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on Small Business Management |
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Issue of 2020‒03‒09
nineteen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Athreye, Suma (Essex Business School); Fassio, Claudio (CIRCLE, Lund University); Roper, Stephen (Warwick Business School) |
| Abstract: | In order to observe a patent application at the firm level two conditions need to be met: new products need to be of patentable quality, which depends both on the degree of novelty of innovations and on the total number (portfolio) of innovations; and the benefits of patents need to be higher than the costs of owning them. Analyzing the patent propensity of small and large UK firms using a novel innovation-level survey (the SIPU survey) linked to Community Innovation Survey data we find that when we consider the whole innovation portfolio smaller firms do patent less than larger firms. However, using data on individual innovations, we find that smaller firms are no less likely to patent any specific innovation than larger firms. We argue that size differences in the probability to patent relate primarily to the ‘portfolio effect’, i.e. larger firms generate more innovations than smaller firms and therefore are more likely to create one or more which are patentable. As for the decision to patent a patentable innovation, we find that cost barriers, more than issues of innovation quality or enforceability, deter small firms from patenting specific innovations. Measures to address the costs of patenting for smaller firms – perhaps by considering patents as eligible costs for R&D tax credits – and/or subsidizing SMEs’ participation in IP litigation schemes may both encourage patent use by smaller firms. |
| Keywords: | Patenting; SME; small firms; UK |
| JEL: | O32 O34 O38 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2020_002&r=all |
| By: | Curraj, Erjon; Lab, SDAG |
| Abstract: | Small and medium enterprises (SMEs) in Albania, similar to other markets, operate in complex, fast-paced and unpredictable environments due to their size and nature. In our contemporary knowledge-based economy, business is constantly changing, and SMEs are thus continually faced with the challenge to find new and innovative ways to improve and adapt to the rapid transformations. As a result, there is a growing interest and necessity for SMEs to explore and adapt new and innovative mechanisms for better decision making, which will then lead to improved performance and competitiveness. Digitalization of SMEs with the use of Business Intelligence (BI) and Knowledge Management (KM) systems is one such innovative instrument open to SMEs for a better performance and increased competitiveness. The research for this doctoral thesis is then set precisely in this configuration whereby: on one hand the current level of adoption and use of advanced ICTs and technological innovation within SMEs, or business digitalization as will be coined later, is relatively limited due to a variety of factors; and on the other hand ICTs themselves as technological systems or tools as well as part of business landscape, i.e. ICT as a sector, are a major driver of innovation, modernization and growth for the Albanian economy. This doctoral thesis addresses the gap in the current state of research regarding the development, adoption and use of advanced ICTs systems, i.e. business digitalization, within SMEs. In addition, the research for the doctoral thesis expands the challenge to the impact of business digitalization on performance of SMEs in Albania. Clearly, SMEs have been selected as the central ground of research not only to contribute towards filling a research gap in management and ICTs studies in Albania, but also because of the central role that SMEs play in Albanian economy and their future potential in the digital world. The results show that business digitalization impacts positively the overall performance of SMEs in Albania. Size, age and location of the SME dominate performance and are related to the business digitalisation more than strategy. Also, the entrepreneurial characteristics of the owner – manager also impact the digitalization. Having a clear business plan was also found to be important when it comes to using BI. SMEs in Albania are a vital part of the national economy and the research shows that there is growing interest in ICTs, digitalisation, BI and KM, but innovation is still at relatively low levels due to financial and human resources, which are limited. However, the research highlights that SMEs are very flexible and easy to adopt to change and when this is combined with a visionary owner- manager they tend to move towards business digitalisation. Another finding of this study is that digitalisation have lead SMEs to reconsider and re-conceptualise their business models attempting to move towards innovations that impact performance. Also, the concept of business model innovations is also gaining ground in SMEs in Albania. Findings show that the use of BI and other digitalisation processes is mainly driven by strategic and innovation related motives that are internal to the company and the owner-manager. The use of BI as a result of external technological factors also plays a role. Analysis of the findings show that the use of BI and digitalisation have a positive impact on business performance. The findings of this research paper have practical implications for the SMEs sector in Albania not only in providing an assessment of the current use of BI, but also in exploring the benefits and potential usage of BI as a necessary activity for deriving improved performance. Findings of this research can be used by owners-managers to better understand how firms can engage with digitalisation and BI and how their adoption and implementation affect business performance. Another implication for business sector is that digitally mature companies have better performance and thus derive more revenue and become more competitive. Finally, the research shows that digitization has a variety of dimensions and can be understood differently by different SMEs, owner-managers and staff, but it is a major contributor to business performance. Future research is needed to explore further the role of digitalisation processes in SMEs in Albania particularly related to enabling and hindering factors. In addition, further research is needed regarding the business model innovations, particularly in terms of human and organizational factors. This study is one of the first research contributions in the case of Albania to analyse the impact of digitalization, specifically the impact of BI on SMEs in Albania. |
