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on Small Business Management |
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Issue of 2024‒11‒04
twenty papers chosen by João Carlos Correia Leitão, Universidade da Beira Interior |
| By: | Joonkyu Choi; Nathan Goldschlag; John Haltiwanger; J. Daniel Kim |
| Abstract: | Using administrative data from the U.S. Census Bureau, we introduce a new public-use database that tracks activities across firm growth distributions over time. With these new data, we uncover several key trends for high-growth firms---critical engines of innovation and economic growth. First, the share of firms that are high-growth has steadily decreased over the past four decades, driven not only by falling rates of entrepreneurship but also languishing growth among existing firms. Second, this decline is particularly pronounced among young and small firms, while the share of high-growth firms has been relatively stable among large and old firms. We also find rich variation across states and sectors. To facilitate future research, we highlight how these data can be used to address various research questions. |
| Keywords: | Organizational Growth; Entrepreneurship; High-Growth Firms; Business Dynamism; Publicly Available Dataset |
| JEL: | L11 L25 L26 O30 O40 |
| Date: | 2024–09–20 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedgfe:2024-74 |
| By: | Masaki Mori; Hua Fan; Chen Zheng |
| Abstract: | This paper primarily explores the impact and mechanisms of smart city policies on innovation output in China’s listed enterprises. Using a sample of A-share listed companies in 246 cities from 2004 to 2019, we employ the Staggered Difference-in-Differences (DID) method to analyse the influence of smart city policies on corporate innovation. Simultaneously, we also analyse the impact mechanisms of smart city policies on corporate innovation activities from the perspectives of industry competition, agglomeration of smart city development-related industries, internet development, and enterprise digital transformation.The study reveals that smart city policies effectively promote innovation output in China’s listed companies. From the perspective of industrial development, smart city policies have substantially stimulated cities’ lower competitive enterprises to innovate, and promoted innovations through agglomeration of industries which are closely related to smart city development.From the perspective of technological development, smart city policies enhance the innovation capabilities of enterprises through the application of the Internet and information technology. Through digital transformation, enterprises can optimise department structures, reduce costs, broaden marketing channels, and improve operational efficiency, leading to further innovations.The study also finds that smart city policies significantly promote innovation output in state-owned, large, and mature enterprises. However, the impact on innovation in non-state-owned, small and medium-sized enterprises is not pronounced and may even hinder innovation. Additionally, the influence of smart city policies on corporate innovation exhibits regional imbalances, with innovative effects being significant in economically advanced first-tier cities, as well as third, fourth and fifth-tier cities. The innovation effect in medium-developed second-tier cities is not significant. These findings indicate potential design flaws and implementation constraints in smart city policies, suggesting a failure to adequately consider the actual needs and challenges of small to medium-sized enterprises and medium-developed cities, leading to unequal resource distribution. |
| Keywords: | Chinese corporations; Innovation; Smart City |
| JEL: | R3 |
| Date: | 2024–01–01 |
| URL: | https://d.repec.org/n?u=RePEc:arz:wpaper:eres2024-050 |
| By: | Hans Degryse; Olivier De Jonghe; Leonardo Gambacorta; Cedric Huylebroek |
| Abstract: | Theory offers conflicting predictions on whether and how lenders' sectoral specialization would affect firms' innovation activities. We show that the sign and magnitude of this effect vary with the degree of "asset overhang" across sectors, which is the risk that a new technology has negative spillovers on the value of a bank's legacy loan portfolio. Using both patent data and micro-level innovation survey data, we find that lenders' sectoral specialization improves innovation for firms operating in sectors with low asset overhang, but impedes innovation for firms operating in sectors with high asset overhang. These results hold for two distinct measures of asset overhang and using bank mergers as a source of exogenous variation in bank specialization. We further show that these heterogeneous effects arise through financial contracting. Overall, our findings provide novel insights into the dual facets of bank specialization and, more broadly, the link between banking and innovation. |
| Keywords: | bank specialization, bank lending, corporate innovation, asset overhang, financial frictions |
| JEL: | G20 O30 L20 |
| URL: | https://d.repec.org/n?u=RePEc:bis:biswps:1218 |
| By: | Bernardo Caldarola; Luca Fontanelli |
