nevertheless, research in industrial organization that has focused on the influences on firm survival has largely ignored the potential effects from agglomeration. Recent studies in urban and regional economics suggests that agglomeration effects may be very localized. Analyses of industry concentration at the MSA or county-level may fail to detect important elements of intra-industry firm interaction that occur at the sub-MSA level. Using a highly detailed dataset on firm locations and characteristics for Texas, this paper analyses agglomeration effects on firm survival over geographic areas as small as a single mile radius. We find that greater firm density within very close proximity (within 1 mile) of firms in the same industry increases mortality rates while greater concentration over larger distances reduces mortality rates. |
| Keywords: | Firm Survival; Agglomeration; Localization; and Knowledge Externalities |
| JEL: | O18 R12 |
| Date: | 2011–08–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:32906&r=sbm |
| By: | Lucio Carlos Friere-Gibb; Nielsen Kristian |
| Abstract: | The entrepreneurial dynamics of urban and rural areas are different, and this paper explores ’individual creativity’ and social network factors in both places. The probabilities of becoming an entrepreneur and of surviving are analyzed. The results are based on longitudinal data combined with a questionnaire, utilizing responses from 1,108 entrepreneurs and 420 non-entrepreneurs. Creativity is only found to be relevant for start-up in urban areas, but it does not influence survival in any of the two areas. The social network matters, in particular in rural areas. By combining the person and the environment, common entrepreneurship beliefs can be questioned and entrepreneurship theory benefited. |
| Keywords: | Entrepreneurship; Urban; Rural |
| JEL: | L26 O18 |
| Date: | 2011 |
| URL: | http://d.repec.org/n?u=RePEc:aal:abbswp:11-01&r=sbm |
| By: | Bergman, Karin (CIRCLE, Lund University); Ejermo, Olof (CIRCLE, Lund University) |
| Abstract: | Sweden has seen a rise in business R&D intensities and dependence on exports to make its economy grow since the early 1990s. This paper examines the role of foreign sales for stimulating R&D as compared to a domestic sales effect. In line with the literature, we find in cross-sections from 1991 to 2001 that R&D rises proportionally to sales. But among manufacturing firms foreign sales is distinctly more strongly associated with an increase in R&D than domestic sales. For service firms domestic sales are as important as foreign. The results are consistent with the hypotheses that manufacturing firms more easily separate production from R&D, that they economize on transport costs and are subject to learning-by-export effects. In general, the results highlight the dependence and the role of openness for stimulating R&D in a small economy, especially among manufacturing firms. |
| Keywords: | R&D; size; exports; Sweden |
| JEL: | O32 |
| Date: | 2011–08–23 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2011_005&r=sbm |
| By: | Susan Sunila Sharma; Paresh Kumar Narayan; Xinwei Zheng |
| Abstract: | In this paper, using time series data for the period 2 January 1998 to 31 December 2008, for 560 firms listed on the NYSE, we examine whether firm volatility is related to market volatility. The main contribution of this paper is that we develop the analytical framework motivating the firm-market volatility relationship. We unravel three new findings on volatility. First, we discover significant evidence of common volatility; for 12 out of 14 sectors, market volatility has a statistically significant effect on firm volatility for at least 50 percent of firms. Second, we discover significant evidence of size effects: for small sized firms, there is weak evidence of commonality in volatility, while for large sized firms there is high evidence (as much as 75 percent of firms) of commonality in volatility. Third, we find that market volatility predicts firm volatility for firms belonging to five of the 14 sectors. |
| Keywords: | Volatility; Size Effects; Firms; Market |
| JEL: | G15 |
| Date: | 2011–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:dkn:ecomet:fe_2011_02&r=sbm |
| By: | Luosha Du (University of California, Berkeley); Ann Harrison (World Bank); Gary Jefferson (Department of Economics, Brandeis University) |
| Abstract: | We investigate how institutions affect productivity spillovers from foreign direct investment (FDI) to China’s domestic industrial enterprises during 1998-2007. We examine three institutional features that comprise aspects of China’s “special characteristics”: (1) the different sources of FDI, where FDI is nearly evenly divided between mostly Organization for Economic Co-operation and Development (OECD) countries and the region known as “Greater China”, consisting of Hong Kong, Taiwan, and Macau; (2) China’s heterogeneous ownership structure, involving state- (SOEs) and non-state owned (non-SOEs) enterprises, firms with foreign equity participation, and non-SOE, domestic firms; and (3) industrial promotion via tariffs or through tax holidays to foreign direct investment. We also explore how productivity spillovers from FDI changed with China’s entry into the WTO in late 2001. We find robust positive and significant spillovers to domestic firms via backward linkages (the contacts between foreign buyers and local suppliers). Our results suggest varied success with industrial promotion policies. Final goods tariffs as well as input tariffs are negatively associated with firm-level productivity. However, we find that productivity spillovers were higher from foreign firms that paid less than the statutory corporate tax rate. |
| Date: | 2011–04 |
| URL: | http://d.repec.org/n?u=RePEc:brd:wpaper:33&r=sbm |