| Date: | 2020–03–04 |
| URL: | http://d.repec.org/n?u=RePEc:osf:thesis:p3yq9&r=all |
| By: | Ewens, Michael (California Institute of Technology); Malenko, Nadya |
| Abstract: | Venture capital (VC) backed firms face neither the governance requirements nor a major separation of ownership and control of their public peers. These differences suggest that independent directors could play a unique role on private firm boards. This paper explores the dynamics of VC-backed startup boards using new data on over 7,200 startups, along with board member entry, exit, and individual director characteristics. We document several new facts about board size, the allocation of control, and composition dynamics. At formation, a typical board has four members and is entrepreneur-controlled. Independent directors are found on the median board after the second financing event, when control over the board becomes shared, with independent directors holding the tie-breaking vote. These patterns are consistent with independent directors playing both a mediating and advising role over the startup lifecycle, and thus representing another potential source of value-add to entrepreneurial firm performance. |
| Date: | 2020–02–16 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:t96yq&r=all |
| By: | Enrico De Monte |
| Abstract: | This paper analyzes productivity dynamics based on French firm-level data covering nine key 2-digit industries for the period 1994 - 2016. I estimate firm-level productivity through the estimation of a translog production function and investigate the following main aspects: (i) aggregate productivity change with firm entry and exit by applying the Dynamic OlleyPakes Productivity Decomposition (DOPD), (ii) firms’ ability to improve productivity and productivity persistence, and (iii) productivity differences between different firm groups such as survivors, entrants and exitors as well as small, medium and big firms by applying the concept of stochastical dominance. My results show that aggregate productivity has increased for most the considered 2-digit industries and that in many cases surviving firms’ have contributed significantly to these positive improvements. Entering firms contribute in many cases positively to aggregate productivity while the contribution of exitors shows varying signs. Furthermore, I find that firms’ reveal a high degree of productivity persistence. Analysing productivity difference between firm groups the results suggest that the productivity distribution of surviving firms stochastically dominates the distribution of entering and exiting firms. Surprisingly, the results reveal that big firms do not stochastically dominate the productivity distribution of small firms. |
| Keywords: | production function estimation, productivity decomposition, technological change, productivity differences, firm entry and exit. |
| JEL: | C13 C14 D24 D30 L60 O47 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ulp:sbbeta:2020-07&r=all |
| By: | OECD |
| Abstract: | This report provides an in-depth analysis of the Estonian policy ecosystem in place for social innovation, social entrepreneurship and social enterprises. It identifies the country’s key strengths and challenges and provides policy recommendations to support the development of a stronger policy ecosystem for social entrepreneurship and social enterprises in the country. Key policy issues analysed include: building a culture of social innovation and social entrepreneurship (Section 2); supporting social entrepreneurship through institutional and legal frameworks (Section 3); improving access to finance and to markets to boost social entrepreneurship (Section 4 and 5); and supporting the development of social entrepreneurial skills and capacity (Section 6). |
| Keywords: | local development, policy ecosystem, social economy, social enterprises, social entrepreneurship, social impact, social innovation |
| JEL: | L31 L33 |
| Date: | 2020–03–06 |
| URL: | http://d.repec.org/n?u=RePEc:oec:cfeaaa:2020/02-en&r=all |
| By: | Biancalani, Francesco; Czarnitzki, Dirk; Riccaboni, Massimo |
| Abstract: | This paper analyses the impact of the Italian Startup Act which entered into force in December 2012. This public policy provides a unique bundle of benefits, such as tax incentives, public loan guarantees, and a more flexible labor law, for firms registered as "innovative startups" in Italy. This legislation has been implemented by the Italian government to increase innovativeness of small and young enterprises by facilitating improved access to (external) capital and (highskilled) labor. Consequently, the goal of our evaluation is to assess the impact of the policy on equity, debt and employment. Using various conditional difference-in-difference models, we find that the Italian startup policy has met its primary objectives. The econometric results strongly suggest that firms operating under this program are more successful in obtaining equity and debt capital and they also hire more employees because of the program participation. |
| Keywords: | start up,innovation policy,firm subsidies,small firms |
| JEL: | M13 O38 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20006&r=all |