| Abstract: | Recent empirical evidence finds positive associations between digitalisation and industry concentration. However, ICT may not be all alike. We investigate the effect of the purchase of cloud services on the long run size growth rate of French firms. Our findings suggest that cloud services positively impact firm growth rates, with smaller firms experiencing more significant benefits compared to larger firms. This evidence suggests that the diffusion of cloud technologies may help mitigate concentration in the era of the digital transition by favouring the digitalisation and growth of smaller firms, especially when the cloud services provided are more advanced. |
| Date: | 2024–09 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2409.17035 |
| By: | Jennifer Hunt; Iain M. Cockburn; James Bessen |
| Abstract: | Using our own data on Artificial Intelligence publications merged with Burning Glass vacancy data for 2007-2019, we investigate whether online vacancies for jobs requiring AI skills grow more slowly in U.S. locations farther from pre-2007 AI innovation hotspots. We find that a commuting zone which is an additional 200km (125 miles) from the closest AI hotspot has 17% lower growth in AI jobs' share of vacancies. This is driven by distance from AI papers rather than AI patents. Distance reduces growth in AI research jobs as well as in jobs adapting AI to new industries, as evidenced by strong effects for computer and mathematical researchers, developers of software applications, and the finance and insurance industry. 20% of the effect is explained by the presence of state borders between some commuting zones and their closest hotspot. This could reflect state borders impeding migration and thus flows of tacit knowledge. Distance does not capture difficulty of in-person or remote collaboration nor knowledge and personnel flows within multi-establishment firms hiring in computer occupations. |
| JEL: | O33 R12 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33022 |
| By: | Park, Jonghwa; Han, Kyunghyun |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:itsb24:302510 |
| By: | Bräuer, Richard |
| JEL: | O12 O33 O41 J24 J42 J44 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302446 |
| By: | Rodepeter, Elisa; Gschnaidtner, Christoph; Hottenrott, Hanna |
| JEL: | L26 O32 O33 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302358 |
| By: | Sommer, Christoph |
| JEL: | G10 G21 G30 O16 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302340 |
| By: | Barra Novoa, Rodrigo |
| Abstract: | This study provides a comprehensive and critical analysis of the trajectory of industrial policy and technological absorption in Chile over the last three decades. The article examines the paradigm and institutional shift in the promotion of innovation, highlighting significant advances in key sectors of the Chilean economy, such as mining, salmon farming, fruit farming and the emerging green hydrogen sector. The research underlines the key role of the state in Chile's industrial and technological development, supported by institutions such as CORFO and ANID. Key factors driving this incremental progress include macroeconomic stability, investment in infrastructure, increased R&D funding and policies aimed at fostering innovation. However, to improve the effectiveness of the industrial strategy and address challenges related to regional inequality, a more adaptive and sustained approach is required to fully capitalise on the opportunities offered by the country's resources and capabilities. |
| Keywords: | Industrial Policy, Technology Absorption, , Innovation, Economic Development |
| JEL: | E02 O31 P42 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:303491 |
| By: | Pirla, Sergio; Ortega-Lapiedra, Raquel |
| Abstract: | Individuals not only seek a happy and meaningful life, but an interesting one. In this letter, we show that past estimates of the well-being gains from entrepreneurship have overlooked an important aspect of the relationship between self-employment and well-being: boredom. Using a sample of over 30, 000 individuals from 25 European countries, we show that self-employment is related to lower levels of boredom – a relationship that is not captured by traditional measures of hedonic or eudaimonic well-being. |
| Keywords: | Boredom, Entrepreneurship |
| JEL: | L26 M5 |
| Date: | 2024–10–04 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122278 |
| By: | Busso, Matías; Fentanes, Oscar |
| Abstract: | What determines the aggregate and distributional effects of new transportation infrastructure? One key overlooked channel is the role that infrastructure policy plays in changing the incentives of firms to enter, exit, and grow--in turn generating endogenous changes in local productivity. In this paper, we document and quantify the importance of this channel by using detailed Mexican microdata and a spatial general-equilibrium model that incorporates firm dynamics. Leveraging random delays in the construction of highways, we empirically show that productivity grows in places with better transportation infrastructure. Firms play a critical role in driving these results: highways increase firms' size, entry rates, survival rates, and total factor productivity. Then, by calibrating our model on census data between 1998 and 2018, we find that new highways over this period increased welfare and income by half a percent, similar to its costs in terms of GDP. Moreover, we find substantial spatial reallocation of workers and production. Nearly half of these effects are explained by endogenous changes in local productivity, which is driven by firm dynamics. |
