The Role of Small Firms in U.S. Biotechnology Clusters

The biotechnology industry poses a particular challenge to analysis because its origins were poorly understood or even noticed at the time. The purpose of this paper is to examine and make sense of recent developments in the U.S. biotechnology industry. The pioneers and subsequent followers in biotechnology came from other fields. They altered their career trajectories in sciences like genetics and medical research to enter an unknown and undefined field, which only subsequently became labeled as biotechnology. Those regions exhibiting the greatest success in developing biotechnology clusters also possessed the greatest ability to unleash the potential commercialization latent in those scientists. To generate a successful regional cluster, the existence of world class scientific talent is a necessary condition. However, it is not a sufficient condition. The ancillary or complementary factors must also be available to translate this knowledge into a commercialized product. The complementary factors include the presence of venture capital and other forms of finance, the existence of an entrepreneurial culture, and transparent and minimal regulations fostering the start-up and growth processes.     

Policies Promoting Innovation in Small Firms: Evidence from the U.S. and U.K.

We provide background information on U.S. and U.K. policies promoting innovation in small firms and also summarize the papers that appear in this special issue. These studies were presented at a recent workshop that was jointly organized by the University of Nottingham Institute for Enterprise and Innovation (UNIEI) and the Board on Science, Technology, and Economic Policy (STEP) of the U.S. National Academy of Sciences. Based on a synthesis of these papers and other evidence that was presented during the workshop, we conclude that: (1) program evaluation is much more prevalent in the U.S. than in the U.K.; (2) the U.S. Advanced Technology Program (ATP) and Small Business Innovation Research (SBIR) program have been successful; and (3) shared costs between government and industry and frequent assessment are the keys to ensuring that such programs are successful.     

Family Ownership and Corporate Misconduct in U.S. Small Firms

This study adds to the theory of family business management by exploring the effects of family ownership on the corporate misconduct of small firms in the United States. The empirical findings indicate that small family-owned firms are less likely to commit misconduct than small non-family-owned firms. We interpret this finding as family firms aiming to achieve the trans-generational succession of moral capital. Further investigation shows a nonlinear family-ownership–misconduct relationship. A negative relationship between them only appears in mature firms. We further show that for relatively mature firms, only family firms with older owners are less likely to commit corporate misconduct.     

On the Growth of Micro and Small Firms: Evidence from Sweden

The relationship between the size, age and growth rate of firms is examined for a large sample of micro and small firms in Sweden. These firms have between 1–100 employees and operate in a geographically concentrated area. Micro and small firms are dominant in the industrial structure and thus their growth patterns are crucial to the economic growth of the region. The period of study is of particular interest because it allows us to evaluate the effects of various regional development policy programs on the growth and formation of firms. The data is an unbalanced panel covering the period 1993–1998. We allow for the exit and entry of firms. The growth rate is defined in terms of the number of employees, sales and assets. In the estimation of the growth rate we control for various factors characterizing the sample firms, their capital structure, performance, human capital, and local labor market conditions. Our results show that the relationship between the growth, size and age of firms is very sensitive with respect to the method of estimation, functional form and definition of growth and size.     

Communicating about Ethics with Small Firms: Experiences from the U.K. and Spain

This article introduces the important issue of communicating with small firms about ethical issues. Evidence from two research projects from the U.K. and Spain are used to indicate some of the important issues and how small firms may differ from large firms in this area. The importance of informal mechanisms such as the influence of friends, family and employees are highlighted, and the likely ineffectiveness of formal tools such as Codes and Social and Ethical Standards suggested. Further resarch in the area of small firms and ethics is essential.     

The J-Curve: Evidence from Industry-Level Data Between the U.S. and Indonesia

Empirical studies on the impact of currency devaluation or depreciation on the trade balance still continue to occupy the literature. These studies have evolved from using aggregate to disaggregated data. The findings, however, have been mixed. Previous research using aggregate trade flows of Indonesia with the rest of the world or bilateral data between Indonesia and the U.S. as one of its major trading partners found no significant relation between rupiah-dollar rate and Indonesia’s bilateral trade balances. In this article, we disaggregate the trade flows between Indonesia and the U.S. by commodity and show that the trade balances of at least nine out of 23 industries react to exchange rate changes favorably in the long run.     

Returns to Scale in Small and Large U.S. Manufacturing Establishments: Further Evidence

Nguyen and Reznek (1991) used plant-level data for five 4-digit SIC industries to estimate and compare the degrees of returns-to-scale for establishments of various size classes for the years 1977 and 1982. They found that the estimated scale elasticities of all plant sizes have values approximately equal to one. They, therefore, concluded that both small and large establishments under study are equally efficient in production. The purpose of the present study is to extend and improve upon Nguyen and Reznek's work by (1) extending the data set to cover the entire U.S. manufacturing sector, (2) improving the model by including energy as a separate input in production, and (3) relaxing the assumption of homogeneity and estimating an unrestricted (non-homogeneous, non-homothetic) production model. With the improved model and data, it is found that the estimated scale elasticities for all sizes of establishment are statistically insignificantly different from one. Thus, the result confirms and strengthens Nguyen and Reznek's finding that a large establishment size is not a necessary condition for efficient production.     