| By: | Emelie Hane-Weijman; Rikard H. Eriksson; David Rigby |
| Abstract: | Related diversification has generated considerable interest in policy (smart specialisation) and academic (related branching) circles, linking regional path creation strategies to the capabilities of regions. While previous studies have tended to focus on knowledge- or industry-spaces in regions, we explore the occupation-space. Occupational relatedness and complexity indicators are deployed as independent variables in spatial panel models that account for annual variations in regional employment growth rates in Sweden between 2002 to 2013. Our findings show that in periods of economic expansion, exit from related occupations and entry into complex occupations decreases regional employment growth. These effects are dampened in periods of economic slowdown. |
| Keywords: | related branching, occupation-space, occupational relatedness, complexity, smart specialization, employment growth |
| JEL: | R11 J21 J24 J62 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2011&r=all |
| By: | Gabriele Angori (Università degli Studi di Ferrara); David Aristei (University of Perugia) |
| Abstract: | Using detailed firm-level longitudinal data, this paper analyses the main factors affecting firms’ access to bank credit in eleven euro area countries over the period 2014-2018. We focus on firms’ loan demand behaviour and on banks’ actual credit granting decision, using alternative measures of financing constraints and controlling for endogenous sample selection and individual heterogeneity. Furthermore, we explicitly analyse the dynamics of firms’ access to credit and account for state dependence in loan demand and credit rationing probabilities. Empirical results show that small and informationally opaque businesses, with deteriorated public support and credit history, experience greater difficulties in accessing to bank loans. Moreover, we provide evidence of significant state dependence in access to credit over time. In particular, firms having already experienced credit restrictions in the past are more likely to face further financing constraints, while enterprises that repeatedly recur to external financing seem to have an easier access to credit. Finally, focusing on the subset of firms that actually need bank financing, we find that previous credit restrictions significantly reduce current demand probability, thus providing evidence of a significant credit discouragement effect. |
| Keywords: | Access to credit; Financing constraints; State dependence; Sample selection; Unobserved heterogeneity; Panel data |
| JEL: | G32 G21 D22 C23 C34 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:srt:wpaper:0220&r=all |
| By: | Holl, Adelheid; Peters, Bettina; Rammer, Christian |
| Abstract: | Recent empirical evidence has shown that firm's innovation behavior exhibits high persistency but not much is known about potential contingencies affecting the degree of persistence. This paper focuses on the role of the local knowledge environment and asks how local knowledge spillovers affect firms' innovation persistence. The empirical analysis draws upon a representative panel data set of firms in Germany from 2002-2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers. Based on correlated random effects probit models that control for state dependence, unobserved individual heterogeneity and endogenous initial conditions, our results corroborate former evidence that persistency in innovation is driven by true state dependence. More importantly, we find that the local patenting activity positively moderates firms' degree of persistency in innovation behavior. This is a novel firm-level mechanism that can explain the widening of spatial disparities in innovation performance. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence via true state dependence declines rather rapidly with increasing distance. |
| Keywords: | innovation,persistence,location,knowledge spillovers |
| JEL: | O31 R1 D22 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:zewdip:20005&r=all |
| By: | Michael Fritsch (Friedrich Schiller University Jena and Halle Institute for Economic Research (IWH), Germany.); Michael Wyrwich (University of Groningen, The Netherlands and Friedrich Schiller University Jena, Germany.) |
| Abstract: | Popular theories claim that innovation activities should be located in large cities because of more favorable environmental conditions that are absent in smaller cities or remote and rural areas. Germany provides a clear counterexample to such theories. We argue that a main force behind the geography of innovation in Germany is the country's federal tradition that has shaped the settlement structure, the geographic distribution of universities and public research institutions, as well as local access to finance. Additional factors that may play a role in this respect are the system of education and the tax treatment of inheriting a business. We demonstrate the long-lasting effect of the historical political structure and distribution of knowledge sources on innovation activities today. We conclude that historical factors that shape the settlement structure and location of knowledge sources are of key importance for the geographic location of innovation activities. |
| Keywords: | Innovation, patents, agglomeration economies, cities, Germany |
| JEL: | R11 L26 |
| Date: | 2020–02–24 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-004&r=all |
| By: | Marques, Pedro (Universitat Politècnica de Valencia); Morgan, Kevin (Cardiff University) |
