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on Small Business Management |
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Issue of 2012‒10‒27
thirteen papers chosen by Joao Carlos Correia Leitao University of Beira Interior and Technical University of Lisbon |
| By: | Abiodun Egbetokun (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena); Ivan Savin (Graduate College "Economics of Innovative Change", Friedrich Schiller University Jena) |
| Abstract: | Cooperation can benefit and hurt firms at the same time. An important question then is: when is it better to cooperate. And how can an appropriate partner be selected? In this paper we present a model of inter-firm cooperation driven by cognitive distance, appropriability conditions and external knowledge. Absorptive capacity of firms develops as an outcome of the interaction between absorptive R&D and cognitive distance from voluntary and involuntary knowledge spillovers. Thus, we offer a revision of the original model by Cohen and Levinthal (1989) accounting for recent empirical findings and explicitly modeling absorptive capacity within the framework of interactive learning. We apply that to the analysis of firms' cooperation and R&D investment preferences. While the focus of this paper is limited to a static scenario, where the cognitive distance between cooperating firms is fixed and given exogenously, in Savin and Egbetokun (2012) we address the dynamic approach and provide more extensive simulation results. |
| Keywords: | inter-firm cooperation, absorptive capacity, cognitive distance, innovation, knowledge spillovers |
| JEL: | C63 D83 L14 O32 O33 |
| Date: | 2012–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2012-056&r=sbm |
| By: | André van Stel; Lorraine Uhlaner; Haibo Zhou; Valerie Duplat |
| Abstract: | This paper focuses on certain drivers of SME sales growth related to knowledge and innovation. Building on the dynamic capabilities literature, we test whether two organizational capabilities (external sourcing and employee involvement in renewal activities) predict sales growth, and if so, whether such effects are mediated by process and/or product innovation. Based on survey data from a panel study of Dutch SMEs, and controlling for several firm characteristics (firm size, sector, age and family business), we conclude that external sourcing has direct effects on both product and process innovation, with an indirect effect (mediated by process innovation) on sales growth. In line with our hypothesis development, we also find that employee involvement, while positively affecting process innovation, has a negative effect on sales growth. Firm size moderates the effects of two of the variables (external sourcing and product innovation) on sales growth, with more positive effects found for the smallest firms, results supporting the nimbleness (versus resource-based) view. |
| Date: | 2012–10–11 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201211&r=sbm |
| By: | André van Stel; José Maria Millan; Concepcion Roman |
| Abstract: | In order to mitigate the negative consequences of the current economic and financial crisis, it is of utmost importance that existing jobs remain intact as much as possible. In this respect, it is crucial that firms which employ personnel, survive. In this paper we investigate the role of the technological environment in determining the survival chances of employer entrepreneurs, defined as ownermanagers of firms which employ personnel. We estimate survival models to analyse durations as an employer entrepreneur, using micro panel data from EU-15 countries drawn from the European Community Household Panel (ECHP). As indicators for the technological environment we use a country’s R&D expenditures, a country’s employment share of high-tech and knowledge-intensive sectors, and a country’s number of patent applications to the European Patent Office. We find strong support for a positive relationship between these indicators of the technological environment in country j and year t and survival chances of employer entrepreneurs in that same country and year. Our analysis also suggests that a selection effect may be part of the explanation in the sense that in a more advanced technological environment, relatively more ‘high-quality’ individuals select into entrepreneurship. An implication of our novel finding is that innovation policy may contribute to survival of employer entrepreneurs, thereby safeguarding wage jobs in Europe, and achieving a lower waste of resources associated with firm exit. |
| Date: | 2012–10–09 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201208&r=sbm |
| By: | Jan de Kok; Haibo Zhou; Chantal Hartog; Peter van der Zwan |
| Abstract: | Fast-growing firms are considered as the central drivers of job creation in the economy. There is an abundance of literature on the separate subjects of firm growth and firm survival. However, the relationship between survival and growth is neglected. Using the Dutch Longitudinal Enterprise Database 1993-1999, we investigate whether high employment growth rates in the recent past have a negative impact on firm survival. Our results do not find support for this relationship for the population of enterprises with a stable or growing employment development. Thus, we find no evidence that policies stimulating fast-growing firms may result in more firm deaths. |
| Date: | 2012–10–18 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201209&r=sbm |
| By: | Li, QC; Tether, BS; Mina, A |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:imp:wpaper:9793&r=sbm |
| By: | André van Stel; Andrew Burke; José Maria Millan; Concepcion Roman |
