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on Small Business Management |
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Issue of 2020‒06‒29
seventeen papers chosen by João Carlos Correia Leitão Universidade da Beira Interior |
| By: | Philippe Aghion (Harvard University [Cambridge]); Antonin Bergeaud (PSE - Paris School of Economics); Gilbert Cette (Centre de recherche de la Banque de France - Banque de France, AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique); Rémy Lecat (Centre de recherche de la Banque de France - Banque de France); Hélène Maghin |
| Abstract: | We identify two counteracting effects of credit access on productivity growth: on the one hand, better access to credit makes it easier for entrepreneurs to innovate; on the other hand, better credit access allows less efficient incumbent firms to remain longer on the market, thereby discouraging entry of new and potentially more efficient innovators. We first develop a simple model of firm dynamics and innovation‐based growth with credit constraints, where the above two counteracting effects generate an inverted‐U relationship between credit access and productivity growth. Then we test our theory on a comprehensive French manufacturing firm‐level dataset. We first show evidence of an inverted‐U relationship between credit constraints and productivity growth when we aggregate our data at the sectoral level. We then move to firm‐level analysis, and show that incumbent firms with easier access to credit experience higher productivity growth, but that they also experience lower exit rates, particularly the least productive firms among them. To support these findings, we exploit the 2012 Eurosystem's Additional Credit Claims programme as a quasi‐experiment that generated an exogenous extra supply of credits for a subset of incumbent firms. |
| Keywords: | credit constraint,firms,growth,interest rate,productivity |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-01976402&r=all |
| By: | Nurulhasanah Abdul Rahman (School of Management, Universiti Sains Malaysia, 11800 Penang, Malaysia Author-2-Name: Daisy Mui Hung Kee Author-2-Workplace-Name: School of Distance Education, Universiti Sains Malaysia, 11800 Penang, Malaysia Author-3-Name: Author-3-Workplace-Name: Author-4-Name: Author-4-Workplace-Name: Author-5-Name: Author-5-Workplace-Name: Author-6-Name: Author-6-Workplace-Name: Author-7-Name: Author-7-Workplace-Name: Author-8-Name: Author-8-Workplace-Name:) |
| Abstract: | Objective - Despite extensive research on Entrepreneurial Orientation (EO) and innovation and performance, there are still limited resources on how these areas benefit Small and Medium Enterprises (SMEs). There are various financial aids and support services that are provided to SMEs. Despite this, SMEs still tend to perform quite low. This paper aims to identify the link between EO and SME performance using innovation as a mediator. Methodology/Technique - To achieve this objective, a quantitative approach is used. Questionnaires are collected from 285 SMEs in Peninsular Malaysia. Structural Equation Modelling (SEM) analysis is applied to test the hypotheses on the direct and indirect relationships between EO and SME performance through innovation. Finding - The findings of this study show that only two aspects of EO (innovativeness and proactiveness) have significant relationships with SME performance. Interestingly, all dimensions of EO have a direct impact on innovation. Further, innovation has a direct effect on SME performance and is a significant mediator between EO and SME performance. Novelty - These findings indicate that EO is a strong predictor of Innovation and SME performance. The discussion provided in this paper strengthens the body of knowledge on Entrepreneurship and acts as a benchmark for future studies on EO, Innovation and SME Performance. Type of Paper - Empirical. |
| Keywords: | Malaysia; Entrepreneurial Orientation; Innovation; SME Performance. |
| JEL: | M13 M19 L25 |
| Date: | 2020–06–03 |
| URL: | http://d.repec.org/n?u=RePEc:gtr:gatrjs:gjbssr558&r=all |
| By: | Jean Pierre Huiban (ALISS - Alimentation et sciences sociales - INRA - Institut National de la Recherche Agronomique); Antonio Musolesi (Centre d'Economie et de Sociologie Rurales Appliquées à l'Agriculture et aux Espaces Ruraux - INRA - Institut National de la Recherche Agronomique - AgroSup Dijon - Institut National Supérieur des Sciences Agronomiques, de l'Alimentation et de l'Environnement) |
