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on Small Business Management |
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Issue of 2018‒02‒12
twenty papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Ferrando, Annalisa; Lekpek, Senad |
| Abstract: | The way firms finance their investments can potentially explain the heterogeneity of firms in terms of their innovation. We use a novel firm-level survey of the European Investment Bank (EIBIS) which provides information about a wide range of financing sources that firms use to fund their investment activities. The aforementioned survey also reveals a firms' degree of innovativeness. By applying a cluster analysis to group firms using information on their financing decisions, we investigate the link between finance and innovation of EU firms. We identify seven financing clusters to show that the degree of innovativeness (defined in terms of R&D or software investment, R&D and software turnover ratios, and the introduction of new products) increases with the diversification of financial instruments. Firms that use several financing instruments are more likely to invest in R&D and software activities and develop new products compared to firms that use a more limited number of financing instruments. |
| Keywords: | innovation,R&D,internal and external finance,cluster analysis |
| JEL: | D22 G32 O31 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:201802&r=sbm |
| By: | Stephan Brunow; Antonia Birkeneder; Andrés Rodríguez-Pose |
| Abstract: | This paper examines the link between innovation and the endowments of creative and science-oriented STEM - Science, Technology, Engineering and Mathematics ? workers at the level of the firm and at the city-/regional-level in Germany. It also looks into whether the presence of these two groups of workers has greater benefits for larger cities than smaller locations, thus justifying policies to attract these workers in order to make German cities 'smarter'. The empirical analysis is based on a probit estimation, covering 115,000 firm-level observations between 1998 and 2015. The results highlight that firms that employ creative and STEM workers are more innovative than those that do not. However, the positive connection of creative workers to innovation is limited to the boundaries of the firm, whereas that of STEM workers is as associated to the generation of considerable innovation spillovers. Hence, attracting STEM workers is more likely to end up making German cities smarter than focusing exclusively on creative workers. |
| Keywords: | Innovation, Creative workers, STEM workers, Smart Cities, Spillover, Germany |
| JEL: | D22 J82 R12 J21 J24 R23 |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1808&r=sbm |
| By: | Craig Doidge; Kathleen M. Kahle; G. Andrew Karolyi; René M. Stulz |
| Abstract: | Since reaching a peak in 1997, the number of listed firms in the U.S. has fallen in every year but one. During this same period, public firms have been net purchasers of $3.6 trillion of equity (in 2015 dollars) rather than net issuers. The propensity to be listed is lower across all firm size groups, but more so among firms with less than 5,000 employees. Relative to other countries, the U.S. now has abnormally few listed firms. Because markets have become unattractive to small firms, existing listed firms are larger and older. We argue that the importance of intangible investment has grown but that public markets are not well-suited for young, R&D-intensive companies. Since there is abundant capital available to such firms without going public, they have little incentive to do so until they reach the point in their lifecycle where they focus more on payouts than on raising capital. |
| JEL: | G18 G24 G28 G32 G35 K22 L26 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24265&r=sbm |
| By: | Ferrando, Annalisa; Preuss, Carsten |
| Abstract: | We examine the link between corporate financing and investment decisions of European firms by using a novel firm-level survey of the European Investment Bank (EIBIS). The survey provides rich quantitative information of a wide range of financing sources and tangible and intangible investment types for a representative sample of EU28 firms in 2016. We provide new evidence and contribute to previous research in the following ways: first we consider the heterogeneous effect of internal and external finance on different tangible and intangible investment types. Second, our analysis focuses on a broad spectrum of nonfinancial corporations across size classes from different countries. By using a multinomial fractional response model to estimate the finance-investment link, we find that SMEs and large enterprises show a different financing behaviour for their investment activity. The results suggest that SMEs' tangible asset investment is positively related to the use of bank finance, whereas internal finance is preferred for intangible asset investments. |
| Keywords: | tangible and intangible investment,internal and external finance,R&D investment,SME finance,multivariate fractional response model |
| JEL: | D22 E22 G32 L25 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eibwps:201801&r=sbm |
| By: | Junwen Qiu; Wenjian Liu; Ning Ning |