| Abstract: | Start-up size is a key strategic decision for entrepreneurs. Should entrepreneurs start up close to minimum efficient scale or should they take less risks and start-up on a smaller scale? Previously, this strategic decision appeared to be one of simply making a choice between a higher risk/reward larger start-up versus a lower risk/reward smaller scale start-up. However, recent research on the relationship between risk management and performance (Burke, 2009) indicates that in situations of greater uncertainty and where innovation is incremental, a lower risk small start-up size can enable greater reward through enhanced post start-up flexibility and agility. In this paper we provide the first statistical test of the efficacy of start-up size strategies. We focus on employer businesses that provide jobs. We find that employer businesses that originally adopted a small scale (own-account) start-up strategy have higher survival chances and entrepreneurial incomes than employer businesses that employed personnel immediately from start-up. We also find that prior entrepreneurial experience positively affects firm survival and entrepreneurial incomes. Given the high failure rates among start-ups and the associated difficulty for new enterprises to create sustainable jobs, the research results highlight how strategic choice in relation to firm start-up size and risk management can have an important bearing on new venture performance. |
| Date: | 2012–08–29 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201207&r=sbm |
| By: | Alberto Rinaldi |
| Abstract: | The Emilia-Romagna region is an exemplary case of industrial development based on systems of small and medium-sized enterprises. Since the 1980s it has become a common reference in the international debate on Post-Fordism. This paper analyzes the role of small and medium-sized enterprises in the development of region’s economy. After presenting a short profile of the dynamics and structural features of the region’s industrialization, the paper reconstructs the debate among economists and politicians about the role of small and medium-sized enterprises in the Emilian economy: from the dominant positions in the mid-20th century economic theory that saw them as unavoidably backward and inefficient, to Togliatti’s innovative proposal for a strategic alliance between the working class and the small entrepreneurs, the debate on productive decentralization, the discovery of industrial districts up to the more recent analysis on the rise of district lead firms and medium-sized firms of the «forth capitalism» |
| Keywords: | Economia; Pci; Piccole imprese; Emilia-Romagna; |
| JEL: | B2 L6 N9 |
| Date: | 2012–05 |
| URL: | http://d.repec.org/n?u=RePEc:mod:depeco:0684&r=sbm |
| By: | Tanaka, Kiyoyasu; Hashiguchi, Yoshihiro |
| Abstract: | Foreign firms have clustered together in the Yangtze River Delta, and their impact on domestic firms is an important policy issue. This paper studies the spatial effect of FDI agglomeration on the regional productivity of domestic firms, using Chinese firm-level data. To identify local FDI spillovers, we estimate the causal impact of foreign firms on domestic firms in the same county and similar industries. We then estimate a spatial-autoregressive model to examine spatial spillovers from FDI clusters to other domestic firms in distant counties. Our results show that FDI agglomeration generates positive spillovers for domestic firms, which are stronger in nearby areas than in distant areas. |
| Keywords: | China, Foreign investments, International business enterprises, Productivity, FDI, Multinational firms, Spillovers |
| JEL: | C21 F21 F23 R12 R58 |
| Date: | 2012–06 |
| URL: | http://d.repec.org/n?u=RePEc:jet:dpaper:dpaper354&r=sbm |
| By: | Jan de Kok |
| Abstract: | Various studies have indicated the presence of firm size wage gaps and firm age wage gaps in the remuneration of employees. This study shows that a firm size wage gap also exists in the population of Dutch Enterprises with 1 – 100 employees, but that there is no sign of a firm age wage gap. The firm size wage gap can be partially explained by the age and educational level of the employee, as well as by the educational level of the entrepreneur. The usage of performance-related pay also varies with firm size (and not with firm age). This firm size effect can be explained fully by employee tenure (rather than age and education). |
| Date: | 2012–10–16 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h201210&r=sbm |
| By: | Andrea Pozzi (EIEF); Fabiano Schivardi (University of Cagliari, CEPR and EIEF) |
| Abstract: | We disentangle the contribution of unobserved heterogeneity in idiosyncratic demand and productivity to firm growth. We use a model of monopolistic competition with Cobb-Douglas production and a dataset of Italian manufacturing firms containing unique information on firm-level prices to reach three main conclusions. First, demand shocks are at least as important as productivity shocks for firm growth. Second, firms respond to shocks less than a frictionless model would predict, suggesting the existence of adjustment frictions. Finally, the degree of under-response is much larger for TFP shocks. This implies the existence of frictions with differential effects according to the nature of the shock, unlike the typical frictions studied by the literature on factor misallocation. We consider hurdles to firm reorganization as one such friction and show that they hamper firms’ responses to TFP shocks but not to demand shocks. |
| Date: | 2012 |
| URL: | http://d.repec.org/n?u=RePEc:eie:wpaper:1211&r=sbm |
| By: | Wagner, Joachim (Leuphana University, Lueneburg and CESIS, Stockholm) |