| Abstract: | We investigate the impact of pollution abatement effort on the economic performances by exploiting a rich panel data set composed of French food industry firms, observed over the 1993-2007 period. We test the Porter hypothesis, assuming that pollution abatement effort has a positive effect on the firm performance by triggering innovation. This is done by estimating a production function augmented with knowledge capital, such a capital being produced by both pollution abatement and R&D investments. Using different estimation methods, including structural semi-parametric ones, we first show than the so-called Porter assumption cannot be rejected when focusing on the full population of French food industry firms since the estimations indicate a positive and significant (though rather small) contribution of the pollution abatement capital to the firm productivity. Then, we consider a more restrictive sample of (potentially) innovative firms, actually engaging both RD and pollution abatement investments. Henceforth, the contribution of pollution abatement capital becomes not significant in regard to the R&D's one. These results do not support the sometimes invoked hypothesis according to which the positive effect of pollution abatements efforts on firms' performances is linked to the induced increased innovation. At the same time, the standard hypothesis, assuming that pollution abatement effort significantly decreases the firm performance is always rejected. |
| Keywords: | productivity, environmental investment, R&D, knowledge capital, food industry |
| Date: | 2020–06–05 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-02804599&r=all |
| By: | Jorge Andrés Vélez-Ospina (Departament d'Empresa, Universitat Autonoma de Barcelona); Isabel Busom Piquer (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona) |
| Abstract: | We investigate whether the impact of direct support for business investment in R&D and innovation varies over the business cycle. We address several questions: whether firms that obtain public support in a recession differ from firms that obtain it during expansions; whether the impact of support is smaller in recessions than in expansions, and whether effects vary with the treatment pattern. Using firm-level data from Spain during the period 2005 to 2014, we combine propensity score matching and difference-in-differences methods to estimate firms’ response to direct support in different phases of the cycle. Two findings stand out. First, while the impact of support on monetary investment in innovation is pro-cyclical, it is countercyclical in terms of the employee-time allocation to innovation activities. Second, the additionality of a one-year treatment is smaller than that of longer treatments, or repeate program participation. Firms receiving public support during the recession have assigned more employee time to innovation activities than a matched control group, preventing a decline of knowledge capital during the big recession. |
| JEL: | O25 O38 C14 C21 D22 L29 L53 H50 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:uab:wprdea:wpdea2001&r=all |
| By: | Chris Forman; Avi Goldfarb |
| Abstract: | Information technology (IT) matters to prosperity. The top patenters are increasingly IT companies. We use data on US patents to document four trends in IT patenting. First, firm-level concentration in IT patenting is increasing over time. Second, geographic concentration in IT patenting is increasing over time. Third, most technology classes experienced a decline in new patenters from 1980 to 2000. This was not true of new IT patents. Since 2000, the trend in new IT patenters looks like other classes and is declining over time. Fourth, there is increased geographic concentration of new IT patenters. We do not identify the reasons behind these trends nor whether they are related to overall changes in industry concentration, agglomeration, or prosperity. |
| JEL: | L22 L26 M13 M15 O31 O32 O33 O34 R12 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27338&r=all |
| By: | Ross Levine; Chen Lin; Lai Wei; Wensi Xie |
| Abstract: | A central debate in economics concerns the relationship between competition and innovation, with some stressing that competition discourages innovation by reducing post-innovation rents and others emphasizing that more contestable markets spur currently dominant and other firms to invest more in innovation. We examine the impact of competition laws on innovation. We create a unique firm-level dataset on patenting activities that includes over 1.4 million firm-year observations, across 68 countries, from 1991 through 2015. Using a new, comprehensive dataset on competition laws, we find that more stringent competition laws are associated with increases in firms’ number of self-generated patents and the citation-impact and explorative nature of those patents. We also conduct the first examination of the relationship between competition laws and firms’ acquisition of patents from other firms. We find that competition increases patent acquisitions but lowers the ratio of acquired to self-generated patents. The results hold when using country-industry data on 186 countries over the 1888-2015 period. |
