“A long-term mortality analysis of subsidized firms in rural areas: an empirical study in the Portuguese Alentejo region”

Studies have demonstrated that public policies to support private firms’ investment have the ability to promote entrepreneurship, but the sustainability of subsidized firms has not often been analysed. This paper aims to examine this dimension specifically through evaluating the mortality of subsidized firms in the long-term. The analysis focuses on a case study of the LEADER+ Programme in the Alentejo region of Portugal. With this purpose, the paper examines the activity status (active or not active) of 154 private, rural, for-profit firms in Alentejo that had received a subsidy to support investment between 2002 and 2008 under the LEADER+ Programme. The methodology is based on binary choice models in order to study the probability of these firms still being active. The explanatory variables used are the following: (1) the characteristics of entrepreneurs and managers’ strategic decisions, (2) firm profile and characteristics, (3) regional economic environment. Data assessment showed that the cumulative mortality rate of firms on 31st December 2013 is over 20 %. Interpretation of the regression model revealed that he probability of firms’ survival increases with higher investment, firm age and regional business concentration, whereas the number of applications made by firms has a negative impact on their survival. So it seems that for subsidized firms the amount of investment is as important as its frequency.

Staatliche Gründungsfinanzierung: Stand der Forschung und offene Fragen

Der Beitrag gibt einen Überblick über den Stand der Forschung zur staatlichen Gründungsfinanzierung, speziell in Deutschland. Dabei steht die Frage im Vordergrund, ob eine öffentliche Gründungsfinanzierung aus wirtschaftspolitischer Sicht zu rechtfertigen ist. Konkret werden vier Forschungsfragen untersucht. Die erste Frage lautet, ob Unternehmensgründungen für eine Wirtschaft überhaupt Nutzen stiften. Die zweite Frage lautet, ob auf dem Markt der Finanzierung von Gründungsunternehmen Unvollkommenheiten bzw. Marktversagen feststellbar sind. Die dritte Frage lautet, ob staatliche Maßnahmen der Gründungsfinanzierung einzelwirtschaftlich effektiv sind, dass sich also geförderte Unternehmen als erfolgreicher erweisen als nicht geförderte. Die vierte Frage lautet, ob eine staatliche Gründungsfinanzierung die angestrebten wirtschaftspolitischen Ziele zu den niedrigstmöglichen Kosten erreicht, also effizient ist. Die Antworten sind durchweg negativ und zeigen, dass die bisherige Forschung keine ausreichende Rechtfertigung für eine staatliche Gründungsfinanzierung bieten kann.

The Selection Process of Applications to the Portuguese Innovation Incentive System: Who Gets Financial Support?

Public policies to support entrepreneurship and innovation play a vital role when firms have difficulties in accessing external finance. However, some authors have found evidence of long-term inefficiency in subsidized firms (Bernini and Pelligrini, 2011; Cerqua and Pelligrini, 2014) and ineffectiveness of public funds (Jorge and Suárez, 2011). The aim of the paper is to assess the effectiveness in the selection process of applications to public financial support for stimulating innovation. Using a binary choice model, we investigate which factors influence the probability of obtaining public support for an innovative investment. The explanatory variables are connected to firm profile, the characteristics of the project and the macroeconomic environment. The analysis is based on the case study of the Portuguese Innovation.Incentive System (PIIS) and on the applications managed by the Alentejo Regional Operational Program in the period 2007 – 2013. The results show that the selection process is more focused on the expected impact of the project than on the firm’s past performance. Factors that influence the credit risk and the decision to grant a bank loan do not seem to influence the government evaluator regarding the funding of some projects. Past activities in R&D do not significantly affect the probability of having an application approved under the PIIS, whereas an increase in the number of patents and the number of skilled jobs are both relevant factors. Nevertheless, some evidence of firms’ short-term inefficiency was found, in that receiving public financial support is linked to a smaller increase in productivity compared to non-approved firm applications. At the macroeconomic level, periods with a higher cost of capital in financial markets are linked to a greater probability of getting an application for public support approved, which could be associated with the effectiveness of public support in correcting market failings.

Cooperation, interaction and learning in local production systems: Evidence in Brazilian firms

In a local production system (LPS), besides external economies, the interaction, cooperation, and learning are indicated by the literature as complementary ways of enhancing the LPS's competitiveness and gains. In Brazil, the greater part of LPSs, mostly composed by small enterprises, displays incipient relationships and low levels of interaction and cooperation among their actors. The size of the participating enterprises itself for specificities that engender organizational constraints, which, in turn, can have a considerable impact on their relationships and learning dynamics. For that reason, it is the purpose of this article to present an analysis of interaction, cooperation, and learning relationships among several types of actors pertaining to an LPS in the farming equipment and machinery sector, bearing in mind the specificities of small enterprises. To this end, the fieldwork carried out in this study aimed at: (i) investigating external and internal knowledge sources conducive to learning and (ii) identifying and analyzing motivating and inhibiting factors related to specificities of small enterprises in order to bring the LPS members closer together and increase their cooperation and interaction. Empirical evidence shows that internal aspects of the enterprises, related to management and infrastructure, can have a strong bearing on their joint actions, interaction and learning processes.