| Keywords: | Economic geography;firm dynamics;Infrastructure |
| JEL: | R12 D24 O18 O54 |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:idb:brikps:13759 |
| By: | Latifi, Albina; Winker, Peter; Lenz, David |
| JEL: | C49 C55 O30 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:vfsc24:302371 |
| By: | Kattel, Rainer |
| Abstract: | The European Union, in the face of mounting geo-political and climate challenges, needs a more effective innovation policy. Currently, its broad experimentalist approach to innovation policies gives Member States and regions autonomy for policy design. However, this often needs more effective organisations and capabilities to take advantage of the policy space. Thus, European countries face quite a substantial rethinking of how innovation policy is designed and implemented through innovation agencies. This policy paper argues that on all levels of European governance, policymakers should pay closer attention to designing and developing organisational ecosystems for innovation, focusing on fostering new capabilities. The paper starts with the assumption that European innovation agencies today face two broad challenges. First, they are tasked with, or engaged in, transforming socio-technical systems (e.g., food, mobility); and second, socio-technical systems fall under over-lapping systems of governance (e.g., food system includes elements from energy, waste management, health, and other policy areas), typically governed by different bodies. The transformation challenge indicates that innovation agencies require a broad spectrum of new capabilities across multiple systems. The governance challenge indicates the need for inter-organisational or distributed capabilities (e.g., division of labour and coordination across multiple organisations). This report discusses how innovation agencies are responding to this dual challenge and what critical steps could be taken to increase their capabilities to tackle the challenges effectively. |
| Keywords: | innovation, governance, innovation agencies, agile stability |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:oefsew:304309 |
| By: | Draca, Mirko (CEP, London School of Economics ; Warwick University and CAGE Research Centre); Nathan, Max (CEP, London School of Economics ; Warwick University and CAGE Research Centre ; University College London); Nguyen-Tien, Viet (CEP, London School of Economics ; POID, London School of Economics); Oliveira-Cunha, Juliana (CEP, London School of Economics ; IGC, London School of Economics); Rosso, Anna (CEP, London School of Economics ; University of Insubria); Valero, Anna (CEP, London School of Economics ; POID, London School of Economics) |
| Abstract: | Which types of human capital influence the adoption of advanced technologies? We study the skill-biased adoption of information and communication technologies (ICT) across two waves in the UK. Specifically, we compare the new wave of cloud and machine learning / AI technologies during the 2010s - pre-LLM - with the previous wave of personal computer adoption in the 1990s and early 2000s. At the area-level we see the emergence of a distinct STEM-biased adoption effect for the second wave of cloud and machine learning / AI technologies (ML/AI), alongside a general skill-biased effect. A one-standard deviation increase in the baseline share of STEM workers in areas is associated with around 0.3 of a standard deviation higher adoption of cloud and ML/AI. We find similar effects at the firm level where we are able to test for the influence of a wide range of skills. In turn, this STEM-biased adoption pattern has encouraged the concentration of these technologies, leading to more acute differences between high-tech and low-tech areas and firms. In contrast with classical technology diffusion, recent cloud and ML/AI adoption in the UK seems more likely to widen inequalities than reduce them |
| Keywords: | Technology Diffusion ; ICT ; Human Capital ; STEM JEL Codes: D22 ; J24 ; O33 ; R11 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:wrk:warwec:1521 |
| By: | Julien Albertini (Université Lumière Lyon 2, CNRS, Université Jean Monnet Saint-Etienne, emlyon business school, GATE, 69007, Lyon, France); Xavier Fairise (GAINS, Le Mans Université); Anthony Terriau (GAINS, Le Mans Université) |
| Abstract: | This paper explores the differentiated effects of corporate tax changes based on firm characteristics and evaluates the potential impact of a tax system modulated by both firm size and age. Using tax rate variations across U.S. states and comparing adjacent counties across state borders, we find that corporate taxes significantly reduce employment in small and young firms, while having no notable impact on large and older firms. We then develop a model to analyze firm dynamics throughout their life cycle under different tax regimes. Our simulations show that a corporate tax system adjusted by both firm size and age is more effective than one based solely on size (and even more so than a system with a single rate). This approach lightens the tax burden on highly productive young firms and shifts it toward less productive older firms, ultimately boosting employment and welfare without reducing the fiscal surplus. |
