Regional differences in small firm entry in manufacturing industries: Lower Saxony, 1979–1991 †

This paper is an empirical study of inter-regional and inter-temporal variations in entry of new firms using longitudinal data covering all manufacturing establishments in Lower Saxony between 1979 and 1991. Patterns of entry are reported for sixteen regions based on gross rates of entry (number of new firms) and entry intensities (shares of employees). An empirical model is applied to detect regional characteristics that are highly correlated with entry. Pooling of cross-section and time-series data allows for control of influences of varying macroeconomic conditions and unobserved regional characteristics that turned out to be important. Small firm entry tends to be positively related to high overall economic growth, and to be higher in regions where both the small firm employment share and the level of wealth are high while the wage rate is low. We find no evidence for a negative impact of the business tax rate or for a positive effect of regional subsidies.     

The influence of co-location in higher education institutions on small firms’ perspectives of knowledge transfer

Since 1980, the UK has experienced a dramatic growth in firms and employment in information–intensive business services, such as management consultancy and market research. Recent expansion of new and small firms operating in these sectors is the focus of a major ESRC–sponsored research project currently under way at Cambridge University Small Business Research Centre.

Small business service firms are able to compete successfully with large firms due to the imperfect nature of the market which characterizes business services demand and supply, together with specialization of expertise. The success of small business service firms depends on informal person–to–person networks, word–of–mouth recommendation and repeal business based on successful earlier assignments or personal contacts acquired, for example, while working in a large consultancy or market research company. This paper examines the types of networks utilized by small business service firms and argues that two distinct types exist: demand– and supply–related networks; the former involves links with clients, the latter links and co–operation between complementary small business service firms.     

The fountain of knowledge: an epistemological perspective on the growth of U.S. SBIR-funded firms

The premise of this paper is that a basis for firms receiving Small Business Innovation Research (SBIR) research awards to develop commercializable technologies is not only their proposed creative ideas but also their endowment of attendant knowledge necessary to develop the technology being proposed. Based on this premise, we propose that those firms that have higher growth rates attributable to their SBIR awards are also those firms that are more creative and have more knowledge endowments. Empirically, we quantify a firms creativity and its sources of research knowledge in terms of its past experiences, and we find that firms with more technical experience and sector experience are those that have realized higher growth rates from their SBIR-funded research.

     

中小会计师事务所发展的理性思考

中小企业是我国国民经济中的一支重要力量,中小企业的存在为中小会计师事务所提供了广阔的发展空间。本文从发展优势、存在的问题等方面对中小会计师事务所进行了分析,在此基础上,提出我国中小会计师事务所的发展对策。     

ON THE STRUCTURE AND DYNAMICS OF SOME SMALL, UK-BASED INFORMATION TECHNOLOGY FIRMS*

The paper reports on the discovery of some small but successful information technology firms. These firms, which are geographically and structurally highly mobile, were found in a recent survey of information technology firms in the north-west of England. Detailed investigation of the firms as case studies, revealed that they have many distinctive and interesting properties. Eleven distinguishing characteristics in addition to small size are identified; among them being lack of hierarchy, pervious boundaries, and extreme mobility including growth by replication. In the discussion, some differences in the organization of the firms are identified, it being argued that although all the firms lack hierarchy and tend to adopt very extreme forms of matrix organization, they do this to a greater degree the less they are dependent on technology for the creation of their products, and/or on the extent to which they retain proprietary products in their range. the paper concludes with a consideration of other work on new technology firms and argues that these findings are not unique. However, it is also argued that small firm researchers have not been very creative in their use of the available frameworks to account for the existence of the firms analysed in this paper, or to understand that it is the contingencies they face which allow them to be highly mobile and adaptable.     

Costs of short-term credit for small and large firms

Changes in costs of credit for small and large firms respond differently to economic conditions and the markets are segmented. Costs for small firms are less responsive to changing economic conditions. Small firms borrow via credit card loans and from banks. Dynamic models prove the costs of funds are negative functions of quantities borrowed and positive functions of the Fed funds rate. During recessions, the decline in funds’ prices to large firms is greater than the reductions to small firms. Large firms benefit to a greater extent than small firms when prices of credit are changing.     