| Abstract: | Based on endogenous economic growth models and the panel data of 31 regions in China, this paper explores the following four questions: Do spatial knowledge spillovers among regions exist? Do spatial knowledge spillovers promote regional innovative activities? What is the radiation range of spatial knowledge spillovers? Do external knowledge spillovers affect the evolution of regional innovations in the long run? The results show that spatial knowledge spillovers exist, and though the range of knowledge spillover is within 1000 kilometers in China, it pushes up regional innovative activities. Moreover, since developing regions benefit more from external knowledge spillovers than developed regions, it leads to the convergence of regional knowledge growth rate. |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:1801.06936&r=sbm |
| By: | Miguel Sanchez-Martinez (European Commission - JRC); Cristiana Benedetti-Fasil (European Commission – JRC); Peder Christensen (European Commission - JRC); Nicolas Robledo-Bottcher (European Commission - JRC) |
| Abstract: | R&D tax credits are currently used by 25 Member States as a means to stimulate R&D investment and, ultimately, economic growth and employment. This paper is a first attempt to provide an in-depth analysis of the structural economic factors that, other things equal, affect or condition the potential macroeconomic impacts of expanding (or start implementing) R&D tax credit schemes. The analysis is based on the European Commission's QUEST III semi-endogenous growth model. Our main conclusion is that, while the short and medium-term impacts of increased R&D tax credits on Member States' GDP and other macroeconomic aggregates are overall significantly positive, there remains space to substantially improve the cost-effectiveness of these policies. |
| Keywords: | R&D tax credits, innovation, economic growth, macroeconomic modelling |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc108931&r=sbm |
| By: | Bekena, Sisay Menji |
| Abstract: | This paper uses World Bank Enterprise Survey 2009 and 2013 panel data for Central Asia and Eastern Europe to estimate the casual effects of firm ownership structure on firm performance measured by the growth rates of sales, labor productivity and employment. The study uses treatment effect models to compute the average treatment effects. Estimation results using propensity score matching show that on average private firms have sales and employment growth rates that are 6 percentage points higher compared to public firms. The effect is statistically significant at conventional significance levels. Labor productivity growth is similar across public and private firms. The key conditional independence assumption necessary for the validity of the matching models is found to be valid and the computed casual effects are consistent across the different treatment effect models. |
| Keywords: | Firm ownership, Treatment Effects, |
| JEL: | D20 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82706&r=sbm |
| By: | Ermias Engida; Mekdim Dereje; Ibrahim Worku; Saba Yifredew; Feiruz Yimer |
| Abstract: | Development of Micro and Small enterprises (MSEs) is one mechanism for alleviating unemployment, especially for women. Ethiopia has developed policy as part of the Growth Transformation and Plan (GTP) to develop MSEs to generate employment at the initial stage and transform the enterprises into medium and large enterprises in the long run. However, contrary to this objective, the growth of these enterprises has been very slow by every standard. This study evaluates the factors behind the slow growth of the enterprises by estimating the enterprise growth model captured by employment growth over the span of the period that the firm has operated. We find that women owners, in particular, face more severe credit, market and working premises constraints. We also find that while enterprise growth is inversely related to initial size, financial literacy and desirable managerial qualities of owners and managers positively contribute to enterprise growth. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:lvl:mpiacr:2017-19&r=sbm |
| By: | Jan-Maarten De Vet; John Huw Edwards (European Commission - JRC); Matteo Bocci |
| Abstract: | The principles of Smart Specialisation are valuable when implementing Blue Growth – an integrated approach towards stimulating the maritime economy. Both concepts pay considerable attention to innovation, young firm formation, bottom-up approaches and value chains. This policy brief builds on presentations and discussions from an S3 Platform Implementation workshop held on 8/9 October 2015 in Las Palmas de Gran Canaria, Canary Islands (Spain). The paper sets out several pathways to building so-called 'Blue Value Nets', notably through: 1) Expanding nets through suppliers and enablers; 2) Sharing infrastructure; and 3) Boosting Blue clusters and networks. All this requires actions from the private sector, by expanding and transforming existing value chains. However, the public sector can support this process also by: a) Enabling competency development and knowledge sharing; b) Use of maritime clusters as a tool to promote Smart Specialisation; c) Stimulating trans-boundary cooperation and; 4) Promoting 'Collaborative Labs'. |
| Keywords: | Smart specialisation, Blue Growth, value chains, value nets, maritime clusters |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc100975&r=sbm |
| By: | Lindholm Dahlstrand Asa (Lund University, Sweden); Jacob Merle (Lund University, Sweden); Sprutacz Maren (European Commission - JRC) |
| Abstract: | The 2016 series of RIO Country Reports analyse and assess the policy and the national research and innovation system developments in relation to national policy priorities and the EU policy agenda with special focus on ERA and Innovation Union. The executive summaries of these reports put forward the main challenges of the research and innovation systems. |
