Linking Innovation and Firm Performance: A New Approach

Using the second Community Innovation Survey (CIS-2) for the Netherlands, we analyse the input and output stages of the innovation process and the links between the innovation process and overall economic performance. We investigate the existence of feedback links running from past economic performance to the input and the output stage of the innovation process and compare the results of a single-equation approach with the results obtained from a simultaneous-equation model.     

A Model of Community–Based Venture Capital Formation To Fund Early–Stage Technology–Based Firms

This paper suggests a model of capital formation that concurrently establishes a mechanism to fund early–stage technology–based firms and meets the economic development needs of rural communities. Investors in a community capital investment fund can gain high rates of return on investment while firms realize all of the benefits associated with the investment, community support, and expanded network. The model includes factors associated with the community environment (community–based factors that impact community members' participation) and external support environment (factors that facilitate the accumulation of investment capital within a community). The result of a community effort can be an environment in which members of the community contribute to an investment fund, cooperate in attracting firms, and provide networking assistance to new business owners. Communities benefit through job creation and economic stability. Community members benefit through wealth creation.     

Venture Capital in Spain by Stage of Development

This paper examines the investment decisions of 51 Spanish venture capital firms by stage of development. The results showed that venture capitalists ranked evaluation criteria related to the characteristics of the entrepreneurs, manager background, and management team experience as more important than market and product characteristics. Factors affecting the required rate of return were more important for the early-stage firms than for late-stage firms. Discounted cash flow analysis is the most frequently used valuation method. Private venture capital firms invest more during late development stages, while public venture capital firms invest more during the early stages. The results can be used by firms seeking venture capital, venture capital firms, consultants, and support agencies that provide capital-acquisition assistance. By gaining insight into decision criteria and processes, firms can develop better and more targeted materials to attract capital. Venture capital firms can use the information from this study to better understand their decision processes, individually and relative to competitors. Consultants and support agencies can use the information to provide better advice to both firms and venture capital firms. Information is this study could easily be built into training programs for both new and existing businesses. Finally, the results can also be incorporated directly into university courses that include material related to venture capital.     

Life Cycle Characteristics of Small Professional Service Firms*

Our study of professional services firms clearly revealed that firms change over the course of their life cycles. During the first three stages, diversification in sales, the differentiation in labor force, and the level of labor productivity increase. In the last stage, diversification in sales, the differentiation in labor force, and the level of labor productivity decrease. Development effects can be treated as interdependent. Our findings show that the effects of growth can be predicted to a certain extent. In efforts towards development, these predictions are important to business strategy, as well as to consultation with and education of SME entrepreneurs.     

Influence of livelihoods on climate change adaptation for smallholder farmers in the Mekong Delta Vietnam

Farmers in the Vietnamese Mekong Delta face a wide range of climate-related and hydrological factors which threaten rice production. Smallholder farmers must adapt to climate change to sustain rice production as their central and most important livelihood activity. A sample was stratified across agro-ecological areas in the Delta affected by flooding, alluvial soils, acid sulphate soils, and saline water intrusion and by derived farmer typologies. A rural livelihoods approach was used in focus group discussions and in-depth interviews to identify and enumerate enabling and constraining adaptation factors. Smallholders experienced diverse natural hazards such as floods, abnormal rains, high temperatures, water scarcity, and salinity intrusion specific to the agro-ecological areas. Adaptation was constrained by labour shortages, water quality, topography, access to combine harvesters, transportation infrastructure, dryers and household savings. Adaptation was enabled by farming techniques and experience, cooperative groups, water quantity, access to information, and ability to purchase agro-chemicals through credit. Small farmers (< 1?ha) were more constrained than large farmers (> 1?ha) who had an expanded livelihood asset base. A range of policy implications are discussed, but adaptation is not just about technological fixes but requires overall improvements in a range of human, social and financial components.     

Non‐Parametric Modelling of CO2 Emission Quota

Dutch glasshouse firms are facing the introduction of a system of tradable CO₂ emission quotas. This paper employs a non‐parametric method for modelling tradable CO₂ emissions of Dutch glasshouse firms. The method is capable of generating shifts in CO₂ emissions across the sample of firms. Moreover, changes in volumes of outputs produced and inputs used are computed. Results show that firms using a conventional heating technology will be net purchasers of CO₂ emissions, whereas firms using more advanced heating technologies will sell part of their emission quota.     

The effect of WTO on the extensive and the intensive margins of trade

We use 6-digit bilateral trade data to document the effect of WTO/GATT membership on the extensive and intensive product margins of trade. We construct gravity equations for the two product margins motivated by Chaney (2008). The empirical results show that standard gravity variables provide good explanatory power for bilateral trade on both margins. Importantly, we show that the impact of the WTO is concentrated almost exclusively on the extensive product margin of trade, i.e. trade in goods that were not previously traded. In our preferred specification, WTO membership increases the extensive margin of exports by 25%. At the same time, WTO membership has a negative impact on the intensive margin. Based on novel comparative statics results about how fixed and variable trade costs impact the product margins of trade, our results suggest that WTO membership works by reducing primarily the fixed rather than the variable costs of trade.     

The Interdependence between Trade Credit and Bank Lending: Commitment in Intermediary Firm Relationships

This study investigates the interdependence between trade and bank credit among 468 Portuguese small and medium‐sized enterprises (SMEs). The results show that a single bank relationship is prevalent among Portuguese SMEs, indicating that the proprietary borrower information that banks obtain through their relationship results in an information monopoly that creates a holdup problem and leads to high interest rates. Suppliers that can control their customers' credit risk may provide additional credit and thus help alleviate concerns associated with holdup costs. Trade credit is a viable alternative to short‐term debt, especially when firms' main bank is unwilling to increase its exposure to liquidity constraints.     

The Ethics of Insider Trading Revisited

Following Manne (1966, Insider Trading and the Stock Market (New York, Free Press)) we introduce a distinction between insider trading and market manipulation on the one hand and corporate insiders versus misappropriators on the other hand. This gives rise to four types of alleged inside transactions. We argue that the literature on insider trading has often targeted inside transactions type II, III and IV but that these arguments do not necessarily hold for type I transactions. We look for consequentionalist as well as non-consequentionalist arguments against type I transactions and demonstrate that these are hard to find. Throughout the article we refer extensively to the economic literature on insider trading in order to overcome a relative divide between the economic, legal, and philosophical discussion on insider trading.

Boards of directors in family firms: a generational perspective

The purpose of this study is to advance the understanding of boards of directors in family firms. Building on generational changes in family attributes, we argue that firms in a different generational phase have different governance needs and characteristics. With regard to board task needs, the empirical results indicate a convex generational evolution in the need for board advice, and a rise over the generations in the need for board control. With regard to board composition, we find that the likelihood of having an outside director on the board has a convex generational trend. This relationship seems to be fully mediated by the firm’s board task needs. Furthermore, the number of family directors seems to increase over the generations. This study demonstrates that it is important to consider the generational phase of the family firm in order to understand its governance system.