中小企业的发展与企业集群研究

中小企业正在世界范围内快速发展,但规模小,在与大企业的竞争中,单个中小企业明显处于劣势。企业集群是一种界于企业与市场之间的中间组织,具有持久的竞争优势,是提升中小企业竞争力的有效途径。消除我国中小企业在竞争中的劣势,应该走集群化道路。     

动态联盟与中小企业的成长

在竞争激烈、产品快速升级换代的环境下,中小企业难以完全依靠自身力量立足并取得发展,中小企业成长依赖于外部资源获取,而资源获取渠道又通常来自于各种关系交织成的复杂、交叉重叠的社会网络,文章将中小企业与动态联盟联系起来,对动态联盟这种新的企业运作模式在中小企业成长所起的作用进行论述。     

Wants and past knowledge: Growth cycles with emerging industries

This paper develops a theory of endogenous growth cycles focusing on the interaction between consumers' desire to satisfy an indefinite range of wants and firms' incentive to utilize knowledge from past production experiences. We show that firms endogenously form a number of distinguishable industries as accumulated knowledge induces them to agglomerate in the technology space. Knowledge accumulation in existing industries reduces production costs, but, as the diminishing returns from learning sets in, some firms start to adopt previously unexplored technologies so that their new goods fit consumers' unsatisfied wants and attract large demand. Thus, sporadic emergence of new industries generates growth cycles, where both the timing and the new technology to be adopted are endogenously determined. New industries based on new technology reduce the rate of per capita GDP growth in the initial phase, but nonetheless are indispensable for sustained economic growth in the long run.     

Determinants of the Size of the Small Business Sector: They Are Labor Productivity, Wage Rates and Capital Intensity

Abstract . Statistical analysis of a hitherto unpublished tabulation of the 1976 Annual Survey of Manufactures provides new evidence of the small business/ large business relationship in the U.S. economy. Small business (measured by employees) seems to have an advantage over large in that it has relatively lower wage costs. But the data prove it has a higher ratio of labor inputto unit output. Higher productivity in large firms make its wage/output relationship an advantage over small firms. Large firms pay appreciably higher wages than small where most production is by large firms. Highly skilled and hence higher paid workers may be a correlate of higher mechanization. Similarly, the role of capital intensity as an indicator of technology differences explains why capital productivity is no adequate explicator of firm industry share. These variables are closely related to profit margin. Relatively high book values in large firms are associated with low small business industry shares. Nor do large businesses have an advantage in lower prices for raw materials and parts. In the U.S. large business is centered in the capital intensive industries.     

Interplay between reputation and growth: the source,role and audience of reputation of rapid growth technology-based SMEs

Abstract

Drawing on resource-based view and signalling theory, this paper presents a comparative case of four (young vs. old; small vs. medium-sized) business-to-business firms to examine how (i.e. through which sources), why (i.e. for which managerial purposes) and for whom (i.e. for which audiences) do technology-based small and medium-sized enterprises build their reputation along the process of rapid growth? The results indicate that in the pre-growth stage product awards as well as technological and financial partners are important sources of reputation for demonstrating technological capabilities and firm sustainability to potential customers especially for young firms. Older firms, in turn, rely on technology partners and acquisitions in the rapid growth stage to convince existing customers that the firms’ can keep up with their customer’s changing needs. Moreover, the reputation gained from the first well-known customer and a focused clientele appear to be two critical antecedents of rapid growth whereas patents do not seem to have a significant reputational role in rapid growth. Our study informs the theory of reputation development of growing technology-based firms by abstracting a more nuanced understanding of stakeholder- and stage-contingent reputation that fosters rapid growth, and provides new insight into the literature on small firm growth.     