| Keywords: | research and innovation, Sweden, innovation system |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc105928&r=sbm |
| By: | Stefano Breschi (OECD); Julie Lassébie (OECD); Carlo Menon (OECD) |
| Abstract: | The report presents new cross-country descriptive evidence on innovative start-ups and related venture capital investments drawing upon Crunchbase, a new dataset that is unprecedented in terms of scope and comprehensiveness. The analysis employs a mix of different statistical techniques (descriptive graphics, econometric analysis, and machine learning) to highlight a number of findings. First, there are significant cross-country differences in the professional and educational background of start-ups’ founders, notably the share of founders with previous academic experience and in the share of “serial entrepreneurs”. Conversely, the founders’ average age is rather constant across countries, but shows a fair degree of variability across sectors. Second, IP assets, and in particular the presence of an inventor in the team of founders, are strongly associated with start-ups’ success. Finally, female founders are less likely to receive funding, receive lower amounts when they do receive financing, and have a lower probability of successful exit, when other factors are controlled for. |
| Date: | 2018–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:52-en&r=sbm |
| By: | Massimiliano Bratti; Luca De Benedictis; Gianluca Santoni |
| Abstract: | In this paper we highlight a new complementary channel to the business and social network effect à la Rauch (2001) through which immigrants generate increased export flows from the regions in which they settle to their countries of origin: they can become entrepreneurs. Using very small-scale (NUTS-3) administrative data on immigrants’ location in Italy, the local presence of immigrant entrepreneurs (i.e. firms owned by foreign-born entrepreneurs) in the manufacturing sector, and on trade flows in manufacturing between Italian provinces and more than 200 foreign countries, we assess the causal relationship going from diasporas and immigrant entrepreneurs towards export flows. Both the size of the diaspora and the number of immigrant entrepreneurs have a positive, significant and economically meaningful effect on exports. In particular, we find that increasing the stock of (non-entrepreneur) immigrants by 10% would lead to a 1.7% increase in exports in manufacturing, while increasing the number of immigrant entrepreneurs in manufacturing by 10% would raise exports by about 0.6%. |
| Keywords: | Exports;immigrants;gravity;immigrant entrepreneurs;Italy |
| JEL: | F10 F14 F22 R10 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:cii:cepidt:2018-01&r=sbm |
| By: | Levine, Sheen S.; Reypens, Charlotte |
| Abstract: | In many life situations, people choose sequentially between repeating a past action in expectation of a familiar outcome (exploitation), or choosing a novel action whose outcome is largely uncertain (exploration). For instance, in each quarter, a manager can budget advertising for an existing product, earning a predictable boost in sales. Or she can spend to develop a completely new product, whose prospects are more ambiguous. Such decisions are central to economics, psychology, business, and innovation; and they have been studied mostly by modelling in agent-based simulations or examining statistical relationships in archival or survey data. Using experiments across cultures, we add unique evidence about causality and variations. We find that exploration is boosted by three past experiences: When decision-makers fall below top performance; undergo performance stability; or suffer low overall performance. In contrast, individual-level variables, including risk and ambiguity preferences, are poor predictors of exploration. The results provide insights into how decisions are made, substantiating the micro-foundations of strategy and assisting in balancing exploration with exploitation. |
| Keywords: | Exploration, Exploitation, Decision Making, Experiment, Protocol Analysis, Cross-culture |
| JEL: | C93 M14 |
| Date: | 2016–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:82858&r=sbm |
| By: | Bijedić, Teita; Chlosta, Simone; Nielen, Sebastian; Werner, Arndt |
| Abstract: | This study analyses institutional, job-related, and individual antecedents of entrepreneurial activi-ties from a longitudinal perspective. We take a holistic look at the start-up process incorporating entrepreneurial gestation activities (nascent entrepreneurship) and finally business creation (entre-preneurship) by combining two waves of a survey with a time interval of three years. Focusing on researchers reporting an entrepreneurial intention in wave one we found for example that pull factors as motivation to start a business reduce the probability to give up the business idea. Furthermore having generated an invention prevents researchers with a business idea from becoming a so-called "quitter" and pushes them towards starting their own business. |
| Keywords: | Academic Entrepreneurship,Nascent Entrepreneurship,Institutions |
| JEL: | L20 L26 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:ifmwps:0317&r=sbm |
| By: | Pattanaik, Arpita (Indira Gandhi Institute of Development Research); Rajeswari Sengupta (Indira Gandhi Institute of Development Research) |