| Abstract: | This paper argues that the development of regional innovation concepts drawing primarily on the experiences of advanced regions, has meant that the dominant narratives about regional development are not adequate to explain the experiences of less developed regions (LDRs). Drawing on the extensive experience of the authors doing research in LDRs, the paper develops three main arguments: first, the emphasis put on networks and systems means that not enough attention is paid to the internal capabilities of organisations, including those of firms, Universities and the public sector. These capabilities shape the strategies of these organisations regarding innovation and collaboration, and therefore influence the nature and content of innovation systems. Second, the paper argues that too much attention has been paid to the importance of informal institutions, rather than analysing the dynamic interaction between formal and informal institutions. The latter approach allows us to avoid culturally deterministic interpretations of under-development and to think about ways in which formal policies could help to improve innovation environments. Third, the paper argues that innovation at the firm level does not always lead to improvement in productivity and economic growth at the aggregate scale. This is partly due to the effects of the dynamics discussed in the two previous points, but is also because advanced regions benefit from a socio-economic ecosystem which supports the translation of new ideas into economic activity. This means that though innovation is fundamental for long-term economic growth, it is not sufficient without mechanisms that ensure its dissemination through the entirety of the economic system. |
| Keywords: | Less developed regions; Innovation; Productivity; Organisational capabilities; Institutions; Regional Development |
| JEL: | O31 O43 P48 R11 |
| Date: | 2020–02–26 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2020_003&r=all |
| By: | Iacovone,Leonardo; Maloney,William F.; Mckenzie,David J. |
| Abstract: | Differences in management quality are an important contributor to productivity differences across countries. A key question is how to best improve poor management in developing countries. This paper tests two different approaches to improving management in Colombian auto parts firms. The first uses intensive and expensive one-on-one consulting, while the second draws on agricultural extension approaches to provide consulting to small groups of firms at approximately one-third of the cost of the individual approach. Both approaches lead to improvements in management practices of a similar magnitude (8-10 percentage points), so that the new group-based approach dominates on a cost-benefit basis. Moreover, the paper finds some evidence that the group-based intervention led to increases in firm size over the next three years, while the impacts on firm outcomes are smaller and statistically insignificant for the individual consulting. The results point to the potential of group-based approaches as a pathway to scaling up management improvements. |
| Date: | 2019–05–15 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8854&r=all |
| By: | Christian Fisch (University of Trier); Michael Wyrwich (University of Groningen, and FSU Jena); Thi Lanh Nguyen; Jörn H. Block (University of Trier) |
| Abstract: | We study the case of Vietnam to assess the long-lasting role of institutional and historical legacy on entrepreneurial outcomes. In particular, we investigate the detrimental effect of socialist institutions on entrepreneurship. Vietnam offers a unique quasi-experimental setting because the country was divided into the socialist North and the nonsocialist South for a relatively short period of two decades. After re-unification the South adopted the institutional framework conditions of the North. To assess the relationship between socialist history and entrepreneurship in this unique setting, we survey more than 3,000 North and South Vietnamese individuals more than four decades after the re-unification of the country. We find that North Vietnamese respondents have lower entrepreneurship intention, are less likely to select into entrepreneurship education programs, and are less willing to engage in business takeover. These patterns indicate the persistence of a long-lasting influence of historical differences in institutional framework conditions on entrepreneurship. The long-run effect of socialism on entrepreneurship is apparently deeper than previously discovered in the prominent case of Germany, where differences in institutional treatment lasted for much longer and ended more recently. |
| Keywords: | Socialism, Vietnam, entrepreneurship intention, entrepreneurship education, takeover vs. new venture startup |
| JEL: | D02 L26 M13 P30 |
| Date: | 2020–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-002&r=all |
| By: | Giuseppe Berlingieri (OECD); Sara Calligaris (OECD); Chiara Criscuolo (OECD); Rudy Verlhac (OECD) |
| Abstract: | This paper provides new evidence on the main characteristics of laggard firms - firms in the bottom 40% of the productivity distribution - and their potential for productivity growth. It finds that laggards are on average younger and smaller than more productive firms, and matter for aggregate resource reallocation. Moreover, younger laggards converge faster toward the productivity frontier, suggesting that the composition of the laggard group matters for future productivity. Yet this report finds that laggards converge at a slower rate in highly digital- and skill-intensive industries, suggesting that there are barriers to technology and knowledge diffusion. This could help explain the much-debated productivity slowdown and the increased productivity dispersion. This report also finds that policies aimed at improving workers’ skills, alleviating financial constraints to investments and increasing firms' absorptive capacity through direct R&D support can accelerate the diffusion of knowledge and technology, and help laggard firms to catch up. |
| Keywords: | Catch-up, Laggards, Productivity |
| JEL: | D2 D4 L2 O57 |
| Date: | 2020–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:oec:stiaac:86-en&r=all |
| By: | Cirera,Xavier; Cusolito,Ana Paula |
