The role of small firms in Indonesia

During the last two decades small firms in developing countries have received more and more attention from researchers and policy makers. For this, several reasons have been brought forward. The decline in labour absorption in agriculture and the slow growth of employment opportunities in the other sectors of the economy, combined with the fact that the growth of the labour force has accelerated, have led to un- and under-employment problems in many of these countries.Small firms are generally viewed as a useful means of alleviating these problems, because medium and large firms only would not help to solve the problems. However, from this study it can be concluded that the medium and large firms in the manufacturing sector in Indonesia are doing better in employment and income than generally anticipated.The purpose of this study is to examine the relative pattern of change and development of small firms in the manufacturing sector in Indonesia in the last two decades and possible factors affecting their growth. Also the relative importance of small firms in terms of income generation will be assessed.The study will use national data collected from the Department of Industry and Central Bureau of Statistic in Indonesia. Further, the study will be based, for its theoretical analysis, on relevant literature on the subject and on some empirical studies in Indonesia as well as in other developing countries.     

Franchise failure: a reassessment of the Bates (1995) results

Franchising is often touted as a safe route to business ownership in the service arena. Yet findings by Bates (J Small Bus Manage 33(2):26–36, 1995) suggest that franchising may be a riskier alternative for prospective business owners than starting a non-franchised business. We contend that this conclusion is inappropriate because flaws in Bates’ study lend themselves to alternative interpretations of his results. The most critical flaws and plausible alternative interpretations are explained, and implications for prospective business owners are discussed.     

Social Embeddedness in Electronic Negotiations

This study contributes to electronic negotiation research by analyzing the role of social embeddedness of actors in a controlled laboratory experiment. In particular, we analyze the effect of prior negotiator relationship in different conflict levels in web-based negotiations. We hypothesize that with increasing intensity of conflicts, negotiators who have a personal relationship use more value creating strategies compared to anonymous negotiators. As a consequence, we also hypothesize to find fewer impasses in electronic negotiations involving subjects who are socially embedded. Our results confirm that, in fact, in severe conflicts socially embedded actors reach significantly more agreements than subjects of the control group while such an effect is not found in weak conflict situations. These findings are related to more yielding between embedded actors but not to more value creating behavior. From these results, we can conclude that socially embedded negotiators better manage to reach agreements in difficult situations. Furthermore, an institutionalized pre-negotiation phase which allows negotiators to establish a personal relationship can counteract the threat of impasses.     

Combining revealed and stated preferences data

Our objective is to develop a unifying framework for the incorporation of different types of survey data in individual choice models. We describe statistical methodologies that combine multiple sources of data in the estimation of individual choice models and summarize the current state of the art of data combination methods that have been used with market research data. The most successful applications so far have combined revealed and stated preference data. We discuss different types of market and survey data and provide examples of research contexts in which one might wish to combine them. Although these methods show a great deal of promise and have already been used successfully in a number of applications, several important research issues remain. A discussion of these issues and directions for further research conclude the paper.     

Interstate banking,bank consolidation,and bank lending to small business

Proponents and critics of interstate banking argue over the implications of nationwide banking for bank lending to small business. This study explores the patterns of (1) bank consolidation at the national level and (2) the share of domestic-bank commercial lending extended to small firms, specifically, small manufacturing firms, over the period 1976–90. The evidence indicates that despite the trend toward fewer banking organizations and increased aggregate bank concentration due largely to cross-state expansion by superregional banking organizations, no significant downtrend is observed in the share of domestic-bank credit extended to small manufacturing firms. Nor is there any discernible downtrend in banks' share of borrowing by small manufacturing firms. These results are consistent with the thesis that banking industry consolidation hasnot led to a reduction in the supply of bank credit to small firms, at least within the manufacturing sector.     

Does corruption increase emerging market bond spreads?

We study the relationship between corruption and borrowing costs for governments and firms in emerging markets. Combining data on bonds traded in the global market with survey data on corruption compiled by Transparency International, we show that countries that are perceived as more corrupt must pay a higher risk premium when issuing bonds. The global bond market ascribes a significant cost to corruption: an improvement in the corruption score from the level of Lithuania to that of the Czech Republic lowers the bond spread by about one-fifth. This is true even after controlling for macroeconomic effects that are correlated with corruption. We find little evidence that investors became more sensitive to corruption in the wake of the Asian financial crisis.     

Experimental analysis of choice

Experimental choice analysis continues to attract academic and applied attention. We review what is known about the design, conduct, analysis, and use of data from choice experiments, and indicate gaps in current knowledge that should be addressed in future research. Design strategies consistent with probabilistic models of choice process and the parallels between choice experiments and real markets are considered. Additionally, we address the issues of reliability and validity. Progress has been made in accounting for differences in reliability, but more research is needed to determine which experiments and response procedures will consistently produce more reliable data for various problems.Sawtooth SoftwareDecision Research     

Market Orientation, Innovativeness, Product Innovation, and Performance in Small Firms

Most research on market orientation, innovation and performance is related to big enterprises and small and medium-sized enterprises (SMEs). In this study a model is developed to investigate the combined effect of market orientation and innovativeness on product innovation and company performance, for small firms. A specific feature of our research is that we use an objective measure for product innovation in contrast to the self-reported measures commonly used in research on innovation. To test our model data from 152 rose growers were used. This study's results show that the owner's innovativeness permeates all variables in the model and has a positive influence on market orientation, innovation, and performance. An interesting research result is also that customer market intelligence influences product innovation positively or negatively, depending on whether the innovativeness of the owner in the new product domain is weak or strong.