美国发展中小企业的成功经验及对我国的启示

美国的中小企业，在美国市场经济发展和科学技术进步中具有十分重要的作用。它对拉动美国经济的复苏，解决美国就业人口等方面作出了较大的贡献。本文分析了美国的中小企业在经济发展中的几点特点及其成功的经验，并结合我国的中小企业的改革与实践，提出了相应的对策建议。     

The Supply of Corporate Social Responsibility Disclosures Among U.S. Firms

Corporate social responsibility (CSR) is a dramatically expanding area of activity for managers and academics. Consumer demand for responsibly produced and fair trade goods is swelling, resulting in increased demands for CSR activity and information. Assets under professional management and invested with a social responsibility focus have also grown dramatically over the last 10 years. Investors choosing social responsibility investment strategies require access to information not provided through traditional financial statements and analyses. At the same time, a group of mainstream institutional investors has encouraged a movement to incorporate environmental, social, and governance information into equity analysis, and multi-stakeholder groups have supported enhanced business reporting on these issues. The majority of research in this area has been performed on European and Australian firms. We expand on this literature by exploring the CSR disclosure practices of a size- and industry-stratified sample of 50 publicly traded U.S. firms, performing a content analysis on the complete identifiable public information portfolio provided by these firms during 2004. CSR activity was disclosed by most firms in the sample, and was included in nearly half of public disclosures made during that year by the sample firms. Areas of particular emphasis are community matters, health and safety, diversity and human resources (HR) matters, and environmental programs. The primary venues of disclosure are mass media releases such as corporate websites and press releases, followed closely by disclosures contained in mandatory filings. Consistent with prior research, we identify industry effects in terms of content, emphasis, and reporting format choices. Unlike prior research, we can offer only mixed evidence on the existence of a size effect. The disclosure frequency and emphasis is significantly different for the largest one-fifth of the firms, but no identifiable trends are present within the rest of the sample. There are, however, identifiable size effects with respect to reporting format choice. Use of websites is positively related to firm size, while the use of mandatory filings is negatively related to firm size. Finally, and also consistent with prior literature, we document a generally self-laudatory tone in the content of CSR disclosures for the sample firms.     

Plant-level responses to antidumping duties: Evidence from U.S. manufacturers

This paper describes the effects of a temporary increase in tariffs on the performance and behavior of U.S. manufacturers. Using a dataset that includes the full population of U.S. manufacturing plants, I show that an apparent positive correlation between antidumping duties and traditional revenue productivity is likely misleading. For the subset of plants reporting quantity-based output data, increases in prices and markups artificially inflate the effect of antidumping duties on revenue productivity, while physical productivity actually falls. Moreover, antidumping duties allow low-productivity plants to continue producing protected products, slowing the reallocation of resources from less productive to more productive uses.     

China's Shale Gas Industry Attracts U.S. Firms

China,the world's biggest energy user,is set to copy the U.S.success in making shale gas a cheap and plentiful new fuel source.Though still in its early days with production nowhere near the commercial stage,China's shale-gas industry holds lucrative opportunities for U.S.companies that provide oil-field services.     

The Role of Small Firms in the Technology Development of China

Science & Technology (S&T) is high on the Chinese policy agenda and the country aims at becoming an innovation‐driven economy. Small firms have been important in technology development in other East Asian countries but the situation in Chinese small firms has been far less explored. We examine how much S&T has been accounted for by small firms and how their S&T intensity differs across industries and ownership groups. We also analyse how various firm characteristics differ over size categories and S&T status. This study is based on newly processed micro‐level data provided by the National Bureau of Statistics with information on a large number of S&T indicators for manufacturing firms in China in 2000 and 2004. Our results suggest that the role of small firms in Chinese S&T is similar to that in many other countries. They account for a comparably small share of total S&T and most small firms are not engaged in any S&T. However, those small firms that do engage in S&T tend to be more S&T intensive and have a higher output in terms of patents than larger Chinese S&T firms.     

The Role of Advertising in the Marketing Strategy of Accountancy Firms: Evidence from a Regional Market

Rules governing the advertising activity of accountancy firms have recently been relaxed. Published evidence is, however, scant regarding the perceived value of accountancy firms' advertising by both users of their services and by business advisers. Building on a conceptual model of the role of advertising in accountancy firms described in an earlier issue of this journal [Watkins and Wright, Service Industries Journal, Vol. 5, No. 3, November 19851, this article presents some results from a recent survey of a regional accountancy market. These results show that a careful examination of advertising within the overall marketing mix is required, with other forms of marketing perhaps offering greater possibilities. The overall conclusion is that the cost-effectiveness of the advertising of accountancy services h s t be open to doubt.     