Efficiency and productivity in the Thai non-life insurance industry

This paper estimates a stochastic cost frontier for a sample of the non-life insurance industry in Thailand from 2000 to 2007. Our model explicitly considers the heteroscedasticity in the variances of the noise and inefficiency components that could affect the position of the cost frontier as well as the measurement of efficiency. Tests for double heteroscedasticity and appropriate specification for the cost frontier are performed. The chosen model is used to examine whether economies of scale and a change in technology exist. In addition, this paper calculates total factor productivity (TFP) change and decomposes it into scale effect, cost efficiency effect, technology effect, output effect, price effect, and environmental effect. Our results reveal that, on average, Thai non-life insurance firms are between 74 and 79 % efficient, that economies of scale exist, and that regress in technology shifts the cost frontier upward by 2.2 %. The regress in technology is the dominant contributor to a negative TFP growth of 1.15 %. The restructuring of the industry following the 1997 Asian financial crisis finally paid off when the industry experienced technology progress in 2005 and beyond. Between 2005 and 2007, technology progress and productivity growth occurred at a little over 2 % a year. In-depth analysis of the most and the least efficient firms reveals that most efficient firms tend to strategically select types of insurance services and underwrite average and small size sum insured per policy to diversify their risks. In addition, they tend to be savvy investors. The opposite holds for the least efficient firms which concentrate in providing labor-intensive, small sum automobile insurance policies or underwrite large coverage policies for fewer policyholders. Balancing the mix of insurance types, spreading risk across insurance types or across number of policyholders, investing in high yield assets, or developing a market niche may prove beneficial for improving cost efficiency.     

Sarbanes-Oxley wealth effects: focus on technology firms

We evaluate the shareholder wealth effects surrounding the passage of the Sarbanes-Oxley Act (SOX). While other studies have also measured wealth effects, none has separately examined technology firms. We discuss the unique characteristics of technology firms and assess whether technology firms are differentially affected. Our results show the portfolio of 218 technology firms experienced significantly more favorable wealth effects than the portfolio of 940 non-technology firms in response to events indicating stringent reform legislation. The cross-sectional analyses suggest that board independence, growth expectations, and R&D expenditures are influential factors in the differential stock price response of technology firms. Across our full sample of 1,158 firms, we find that wealth effects are less favorable for firms that likely will incur high compliance costs and more favorable for firms that are expected to benefit from improved governance and improved transparency.     

Work and pay in small Chinese clothing firms: a constrained negotiated order

Small clothing factories in China represent ideal conditions to find regimes characterised by market despotism. Yet studies of similar firms in other countries suggest that ‘negotiated paternalism’ is a better characterisation and that work relations have a large degree of cross‐national similarity. Using interview data from seven small case firms and 63 employees in 12 small clothing firms in Guangdong province, this article finds important parallels with other countries in terms of pay system and negotiated order. Workers could negotiate relatively high wages, albeit at the cost of very long hours. This situation reflected booming economic conditions, a non‐rationalised production system that left space for individual and informal collective bargaining, and close personal ties between workers and managers. Work relations in small firms are more nuanced than the sweatshop image allows, and extreme exploitation is more likely in Taylorised workplaces run by large corporations.     

Alliance Dynamics for Entrepreneurial Firms

abstract    Small firms are thought to encounter various difficulties implementing strategic alliances. Due to these problems, they may be less able to reap the benefits of alliance adaptation, and the changes that do occur in alliances may not coincide with a small firm's interests. The evidence we present on contractual renegotiations in alliances suggests that small firms are no more or less likely to adjust their alliances' contracts in general. However, small firms tend to bear inefficiencies of two kinds in their collaborations. First, they are less likely to adapt alliances in the presence of governance misalignments. Second, our sampled small firms were more prone to make transaction-specific investments, which can stimulate ex post hold-up in the form of contractual renegotiations.     

Antecedents of the small firm effect: the role of knowledge spillover and blocked mobility for employee entrepreneurial intentions

Small firms are said to produce more entrepreneurs than larger ones (“small firm effect”). Applying existing theories, we analyze how different management positions influence employee entrepreneurship in small firms. Based on a panel study of 4832 cases, we provide evidence for the fact that small firms indeed produce more entrepreneurs. Moreover, we show that lower management positions of small firm employees are responsible for this small firm effect. We conclude that small firms seem to create an environment in which employees on low management positions strongly benefit from knowledge spillover effects as they are educated necessary skills, knowledge and expertise, and are able to build up networks conducive to entrepreneurship (“knowledge spillover effect”), while not having the multifaceted advancement opportunities as in large companies (“blocked mobility effect”).     