| JEL: | K21 L4 O3 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27253&r=all |
| By: | Bermejo, Vicente; Ferreira, Miguel; Wolfenzon, Daniel; Zambrana, Rafael |
| Abstract: | The Spanish Christmas Lottery is the largest lottery worldwide. We exploit local windfall gains arising from lottery prizes to estimate the effect of income on entrepreneurship. We find higher firm creation and greater self-employment in winning provinces. Our estimates imply that 46 firms are created for every â?¬1,000 increase in disposable income per capita. The effect occurs in both non-tradable and tradable industries, and is more pronounced in regions with poorer access to finance. Firms created in winning provinces are larger, create more value-added, and are more likely to survive. These results suggest that local income and financial development are important drivers of entrepreneurship. |
| Keywords: | Aggregate income; entrepreneurship; Financial Development; firm creation; Local demand; public policy; Self-employment |
| JEL: | D14 L26 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14638&r=all |
| By: | Lee, Neil; Rodríguez-Pose, Andrés |
| Abstract: | Innovation in cities is increasingly regarded as an outcome of two potential inputs: scientific activity and creativity. Recent research using firm level data has suggested that actually it might be the combination of these two inputs, rather than the mere presence of workers representing each group, which matters. Yet there is little evidence on whether this relationship holds using city level data in the case of the United States (US). This paper investigates this gap in our knowledge by examining how the combination of STEM (geeks) and creative workers (hipsters) in a panel of 290 US Metropolitan Statistical Areas during the period between 2005 and 2015 relates to city level innovation. The results indicate that, although the presence of STEM workers is a more important driver of innovation than that of creative ones, the most innovative cities are characterised by a combination of the two. Hence, current policies which tend to focus mainly on either STEM or creativity may be better targeted at ensuring interactions between the two. |
| Keywords: | cities; Creative Class; Creativity; Innovation; STEM; United States |
| JEL: | O18 O32 O33 R12 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14560&r=all |
| By: | Rhoden, Imke |
| Abstract: | This paper introduces two indicators for innovation, showing the allocation of innovation and its inherent diversity. Both indicators can give insights for regional innovation policy conception. The first indicator measures the share of patents in research and development expenditure, proposing a locational innovation output indicator. It can show that innovation in Europe differs strongly among NUTS2-level regions, which points to regionally specific, place-based policies as a result of a strong dispersion in European innovation activity. The second measure, the innovation diversity indicator, shows the diversification of innovation in a region and is built upon Krugman’s locational Gini coefficients. Here, the share of patents belonging to a particular IPC class is related to the dispersion of all patents in a region. Possible implications for policy are the construction of place-based, technology-specific programs, on either national or subnational (NUTS2-) level, where each country or region has to be considered carefully. Analyses underline that innovation in Europe is a highly regionally and technically diversified concept. |
| Keywords: | Innovation Indicator,Innovation Gini,Regional Dispersion,Research and Development Allocation,Patent Data |
| JEL: | R12 O33 O38 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:esprep:218875&r=all |
| By: | Robert W. Fairlie |
| Abstract: | Social distancing restrictions and demand shifts from COVID-19 are expected to shutter many small businesses, but there is very little early evidence on impacts. This paper provides the first analysis of impacts of the pandemic on the number of active small businesses in the United States using nationally representative data from the April 2020 CPS – the first month fully capturing early effects from the pandemic. The number of active business owners in the United States plummeted by 3.3 million or 22 percent over the crucial two-month window from February to April 2020. The drop in business owners was the largest on record, and losses were felt across nearly all industries and even for incorporated businesses. African-American businesses were hit especially hard experiencing a 41 percent drop. Latinx business owners fell by 32 percent, and Asian business owners dropped by 26 percent. Simulations indicate that industry compositions partly placed these groups at a higher risk of losses. Immigrant business owners experienced substantial losses of 36 percent. Female-owned businesses were also disproportionately hit by 25 percent. These findings of early-stage losses to small businesses have important policy implications and may portend longer-term ramifications for job losses and economic inequality. |