| JEL: | H25 H32 J21 J23 E61 E62 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:gat:wpaper:2410 |
| By: | Klein, Michael |
| Abstract: | I develop an endogenous growth model that separates firm decisions to invent, patent, and commercialize new innovations. I use the model to examine how multiple dimensions of patent policy impact economic growth by shaping these relative incentives. I pay particular attention to the role of patenting requirements that dictate how far along the development process an inventor must progress to obtain a patent. The model formalizes how strengthening such requirements generates competing effects on economic growth; stronger requirements reduce ex ante research incentives by increasing the expected cost of patenting, but increase ex post incentives to fully develop patented inventions into commercial innovations by decreasing the additional cost associated with commercialization. Overall, my analysis supports the use of patenting requirements as an effective policy tool to improve economic outcomes by shifting incentives away from invention in the pursuit of patents and towards the development of commercial innovations. |
| Keywords: | Patent policy; Patenting requirements; Invention; Innovation; Economic growth |
| JEL: | O31 O34 O43 |
| Date: | 2024–09–16 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122283 |
| By: | Chatzistamoulou, Nikos; Koundouri, Phoebe |
| Abstract: | The European Green Deal prioritizes green growth through resource efficiency and eco-innovation to achieve the transition in a sustainable and inclusive growth orbit. To monitor progress in such endeavor the EU Resource Efficiency Scoreboard was launched. Focusing on the resource productivity, which is the main sustainability development indicator and policy evaluation tool for Europe and the eco-innovation performance of the EU-28 over a twenty-year period, from 2000 though 2019, we explore convergence patterns and club formation. Descriptive analysis via growth rates of the resource productivity and eco-innovation indicates productivity differentials among the countries giving rise to heterogeneity groups. Econometric results using convergence algorithms advocate in favor of convergence for both variables. However, convergence clubs surface highlighting that there is heterogeneity to consider when designing policies to promote sustainability transition to ensure that no one is left behind serving the priority of inclusive and sustainable growth. |
| Keywords: | Resource Productivity, Eco-Innovation, Sustainability, Convergence, Technological Heterogeneity, European Green Deal |
| JEL: | O1 O3 |
| Date: | 2022–12 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:122104 |
| By: | Bertin Martens |
| Abstract: | This working paper explores the tension between rapidly increasing artificial intelligence investment costs and the slower pace of productivity growth |
| Date: | 2024–10 |
| URL: | https://d.repec.org/n?u=RePEc:bre:wpaper:node_10375 |
| By: | Nicola Gagliardi (CEBRIG and DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles); Elena Grinza (Department of Economics, Social Studies, Applied Mathematics and Statistics, University of Turin); François Rycx (CEBRIG and DULBEA, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles. IRES (UCLouvain)) |
| Abstract: | In this paper, we investigate the impact of rising temperatures on firm productivity using longitudinal firm-level balance-sheet data from private sector firms in 14 European countries, combined with detailed weather data, including temperature. We begin by estimating firms’ total factor productivity (TFP) using control-function techniques. We then apply multiple-way fixed-effects regressions to assess how higher temperature anomalies affect firm productivity – measured via TFP, labor productivity, and capital productivity. Our findings reveal that global warming significantly and negatively impacts firms’ TFP, with the most adverse effects occurring at higher anomaly levels. Labor productivity declines markedly as temperatures rise, while capital productivity remains unaffected – indicating that TFP is primarily affected through the labor input channel. Our moderating analyses show that firms involved in outdoor activities, such as agriculture and construction, are more adversely impacted by increased warming. Manufacturing, capital-intensive, and blue-collar-intensive firms, compatible with assembly-line production settings, also experience significant productivity declines. Geographically, the negative impact is most pronounced in temperate and mediterranean climate areas, calling for widespread adaptation solutions to climate change across Europe. |
| Keywords: | Climate change, Global warming, Firm productivity, Total factor productivity (TFP), Semiparametric methods to estimate production functions, Longitudinal firm-level data |
| JEL: | D24 J24 Q54 |
| Date: | 2024–08–21 |
| URL: | https://d.repec.org/n?u=RePEc:ctl:louvir:2024010 |