Bargains Followed by Bargains: When Switching Costs Make Markets More Competitive

In markets where consumers have switching costs and firms cannot price‐discriminate, firms have two conflicting strategies. A firm can either offer a low price to attract new consumers and build future market share or a firm can offer a high price to exploit the partial lock‐in of their existing consumers. This paper develops a theory of competition when overlapping generations of consumers have switching costs and firms produce differentiated products. Competition takes place over an infinite horizon with any number of firms. This paper shows that the relationship between the level of switching costs, firms' discount rate, and the number of firms determines whether firms offer low or high prices. Similar to previous duopoly studies, switching costs are likely to facilitate lower (higher) equilibrium prices when switching costs are small (large) or when a firm's discount rate is large (small). Unlike previous studies, this paper demonstrates that the number of firms also determines whether switching costs are pro‐ or anticompetitive, and with a sufficiently large (small) number of firms switching costs are pro‐ (anti‐) competitive.     

Myth-busting and entrepreneurship policy: the case of high growth firms

Abstract

Promoting high growth firms (HGFs) has become a strong fixation within enterprise policy. This is a debate article seeking to examine and challenge the mythology perpetuated by policy makers and embedded within high growth entrepreneurship policy frameworks. Within the article we argue that a number of distinctive ‘myths’ have become deeply embedded within these policy frameworks. Such myths have been built on misconceived preconceptions of HGFs, which has resulted in policy-makers taking a myopic view of these firms. A key aim of the paper is to highlight how false perceptions of HGFs translate into inappropriate policy interventions. The paper challenges some of the most commonly held myths about these firms (that they are predominantly young, small, high-tech, VC-backed, university spin-outs, who grow in an orderly organic fashion, operating similarly irrespective of location) and identifies a clear mismatch between how policy makers perceive HGFs and what they actually look like in reality. Suggestions for the design of future policy approaches are forwarded.     

Firm turnover and productivity differentials in Ethiopian manufacturing

Are the forces of market selection at work in Africa? How successful are markets in these economies in sorting out firms on an efficiency basis following the sequence of reforms to liberalize and particularly to transform some of the previous command economies to market oriented ones? What is the pattern of entry and exit in the manufacturing sector and how does it affect industry productivity growth? This study examines these issues using firm-level industrial census data from the Ethiopian manufacturing sector. It is the first attempt to analyze firm turnover and productivity differentials using industrial census data in sub-Saharan Africa. The Ethiopian manufacturing sector exhibits a high firm turnover rate that declines with size. Exit is particularly high among new entrants; 60% exit within the first 3 years in business. Our study consistently shows a significant difference in productivity across different groups of firms, which is reflected in a turnover pattern where the less productive exit while firms with better productivity survive. We also found higher aggregate productivity growth over the sample period, mainly driven by firm turnover.     

Defining and improving technology transfer business and management processes in university innovation centres

The complex and dynamic behaviour associated with technology transfer business processes combined with the technological risk involved in the participating small firms, has led to a lack of business process definition and improvement in this area. Furthermore, the embryonic firms are highly individualistic with differing needs for assistance and development. There may also be a tendency to provide infrastructure and basic services with an avoidance of business process definition and hence, improvement.The aim of this paper is to investigate how potential business and management inputs can be used to define and to suggest improvements for two key technology transfer business processes, namely the technology licensing process and the business building process.A stratified pathway process mapping approach is used. This research approach includes semi-structured interviews with University Innovation Centre small firms, focus groups with Innovation Centre stakeholders and best practice benchmarking.The findings indicate that a modified processual approach can be adopted to define key business processes within technology transfer. Using this approach it is possible to show where business and management interventions can most effectively be deployed in each process.