A Dynamic Model of Size Distribution of Firms Applied to U.S. Biotechnology and Trucking Industries

The present paper attempts to contribute to the existing literature on industry dynamics by proposing a tractable structure for the analysis of the dynamic process governing the size distribution of firms. An analytical model is proposed which describes the density of the cross-sectional distribution of firm size within an industry. The model is based on the theory of diffusion processes, and the method illustrates how information on the time-evolution of size distribution of firms over an extended period of time can be used to make inferences about an underlying process. An empirical application to the evolution of size distribution of population of firms in (i) the U.S. biotechnology industry, and (ii) the U.S. interstate for-hire trucking industry illustrates the applicability of the proposed model in industry studies.     

The Role of Language in the Communication Process Between Business and Government: Evidence from Russian Firms

Abstract

The paper investigates how language facilitates communication process between government and business. We use Russian context to show barriers and challenges of using language in official communication between governmental authorities and Russian companies. In our work, we demonstrate how language may produce employee’s misunderstanding and discuss typical sources of ineffective usage of language. The results indicate that problematic issues of both linguistic and non-linguistic nature can lead to serious implications for successful communication between government and business in Russia. We found that documentations’ complexity, which is perceived as such due to a complicated subject area they belong to (legal, tax, etc.) and language insufficiency applied are most likely to raise multiple problems related to government’s communication with business.     

A Survey of Governance Disclosures Among U.S. Firms

Recent years have featured a spate of regulatory action pertaining to the development and/or disclosure of corporate governance structures in response to financial scandals resulting in part from governance failures. During the same period, corporate governance activists and institutional investors increasingly have called for increased voluntary governance disclosure. Despite this attention, there have been relatively few comprehensive studies of governance disclosure practices and response to the regulation. In this study, we examine a sample of 50 U.S. firms and their public disclosure packages from 2004. We find a high degree of variability in the presentation and reporting format choices for many elements of the governance structure. This variability includes several items for which disclosure is mandated by regulators or legislative action. In particular, smaller firms offer fewer disclosures pertaining to independence, board selection procedures, and oversight of management (including whistleblowing procedures). There are also trends associated with board characteristics: boards that are less independent offer fewer disclosures of independence and management oversight matters. Moreover, large firms provide more disclosures of independence standards, board selection procedures, audit committee matters, management control systems, other committee matters, and whistleblowing procedures but do not appear to have a strictly superior information environment when compared to smaller firms. The findings raise questions about compliance with regulatory requirements and the degree to which conflicts of interest between managers and directors are being controlled. While there have been notable improvements in the information environment of governance disclosures, there remain structural issues that may possess negative ramifications for stakeholders.     

An Investigation into the Overseas Expansion of Small Asian-Owned U.K. Firms

This paper contributes to the growing body of knowledge in international entrepreneurship by reporting on a qualitative empirical investigation into the overseas expansion processes of small Asian (originating from the Indian sub-continent)-owned firms operating in the U.K. clothing industry. The key decision makers within these firms frequently identified themselves as an active, and important, influence upon the actual activities of their firms as international operators. For some firms though, a more passive approach to internationalisation could be identified, whereby the receipt of unsolicited orders had an effect on some firms' timing of overseas market entry. The balance between the nature of opportunities, that frequently derived from cultural networks, and the constraints of a limited resource base with which to exploit those opportunities, also had a major impact on the direction and pace of certain firms' overseas expansion. The findings suggest a general tendency to adopt an incremental approach to internationalisation within this mature trade sector. The cultural and business experience of managers, however, was found to have an effect on the pace and direction of the overseas expansion. Recommendations on the likely efficacy and effectiveness of public/private sector interaction within the area of international entrepreneurship involving entrepreneurs from Asian backgrounds are offered.     

What Affects New and Established Firms’ Expansion? Evidence from Small Firms in Russia

Research on financial constraints of very small firms is scarce because it is difficult to observe and measure their transactions. Previous studies on small enterprises in post-communist countries have focused either on the effect of financing constraints on business growth (Budina et al., 2000, Economics of Transition 8(2), 453–475; Bratkowski et al., 2000, Economics of Transition 8(1), 101–116) or on the effect of property rights (Johnson et al., 2002, American Economic Review 92(5), 1335–1357). This paper provides evidence on both. It turns out that financing constraints and property rights considerations affects investment in firms of different age differently. Younger firms face higher information costs and their expansion is more dependent on the availability of internal funds than is the expansion of older firms. This paper also finds that while the financial sector did not channel funds to the most successful businesses, there is evidence that loans were given to firms that had more transparent transactions. Results also indicate that the security of property rights does not influence investment in young firms, which is interpreted to mean that only the most efficient entrepreneurs entered the market. In older small firms, investment is negatively influenced by the index of security of property rights suggesting that these firms might have “secured” their property rights by bribes. Improvements in the security of property rights, therefore, would help more micro enterprises to be born as well as decrease transaction cost of established enterprises.      

Taxation and the Performance of Technology Based Small Firms in the U.K.

This paper analyses a database of U.K. small companies in order to establish the profile of Technology Based Small Firms (TBSFs) in terms of their demography, financial structure and performance, and tax affairs. Following the evaluation of the impact of direct taxation on the high technology small companies, compared to that of their low technology counterparts, the paper briefly discusses the current policy debate about the nature and appropriateness of tax-based incentives for the development of this strategically important scale and type of enterprise.