| Abstract: | This study uses newly available enterprise level data for firms from manufacturing industries in Germany to test for the link between credit constraints, measured by a credit rating score from the leading credit rating agency Creditreform, and exports. In line with hypotheses from theoretical model we find a positive link between a better credit rating score of a firm and both the probability that the firm is an exporter and a higher share of exports in total sales. This link, though statistically highly significant, is not very strong from an economic point of view. While empirical evidence for the hypothesis that credit constrained firms are less likely to start to export is at best weak, we find no evidence for a statistically significant difference in credit rating scores between firms that stopped to export and firms that continued to export. |
| Keywords: | Credit constraints; exports; Germany |
| JEL: | F14 |
| Date: | 2012–10–15 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0286&r=sbm |
| By: | Bundaleska, Elena; Dimitrova, Makedonka; Nikolovska, Zdenka |
| Abstract: | Corporate governance refers to a set of internal policies, rules, and procedures that a company follows on a regular basis to ensure that it operates in a fair, equitable, and appropriate manner for the benefit of the company, its management and its stakeholders. It is almost always thought about in the context of big publically listed companies. However, it is just as important for privately held, small and medium sized businesses to adhere to good corporate governance policies and practices. One of the reasons being their accountability as key economic drivers and job creators in most of the countries (example: in 2009, there were 27.5 million businesses in the United States, according to US Office of Advocacy estimates`1). As businesses grow and stakeholders increase, good corporate governance becomes even more important, as there are many people with vested interests. Yet many small and medium businesses do not necessarily pay attention to the concepts of corporate governance. Most of them do not even have the necessary structure and knowledge organize and implement it. This Paper discusses how corporate governance applies to small businesses. It explains the mechanisms related to sound corporate governance in big companies, such as well developed and implemented policies, procedures and processes, risk management systems, strategic planning, transparency and disclosure, reporting, employee management systems, etc. and recommends which of these mechanisms may be applicable and effective for small and medium businesses. As there is a buzz among the businesses that legislation requiring small and medium businesses to adhere to similar if not exact rules on corporate governance as big publically listed companies, is being considered, this Paper shall discuss whether the government should impose its will to the small and medium business environment, or leave it up to the discretion of the businesses. As a final note, having discussed all of the above, the Paper shall conclude that every company, no matter what size it is, will see the positive effects of implementing the principles of corporate governance. `1 Kobe, Kathryn. 2007. U.S. Department of Commerce, Census Bureau and Intellectual Trade Administration. www.sba.gov/advo/research/rs299.pdf (accessed September 10, 2011) |
| Keywords: | Corporate governance; small and medium sized businesses; regulation vs. deregulation |
| JEL: | G34 |
| Date: | 2011–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:41971&r=sbm |
| By: | Carlos M. Jardón |
| Abstract: | The innovativeness is a core competence to innovate and therefore enhancing competitiveness, especially in small and medium enterprises (SMEs). Such capability is constrained by internal and external factors. This article discusses how the company combines these factors to improve innovativeness. The company produces a core competence called human resource management and technology from internal intellectual capital. In addition, the company organizes another competency called core resource management and territorial relations from tangible resources associated with territory and intellectual capital as a result of the relationship with the environment. Using partial least squares techniques applied to a sample of small and medium enterprises in a region in northwest Spain is shown that both factors influence innovativeness. This study helps to define what the factors that enhance innovativeness are and how those factors associated company, indicating which the process of building core competencies to improve their innovativeness is. As a result, the article suggests for thought to develop policies to support business innovation. Resumen: La capacidad de innovación es una competencia distintiva que permite innovar y, en consecuencia, potencia la competitividad, especialmente en las pequeñas y medianas empresas (PYME). Dicha capacidad se ve condicionada por factores internos y externos. Este artículo analiza como combina la empresa dichos factores para mejorar la capacidad de innovación. Por un lado, la empresa genera una competencia distintiva denominada gestión de los recursos humanos y tecnológicos a partir del capital intelectual interno. Por otro lado, organiza otra competencia distintiva denominada gestión de los recursos y relaciones territoriales a partir de los recursos tangibles asociados al territorio y del capital intelectual fruto de las relaciones con el entorno. Mediante técnicas de Mínimos cuadrados parciales aplicados en una muestra de pequeñas y medianas empresas en una región del noroeste de España se demuestra que ambos factores influyen en la capacidad de innovación. Este estudio contribuye a delimitar cuales son los factores que potencian la capacidad de innovación y como la empresa asocia esos factores, indicando cual es el proceso de construcción de competencias básicas para mejorar su capacidad de innovación. Como consecuencia, el artículo sugiere elementos de reflexión para elaborar políticas de apoyo a la innovación empresarial. |
| Keywords: | Innovativeness, regional SME, core competency |
| JEL: | M21 M14 M10 |
| Date: | 2012–09 |
| URL: | http://d.repec.org/n?u=RePEc:vig:wpaper:1202&r=sbm |