Small businesses as a research subject: Some reflections on knowledge of small businesses and its effects on economic theory

Most economists agree in their view of small and medium-sized enterprises, or small businesses (SMEs), as a marginal scientific subject. They may go so far as to ignore them, either because they think these economic units do not lend themselves to conventional economic studies — studies which, for instance, take into account the sacred cow theory of economies of scale — or because they see them as being not really different from big businesses.However, at least a few economists have recognized, first, the many characteristics differentiating SMEs from big firms, and second, their increasing importance in terms of numbers and job creation within economies. Among these few, Schumpeter was one of the first to show the importance of entrepreneurs and SMEs as the main variable of change in an economy. Simon and Lucas also explained the difference between small and big firms through the differing abilities required by managers to run them. Penrose looked at the question from another point of view by highlighting the interstices taken up by SMEs to fulfil needs that cannot be fulfilled by bigger units. Critics of the theory of economies of scale showed that such economies may be offset by a number of diseconomies, thus justifying the efficiency of many SMEs. More recently, Mills and Schumann suggested that SMEs compensate for their lack of economies of scale by their production flexibility, particularly in today's turbulent economy.The limits of traditional economic theory are clearly demonstrated by the fact that it does not take account of all these theories, concepts and ideas. It thus neglects a number of important economic phenomena, including the persistence and current expansion of SMEs. Consideration of such phenomena may lead to the development of a new economic theory based on the concepts of instability and contingency, together with the behaviour of entrepreneurs and small firms, thus tending to contradict, in particular, the concept of equilibrium in conventional economic theory.A first version of this paper has been presented as invited speaker at the symposium of TETRA Group at Lyon, France, 30–31 May 1990. I thank the colleagues Fritz Rieger, Frances Solé Parrellada, Jacques Filion and the two referees for their very interesting suggestions on a preliminary second version.     

It's a secret: Marketing value and the denial of availability

Marketing thrives on secrets, yet surprisingly little formal attention has been paid to how the marketing of secrecy and the secrecy of marketing can play a significant role in contemporary organizations. We draw upon the fields of organizational studies, psychology, and marketing to develop a typology of secrets that reflects their marketing value and their knowledge value. Marketing secrets can have value to the firm (strategic value), to the customer (marketing value), or to both parties. Based on these two dimensions, we identify four different types of marketing secrets: (1) appealing secrets have high strategic value, as well as high marketing value; (2) mythical secrets mean little to the firm but a lot to the customer; (3) plain secrets are critical to the firm but are irrelevant to customers; and (4) weak secrets have neither strategic value nor marketing value. Our typology enables academics to formulate research questions regarding secrecy in marketing, and serves as a guide for practitioners in the construction of strategies that can exploit the strategic value of secrets by ‘romancing’ them, and increase their knowledge value by ‘educating’ the secrets.     

Inferior factor in Cournot oligopoly revisited

We reconsider the recent work by Okuguchi (J Econ 101:125–131, 2010) on (possibly asymmetric) Cournotian firms with two production factors, one being inferior for each firm. It is shown there that an increase in the price of the inferior factor does raise the equilibrium industry output. In addition of providing a simpler and more rigorous proof of that result, we generalize it to the case of technologies with $s\ge 2$ factors and also allow some firms not to use the inferior one.     

Optimal fertility along the life cycle

We explore the optimal fertility timing in a four-period OLG economy with physical capital, whose specificity is to include not one, but two reproduction periods. It is shown that, for a given total fertility rate, the economy exhibits quite different dynamics, depending on the timing of births. If all births take place in the late reproduction period, there exists no stable stationary equilibrium and the economy exhibits cyclical dynamics due to labor growth fluctuations. We characterize the long-run social optimum and show that optimal consumptions and capital depend on the optimal cohort growth factor, so that there is no one-to-one substitutability between early and late fertility. We also extend Samuelson’s Serendipity Theorem to our economy and study the robustness of our results to: (1) endogenizing fertility timing, (2) assuming rational anticipations about factor prices, (3) adding a third reproduction period.     

Intraday data and hedging efficiency in interest spread trading

Three government bond futures contracts and their respective 3-month interest rate futures contracts traded on LIFFE are examined. The data period covers three years of observations, January 1994-December 1996, sampled at half-hourly intervals. Borrowing from the calculation of minimum variance hedge ratios, half-hourly minimum variance spread ratios (the ratio of one contract to another, which provides the minimum variance) are estimated for the above contracts. The hypothesis under examination is whether there is any value-added in estimating minimum spread ratios based on intraday data. Three spread ratios are defined: two ratios calculated from daily data and a third one based on intraday data. Evidence tends to indicate that spread ratios calculated from intraday data exhibit a substantially lower variance than the other two spread ratio speciications. Thus, it is shown that intraday data, in comparison with daily data, allow for lower hedging costs. Moreover, the use of intraday-based spread ratios might be a contributing factor to reducing the maximum cumulative loss potentially incurred while holding a spread position.     

Fiscal Policy when Individuals Differ with Regard to Altruism and Labor Supply

This paper studies the incidence of tax-transfer policy in a growth model wherein individuals differ according to their level of intergenerational altruism and have an endogenous labor supply. The main result is that public debt is neutral at the macro level but redistributes resources from nonaltruists to altruists. Capital income taxation can hurt the nonaltruists who do not have any wealth more than it hurts the altruists who own all of it. Whether or not the altruists supply a positive amount of labor makes a big difference as to the incidence of alternative tax transfer policies.     

What Can Acreage Allocations Say about Crop Supply Elasticities? A Convex Programming Approach to Supply Response Disaggregation

This article has two goals. The first is to extend previous results regarding calibration of land‐constrained programming models of agricultural supply against supply elasticities to the general case of multiple constraints. The second goal is to demonstrate how the resulting calibration conditions can be used as a source of identification to disaggregate crop supply elasticities down to the level at which static information on acreage allocations is available. We propose an information‐based disaggregation algorithm to systematically generate regionalised elasticities from a single prior, and provide an empirical illustration.