Small business,innovation, and entrepreneurship

The purpose of this special issue is to examine small businesses, innovation, and entrepreneurship, and show that, although these three concepts have their own specific literature and can be dealt with independently, they are closely related. From Schumpeter to the present, a stream of literature unites the concept of entrepreneurship with its ability to make new combinations of factors and corresponding innovations in processes and products; similarly, in a broad stream of literature, the most characteristic dimension of entrepreneurship is closely linked to small businesses. Small and large companies have different advantages and drawbacks with innovation, but small businesses provide the most conducive environment for entrepreneurship and innovation that are not necessarily sustained by the know-how and resources characteristic of large-scale production, but require commitment and close cooperation between company members. In this introduction, we show how the three topics converge in four articles dealing with micro-start-ups and innovation, institutional determinants of entrepreneurship, and determining factors in entrepreneurs’ individual characteristics.     

Estimating efficiency and its determinants in the hotel sector using a profit function

Inefficiency in the hotel sector is normally estimated through cost and scale efficiencies. This paper estimates hotel profit efficiency and its determinants employing a stochastic frontier profit function and the inefficiency effects function. The key advantage of this methodology is its ability to estimate efficiency for each hotel and the factors that explain differences in efficiency in a single-stage sampling procedure. The sample consists of 231 hotels in Spain in the period 2008–2012. Empirical evidence shows that the average level of profit efficiency is 45.85% and that age, labour productivity and location are determinants of this efficiency. Policy implications for the improvement of less efficient hotels are noted.     

Panel data modeling of bank deposits

Annals of Finance - Studying the dynamics of deposits is important for three reasons: first, it serves as an important component of liquidity stress testing; second, it is crucial to...     

Practical wisdom: A virtue for leaders. Bringing together Aquinas and Authentic Leadership

This article analyzes in detail the virtue of practical wisdom as described by Thomas Aquinas, and on this basis it develops a comprehensive framework to enrich Authentic Leadership theory, establishing the virtue of practical wisdom as foundational for the authentic leader’s behavior and character development, and highlighting shortfalls that may stem from vices opposed to it. The goal of the article is two-fold: First, it seeks to fill a void on the role of virtues–and in particular practical wisdom–in leadership studies; second, it aims to show how cultivating the virtue of practical wisdom as described by Aquinas promotes the development of exactly those traits that are characteristic of an authentic leader, offering a set of propositions delineating these correlations.     

Fundraising as organisational knowing in practice: Evidence from the arts and higher education in the UK

This paper argues for the centrality of organisational practices in occupational learning with a case study of fundraising in the non-profit UK's arts and higher education sectors. Despite the need to increase charitable giving to non-profit organisations, little is known about the work, fundraisers must do in order to carry out their jobs. We argue that fundraisers develop strategic understandings and competences within organisational environments, which they put into practice in their relationships with stakeholders within and outside the organisations where they work. Our findings suggest that one of the main ways in which fundraisers learn is by negotiating and surmounting obstacles both internally, within their organisational environments and externally, around the perception of fundraising as a profession. We thus argue for the importance of establishing a “fundraising culture” within organisational environments; a shared organisational competence where fundraising is practiced as a legitimate and strategic type of practice.     

The effect of science and technology parks on a firm’s performance: a dynamic approach over time

We argue that the benefits provided by locations inside science and technology parks evolve over time. Firms inside parks can improve performance due to certain advantages related to knowledge spillovers and shared resources that can be particularly useful in earlier stages of the industry life cycle. In these industries, local knowledge sharing is particularly useful because no standards are clearly established, as we have confirmed in a sample of 12,800 firms from the PITEC database, located either on- or off-park. We also find that young firms can benefit more from the park than more established businesses in terms of both business growth and innovative capacity. Although older firms have greater experience and investments that would increase their capacity to absorb external knowledge, their associated rigidities prevent them from incorporating changes into their structures.     

The effect of science and technology parks on firms’ performance: how can firms benefit most under economic downturns?

The objective of this research is to evaluate the effect of the economic recession on the performance of firms located in science or technological parks. Compared to off-park firms, we propose that under an economic crisis park benefits are more noticeable, since firms located inside parks have less resource restraints and access to external sources of information and knowledge. Moreover, we observe that as firms invest on internal R&D, they tend to reinforce these park benefits. Empirical evidence gathered data on employment and sales from 2007 to 2012 for the group of firms which participated in the Spanish Technological Innovation Panel. The results confirm the positive role played by science and technology park locations under economic downturn environments, especially when firms investing in internal R&D.     

Irrational Exuberance, Entrepreneurial Finance and Public Policy

Unrealistic optimism is a well documented phenomenon. This paper argues that it is important in many economic contexts. Focusing on start-up finance for businesses, optimism may be responsible for or consistent with features such as credit rationing or redlining that are normally taken as symptoms of under-provision of finance requiring intervention to expand lending. Optimism leads to the opposite conclusion, at least if it is legitimate to use fiscal policy to counteract systematic error. The paper reports on an experiment in which, due to optimism, the lower the prizes to entrepreneurial activity the higher the subject's expected income.     

The performance implications of “grow or buy” decisions in the wine industry

This paper investigates how wineries’ decisions to grow or buy their provisions of grape affect their viticultural performance. While previous literature in agrarian economics suggests a direct association between vertical integration and performance, this research largely neglects the impact of transaction cost variables on governance mode choice and firm performance. This paper first demonstrates that neither outsourcing nor vertical integration per se result in superior performance; rather, a winery’s viticultural performance is contingent upon the alignment of winery’s governance decisions with the predictions of transaction cost theory.