Small Business Economics

This paper provides novel empirical evidence on the effectiveness of regional research and innovation policies for small and medium-sized enterprises (SMEs). It investigated two subsidy programs implemented at the regional level in central Italy. One program targeted SMEs’ investments in individual research projects, and the other focused on collaborative research projects between SMEs and universities. Using a matched difference-in-differences approach, the empirical analysis showed that the two programs had different effects. The first was successful in stimulating additional private research and development (R&D) investment and improving firms’ performance. The second had weaker effects, mostly restricted to R&D expenditure and employment. These effects were not always uniformly distributed among project participants.

Davis, Haltiwanger and Schuh (1993; 1996a; 1996b) suggested that the belief that small firms are major contributors of new jobs is largely based on methodological flaws. In particular, their reasoning about the "regression fallacy", i.e., that temporary fluctuations in size systematically biases estimates in favor of small firm job creation, has caught on interest among researchers and concern among policy makers. In this article we attempt to estimate empirically the extent of overestimation of small firm job creation due to the "regression fallacy". It is concluded that the effect is very small and that correcting for it does not lead to qualitative change of the results. There may be good reasons to question to what extent small firms can lead economic development, and whether it is good or bad if they do create most new jobs, but concern for the "regression fallacy" does not seem to be an important issue in this context.

This paper theorizes how institutional conditions influence students’ entrepreneurship dynamics (e.g., nascent and active), especially these institutional conditions related to environments where students are mostly exposed (e.g., university and country), as well as the moderation effect of the type of economy (e.g., post-socialist and marked-oriented). We tested our proposed theoretical model in a sample of 91,105 students from 557 European universities located in nine post-socialist economies and nine market-oriented economies. The results show the important role of informal institutions in the country (societal perceptions) and university (students’ perception) on students’ entrepreneurial dynamics, especially the moderation of post-socialist and market-oriented economies on the informal institutions that influence nascent entrepreneurs. Several implications for policymakers and university managers emerge from this study. This paper extends the university entrepreneurship research by theorizing the influence of institutional conditions (environments where students are mostly exposed at university and country-level) on students’ entrepreneurship dynamics (e.g., nascent and active), as well as the moderation effect of the type of economy (e.g., post-socialist and marked-oriented). This study shows the crucial role of informal institutions in the country (societal perceptions) and university (students’ perception) on students’ entrepreneurial dynamics. Several implications emerge from this study. First, policymakers should realize that students’ entrepreneurship is a multi-level phenomenon affected by individual- university- and country-level factors in implementing policy frameworks that cultivate pro-entrepreneurial values in post-socialist economies. Second, for university managers, results open a window for the re-consideration of university budgets and performance indicators in the configuration of entrepreneurial education programs with more action-oriented approaches to stimulate students’ interest and perceived self-efficacy to pursue this career path.

The recent emergence in the industrial organization literature of a wave of studies identifying small firms as more innovative than their larger counterparts poses something of a paradox? Where do small firms get their knowledge generating inputs? The purpose of this paper is to link innovative inputs to innovative outputs. This enables the identification of the extent to which spillovers exist from major sources generating new economic knowledge, such as the research and development (R&D) laboratories of private and public firms, as well as universities, to the innovative activity of large and small enterprises. Based on twenty Italian regions over a period of nine years, the emprical evidence suggests that, while firm R&D expenditures contribute to the generation of innovative output for all firms, as well as for large and small firms, the spillovers from university research are apparently more important for small-firm innovation than for large-firm innovation.

Creative destruction is a central element of the competitive dynamic of capitalism. This phenomenon assumes concrete form in relation to specific geographical and historical conditions. One such set of conditions is investigated here under the rubric of the creative field, i.e. the locationally-differentiated web of production activities and associated social relationships that shapes patterns of entrepreneurship and innovation in the new economy. The creative field operates at many different levels of scale, but I argue that the urban and regional scale is of special interest and significance. Accordingly, I go on to describe how the creative field functions as a site of (a) entrepreneurial behavior and new firm formation, (b) technical and organizational change, and (c) the symbolic elaboration and re-elaboration of cultural products. All of these activities are deeply structured by relations of spatial-cum-organizational proximity and separation in the system of production. The creative field, however, is far from being a fully self-organizing entity, and it is susceptible to various kinds of breakdowns and distortions. Several policy issues raised by these problems are examined. The paper ends by addressing the question as to whether industrial agglomeration is an effect of producers’ search for creative synergies, or whether such synergies are themselves simply a contingent outcome of agglomeration.

In the rapidly evolving landscape of open innovation, understanding the dynamics of learning is pivotal for corporate success. Yet, the constraints and thresholds inherent in the novel technology sourcing processes remain under-explored. We study 163 firms during the third wave of corporate venture capital activity characterized by the primary focus on innovation to investigate the effects of technology sourcing ambidexterity (the simultaneous pursuit of internal and external sources of innovative ideas) on corporate patenting and realized innovation. Acknowledging limitations of organizational learning, our results indicate the presence of the inverted U-shaped relationship between technology sourcing ambidexterity and innovation and suggest that beyond a certain threshold, increases in ambidexterity are detrimental to organizational learning and corporate innovation because boundary conditions to experimentation as a key element to learning arise. Such restrictions are alleviated by organizational slack, which enhances organizational abilities to orchestrate resources and take calculated risks to go beyond existing internal competencies. Proponents of open innovation suggest that combining internal and external sources of innovative ideas often leads to success. We demonstrate that this may be true in some circumstances, but there is a learning threshold for organizations. We argue and demonstrate that this combination, known as technological sourcing ambidexterity, is only beneficial up to a certain point, beyond which further investments in the dual internal–external search for innovative ideas are detrimental for reasons that have to do with organizational learning. Moreover, for those same reasons, the benefits are most likely to be observed for firms with substantial organizational slack. Lean organizations that do not have much slack are less likely to gain strategically from investing in technology sourcing ambidexterity.

This study examines whether and how the experience of poverty shapes the entrepreneurial journey. The research builds upon disadvantage theory to explore how liabilities resulting from the poverty experience can serve as obstacles to the creation of sustainable enterprises. An analysis of data from a sample of 202 entrepreneurs in poverty contexts in the USA demonstrates how liability of poorness (LOP) factors leads to the emergence of more fragile ventures. The findings further indicate that entrepreneurial alertness can moderate the effect of LOP on venture fragility. The study offers theoretical and practical suggestions for further understanding and fostering entrepreneurship as a viable solution to poverty. How poverty conditions affect a person’s ability to start a successful business. Creating a successful business can be difficult for anyone, but especially for those who come from poverty circumstances. This study demonstrates how ventures created by poverty entrepreneurs tend to be more fragile or subject to serious decline or failure when the inevitable threat or unexpected setback occurs. Two key aspects of poverty, experienced scarcity and significant nonbusiness distractions, combine to lead entrepreneurs to create more fragile businesses. However, when a low-income individual demonstrates more entrepreneurial alertness, a variable associated with venture success, the negative effect of poverty-related variables is reduced. The findings suggest that, for entrepreneurship to be a viable pathway out of poverty, public policies and community-based programs should focus on reducing the fragility of these ventures and enhancing the opportunity recognition skills of these entrepreneurs.