| JEL: | J15 J16 L26 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27309&r=all |
| By: | Lee, Neil; Rodríguez-Pose, Andrés |
| Abstract: | Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors â?? and, therefore, is more likely to have positive local multiplier effects â?? or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty. |
| Keywords: | cities; economic development; entrepreneurship; poverty; USA |
| JEL: | J21 J31 M13 O18 R11 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14643&r=all |
| By: | Dorian Boumedjaoud (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier); Karim Messeghem (MRM - Montpellier Research in Management - UM1 - Université Montpellier 1 - UM3 - Université Paul-Valéry - Montpellier 3 - UM2 - Université Montpellier 2 - Sciences et Techniques - UPVD - Université de Perpignan Via Domitia - Groupe Sup de Co Montpellier (GSCM) - Montpellier Business School - UM - Université de Montpellier, Labex Entreprendre - UM - Université de Montpellier) |
| Abstract: | Business takeovers can be divided into three steps (Deschamps, 2002): decision to takeover an SME, takeover process and entry into the SME. After entering the company, the buyer has to build his entrepreneurial strategy to identify new business opportunities, and thus maintain or even develop the growth of his company. Since the works of Shane and Venkataraman (2000), opportunity identification became central in entrepreneurship-with the emergence of a specific cognitive stream on entrepreneurial alertness. The antecedents of alertness are still little known among SME buyers, but works show that the creative process of entrepreneurs can influence the ability to associate and connect information-a dimension of alertness according to Tang et al. (2012)-and more broadly entrepreneurial alertness. Our aim is to show that creativity influences the three dimensions of entrepreneurial alertness according to Tang et al. (2012), and that the relationship between creativity and the association and connection dimension is stronger. To answer these questions, we use a sample of 360 SME buyers, most of them supported by Réseau Entreprendre, and proceed to a modeling in structural equations. The results show that creativity significantly influence the three dimensions of entrepreneurial alertness. This result underline the role of creative process in opportunities identification, and more broadly the interest of cognitive support. |
| Abstract: | La reprise de PME peut être déclinée en trois étapes (Deschamps, 2002) : la décision de reprendre, le processus de reprise et l'entrée dans l'entreprise. Après son entrée dans l'entreprise, le repreneur est amené à construire sa stratégie entrepreneuriale pour identifier de nouvelles opportunités d'affaires, et ainsi maintenir voire développer la croissance de son entreprise. Depuis les travaux de Shane et Venkataraman (2000), l'identification des opportunités est devenue centrale en entrepreneuriat-avec l'émergence d'un courant cognitif portant spécifiquement sur la vigilance entrepreneuriale. Les antécédents de la vigilance sont encore peu connus chez les repreneurs de PME, mais des travaux montrent que le processus créatif des entrepreneurs peut influencer la capacité à associer et connecter des informations-une des dimensions de la vigilance selon Tang et al. (2012)-et plus largement la vigilance entrepreneuriale. Notre objectif est donc de montrer d'une part que la créativité influence les trois dimensions de la vigilance selon Tang et al. (2012), et d'autre part que la relation entre créativité et la dimension association et connexion est plus forte. Pour répondre à ces questions, nous prenons appui sur un échantillon de 360 repreneurs, en grande majorité accompagnés par Réseau Entreprendre, et procédons à une modélisation en équations structurelles. Les résultats montrent notamment que la créativité influence de manière significative les trois dimensions de la vigilance. Ce résultat rappelle le rôle du processus créatif dans l'identification des opportunités, et plus largement l'intérêt de la dimension cognitive de l'accompagnement. |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:hal-02570575&r=all |
| By: | Lee, Neil; Rodríguez-Pose, Andrés |
| Abstract: | Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors – and, therefore, is more likely to have positive local multiplier effects – or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty. |