| Abstract: | In this paper we analyse the effect of business cycle fluctuations on firms' capital structure using a large panel of non-financial firms in India. In particular, we explore the dynamics of firm leverage across business cycle expansions and recessions for financially constrained and unconstrained firms. We find that the leverage of unconstrained firms exhibits counter-cyclical dynamics. Leverage of financially constrained firms does not show any cyclical pattern. These results are robust across different empirical methods of estimation. A healthy financial system is one where all firms are able to access the external debt market especially in a downturn. Our analysis shows that in the Indian financial system, external capital goes only to a certain category of firms. This has important policy implications for further developing the domestic financial markets and institutions. |
| Keywords: | Capital structure, Firm leverage, Financial constraints, Business cycle, Leverage determinants, Indian firms |
| JEL: | E32 G32 G1 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2018-001&r=sbm |
| By: | Chibani Ltaief, Faten; Henchiri, jamel E. |
| Abstract: | This paper aims to analyze whether pecking order theory has a relevant application for family businesses. For this purpose, we compared two series of family and non-family unlisted firms in the French context. Our results indicate that generally the financial behavior of family businesses differs from non-family enterprises. Family business prefer internal financing to external financing and, in the case of external financing, debt is preferred to the capital increase. The Pecking order theory is more appropriate for family businesses than for non-family businesses. |
| Keywords: | Family business - pecking order theory - internal financing gap - france |
| JEL: | G32 |
| Date: | 2016–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:76784&r=sbm |
| By: | Lucia Foster; Cheryl Grim; John Haltiwanger; Zoltan Wolf |
| Abstract: | We examine whether underlying industry innovation dynamics are an important driver of the large dispersion in productivity across firms within narrowly defined sectors. Our hypothesis is that periods of rapid innovation are accompanied by high rates of entry, significant experimentation and, in turn, a high degree of productivity dispersion. Following this experimentation phase, successful innovators and adopters grow while unsuccessful innovators contract and exit yielding productivity growth. We examine the dynamic relationship between entry, productivity dispersion, and productivity growth using a new comprehensive firm-level dataset for the U.S. We find a surge of entry within an industry yields an immediate increase in productivity dispersion and a lagged increase in productivity growth. These patterns are more pronounced for the High Tech sector where we expect there to be more innovative activities. These patterns change over time suggesting other forces are at work during the post-2000 slowdown in aggregate productivity. |
| Date: | 2018–02 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-08&r=sbm |
| By: | Melisande Cardona (European Commission - JRC); Giuditta de Prato (European Commission - JRC); Montserrat Lopez-Cobo (European Commission - JRC); Riccardo Righi (European Commission - JRC); Sofia Samoili (European Commission - JRC) |
| Abstract: | The PREDICT 2017 Factsheets present essential statistical data regarding the performance of the EU ICT sector. They provide figures and tables on general economic and industry trends and R&D performance. These Factsheets are the subject of three reports. This report on ‘Purchasing Power Standard’ and the second report on ‘Data in Current Prices’ present sets of Factsheets with data on each EU Member State, in comparison to the EU average. The third report presents Factsheets on the EU and 12 non-EU countries: Australia, Brazil, Canada, China, India, Japan, Korea, Norway, Russia, Switzerland, Taiwan and the United States. |
| Keywords: | R&D, ICT, innovation, statistics, data collection, estimation, nowcasting, digital economy, ICT industry analysis, ICT R&D and innovation |
| JEL: | O30 O32 O52 C82 |
| Date: | 2017–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc109565&r=sbm |
| By: | Pascal Le Masson (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Armand Hatchuel (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique); Benoit Weil (CGS i3 - Centre de Gestion Scientifique i3 - MINES ParisTech - École nationale supérieure des mines de Paris - PSL - PSL Research University - CNRS - Centre National de la Recherche Scientifique) |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01619983&r=sbm |
| By: | Nicolas Crouzet; Neil R. Mehrotra |
| Abstract: | Drawing on a new, con dential Census Bureau dataset of financial statements of a representative sample of 80000 manufacturing firms from 1977 to 2014, we provide new evidence on the link between size, cyclicality, and financial frictions. First, we only find evidence of lower cyclicality among the very largest firms (the top 1% by size). Second, due to high and rising concentration of sales and investment, the lower sensitivity of the top 1% firms dominates the behavior of aggregate fluctuations. Third, we show that this differential sensitivity does not appear to be driven by financial frictions. The higher sensitivity of the bottom 99% does not disappear after controlling for measures of financial strength, is not statistically significant after identified monetary policy shocks, and does not appear in debt financing flows. Evidence from 3-digit industries suggests a non-financial explanation: the largest 1% of firms are less sensitive due to a more diversified customer base. |
| Keywords: | Firm size, business cycles, financial accelerator. |
| JEL: | E23 E32 G30 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:18-09&r=sbm |