| Abstract: | This paper describes and benchmarks innovation activities for a sample of countries in the South Asia region, as well as the impact of these activities on firm-level productivity. The evidence gathered suggests that countries in the South Asia region can be divided into two groups, in terms of the magnitude and composition of the innovation activities: leaders (Bangladesh and India) and laggards (Nepal and Pakistan). Leaders present higher rates of innovation activities than laggards and focus more on process innovation than product innovation. Differences across firms within all countries tend to present similar patterns when considering leaders and laggards, with the acquisition of knowledge capital (for example, research and development investments in equipment, and training) highly concentrated in a few firms, and mature, exporter, and foreign-owned firms as the most innovative of the region. The evidence also suggests a positive impact of innovation on productivity, primarily via incremental innovation, especially in India. |
| Keywords: | Legislation,Real&Intellectual Property Law,Social Policy,Intellectual Property Rights,Legal Products,Common Property Resource Development,Legal Reform,Regulatory Regimes,Judicial System Reform,Inequality,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Food&Beverage Industry,Common Carriers Industry,Plastics&Rubber Industry,General Manufacturing,Construction Industry,Business Cycles and Stabilization Policies,Innovation,International Trade and Trade Rules |
| Date: | 2019–06–10 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:8876&r=all |
| By: | Bryan Harcy; Can Sever |
| Abstract: | Financial crises are accompanied by permanent drops in economic growth and output. Technological progress and innovation are important drivers of economic growth. This paper studies how financial crises affect innovative activities. Using cross-country panel data on patenting at the industry-level, we identify a financial channel whereby disruptions in financial markets impact patenting activity. Specifically, we find that patenting decreases more following banking crises for industries that are more dependent on external finance. This financial channel is not at play during currency crises, sovereign debt crises, or recessions more generally, suggesting that disruption in banking activity matters for investment in innovative activities. The effect on patenting is economically large and long-lasting, resulting in less patenting, in terms of both total quantity and quality, for 10 years or longer after a banking crisis. The average patent quality, however, does not appear to decline. We show the results are not likely to be driven by reverse causality or omitted variables. These findings provide a link between banking crises and the observed patterns of lower long-term growth. Liquidity support in the aftermath of banking crises appears to help reduce the effects through the financial channel over the short term. |
| Keywords: | innovation, financial crises, banking crises, patents, growth |
| JEL: | E44 F30 G15 G21 O31 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:bis:biswps:846&r=all |
| By: | Aghion, Philippe; Bergeaud, Antonin; Blundell, Richard; Griffith, Rachel |
| Abstract: | Matched employee-employer data from the UK are used to analyze the wage premium to working in an innovative firm. We find that firms that are more R&D intensive pay higher wages on average, and this is particularly true for workers in some low-skilled occupations. We propose a model in which a firm’s innovativeness is reflected in the degree of complementarity between workers in low-skill and highskilled occupations, and in which non-verifiable soft skills are an important determinant of the wages of workers in low-skilled occupations. The model yields additional predictions on training, tenure and outsourcing which we also find support for in data. |
| Keywords: | innovation; skill-based technological change; wage; complementarity |
| JEL: | O33 L23 J31 |
| Date: | 2019–12 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103452&r=all |
| By: | de la Fuente, Ignacio |
| Abstract: | Con motivo de la Gran Recesión los distintos gobiernos se vieron en la necesidad de promover el emprendimiento como una solución a los graves problemas de paro. En España, con un paro estructural muy elevado y profundamente cíclico, la Gran Recesión elevó sus niveles en gran medida, de modo que el emprendimiento jugó un papel importante en la política laboral del Gobierno. En este trabajo abordamos el estudio de los determinantes del emprendimiento en La Rioja, Comunidad Autónoma situada al Norte de España, y lo hacemos a través del estudio econométrico de microdatos correspondiente al año 2015 del GEM (Global Entrepreneurship Monitor) a través de los que estimaremos 9 regresiones lineales utilizando MCO. Tras presentar los resultados del estudio, se propondrán una serie de medidas de política económica. |
| Keywords: | emprender, emprendimiento, La Rioja, GEM data |
| JEL: | L26 R10 |
| Date: | 2020–03–02 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:98894&r=all |
| By: | Joshua Graff Zivin; Elizabeth Lyons |
| Abstract: | Successful innovation is essential for the survival and growth of organizations but how best to incentivize innovation is poorly understood. We compare how two common incentive schemes affect innovative performance in a field experiment run in partnership with a large life sciences company. We find that a winner-takes-all compensation scheme generates significantly more novel innovation relative to a compensation scheme that offers the same total compensation, but shared across the ten best innovations. Moreover, we find that the elasticity of creativity with respect to compensation schemes is much larger for teams than individual innovators. |
| JEL: | J24 M54 O32 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:26737&r=all |