| Keywords: | entrepreneurship; poverty; cities; economic development; USA |
| JEL: | M13 J21 J31 O18 R11 |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:104384&r=all |
| By: | Anelli, Massimo (Bocconi University); Basso, Gaetano (University of California, Davis); Ippedico, Giuseppe (University of California, Davis); Peri, Giovanni (University of California, Davis) |
| Abstract: | Emigration of young, motivated individuals may deprive countries-of-origin of entrepreneurs. We isolate exogenous variation in a large emigration wave from Italy between 2008 and 2015 by interacting diaspora networks with economic pull factors in destination countries, and find that larger emigration rates reduced firm creation and innovative start-ups. We estimate that for every 100 emigrants, 26 fewer firms were created. An accounting exercise shows that 37 percent of the effect was due to the disproportionate loss of young people. The remaining effect was due to selection into emigration of highly entrepreneurial individuals, as well as negative spillovers on firm creation. |
| Keywords: | emigration, demography, brain drain, entrepreneurship, innovation, EU integration |
| JEL: | J61 H7 O3 M13 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13390&r=all |
| By: | Lilas Demmou; Guido Franco |
| Abstract: | Measuring the quality of governance and regulation in various ways and focusing on energy, transport and telecommunications, this paper shows that both sound governance of infrastructure investment and pro-competitive regulation in network industries are associated with stronger productivity growth in firms operating downstream. |
| Keywords: | governance, infrastructure, investment, regulation, total factor productivity |
| JEL: | D24 H54 K23 L50 |
| Date: | 2020–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:1609-en&r=all |
| By: | Theresa Kuchler; Yan Li; Lin Peng; Johannes Stroebel; Dexin Zhou |
| Abstract: | We use social network data from Facebook to show that institutional investors are more likely to invest in firms from regions to which they have stronger social ties. This effect of social proximity on investment behavior is distinct from the effect of geographic proximity. Social connections have the largest influence on investments of small investors with concentrated holdings as well as on investments in firms with a low market capitalization and little analyst coverage. We also find that the response of investment decisions to social connectedness affects equilibrium capital market outcomes: firms in locations with stronger social ties to places with substantial institutional capital have higher institutional ownership, higher valuations, and higher liquidity. These effects of social proximity to capital on capital market outcomes are largest for small firms with little analyst coverage. We find no evidence that investors generate differential returns from investments in locations to which they are socially connected. Our results suggest that the social structure of regions affects firms' access to capital and contributes to geographic differences in economic outcomes. |
| JEL: | G2 G3 |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:27299&r=all |
| By: | Halling, Michael; Yu, Jin; Zechner, Josef |
| Abstract: | We find that US public firms spread out their debt more across different sources in recession quarters, making measures of debt concentration move pro-cyclically. There is substantial cross-sectional variation in these dynamics. Firms with less leverage and higher debt concentration further decrease leverage and increase debt concentration in recessions. The opposite is true for firms with higher leverage and lower debt concentration. The latter (former) group consists of firms that are larger (smaller), less risky (riskier), have fewer (more) growth options and lower (higher) cash levels. While the fraction of total assets funded by bank debt increases in the recession by approximately 18% of its average non-recession level, the equivalent measure for market debt drops by approximately 7%. Bank debt, in particular, term loans, appears to become more attractive during recession quarters, especially for borrowers characterized by high profitability while firm size, in contrast, has a positive effect on the use of market debt in recessions. A cluster analysis shows that a substantial fraction of frms changes its debt policy over the business cycle. For example, 12% of the firms that exclusively use bond-financing pre-recession switch to bank-financing during recessions. |
| Keywords: | business cycle variation; clus- ter analysis; corporate debt structure dynamics; debt concentration |
| JEL: | G01 G32 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14572&r=all |