A technological and organisational explanation for the size distribution of firms

This paper combines insights from the literature on the economics of organisation with traditional models of market structure to construct a theory of equilibrium firm size heterogeneity under the assumption of a homogenous product industry. It is possible that configurations consisting entirely of small firms (run by entrepreneurs with limited attention) and with larger firms (using managerial techniques to substitute away these limits to allow increasing returns technologies to become profitable) can arise in equilibrium. However, there also exist equilibrium configurations with the co-existence of large and small firms. The efficiency properties of these respective equilibria are discussed. Finally, the implications of an expanding market size are considered.

Economic performance of Brazilian manufacturing firms: a counterfactual analysis of innovation impacts

This article assesses if innovators outperform non-innovators in Brazilian manufacturing during 1996-2002. To do so, we begin with a simple theoretical model and test the impacts of technological innovation (treatment) on innovating firms (treated) by employing propensity score matching techniques. Correcting for the survivorship bias in the period, it was verified that, on an average, the accomplishment of technological innovations produces positive and significant impacts on the employment, the net revenue, the labor productivity, the capital productivity, and market share of the firms. However, this result was not observed for the mark-up. Especially, the net revenue reflects more robustly the impacts of the innovations. Quantitatively speaking, innovating firms experienced a 10.8-12.5 percentage points (p.p. henceforth) higher growth on employment, a 18.1-21.7 p.p. higher growth on the net revenue, a 10.8-11.9 p.p. higher growth on labor productivity, a 11.8-12.0 p.p. higher growth on capital productivity, and a 19.9-24.3 p.p. higher growth on their market share, relative to the average of the non-innovating firms in the control group. It was also observed that the conjunction of product and process innovations, relative to other forms of innovation, presents the stronger impacts on the performance of Brazilian firms.

Labour flexibility and gender in the service sector: A study of employment practices in law and accounting firms

In seeking to increase the flexibility of their use of employee time, employers can pursue strategies based on the employment of casual and part-time workers (numerical flexibility) or strategies based on ad hoc variation of the working hours of permanent employees (working time flexibility). Patterns of flexibility strategies and their implications are examined in the context of a highly feminised sector of work-clerical and administrative employment in law and accounting firms. We consider whether, as is often assumed, working time flexibility strategies are generally better for employees because they avoid the substitution of core, high quality jobs with the peripheral, relatively insecure employment often associated with casualisation. Analysing data drawn from a survey of law and accounting firms, we argue that there are three distinct flexibility strategies adopted by employers, and that the choice of strategy is influenced by the size of the firm and the extent of feminisation. The quality of employment conditions associated with each strategy is investigated through an analysis of the determinants of training provision for clerical and administrative workers. Rather than an expected simple linear relationship between increasing casualisation and decreasing training provision, we find that firm size and feminisation are implicated. Larger firms that tend to employ at least some men and use a combination of working time and numerical flexibility strategies tend to provide more training than the small, more fully feminised firms that tend to opt for either casualisation or working time flexibility strategies. This suggests that, from an employee perspective, working time flexibility may not be as benevolent as is often thought.

What is the value of firms' prior knowledge? Building organisational knowledge capabilities

A firm's prior knowledge facilitates the absorption of new knowledge, thereby renewing a firm's systematic search, transfer and absorption capabilities. The rapidly expanding field of biotechnology is characterised by the convergence of disparate sciences and technologies. This paper, the shift from proteinbased to DNA-based diagnostic technologies, quantifies the value of a firm's prior knowledge and its relation to future knowledge development. Four dimensions of diagnostic and four dimensions of knowledge in biotechnology firms are analysed. A simple scaled matrix method is developed to quantify the positive and negative heuristic values of prior scientific and technological knowledge that is useful for the acquisition and absorption of new knowledge.

Innovation in Queensland firms: implications for the smart State

The challenges in the business environment are forcing Australian firms to be innovative in all their efforts to serve customers. Reflecting this need there have been several innovation policy statements both at Federal and State government level aimed at encouraging innovation in Australian industry. In particular, the innovation policy statement launched by the Queensland government in the year 2000 primarily intends building a Sman State through innovation. During the last few decades the Australian government policy on innovation has emphasized support for industry R&D. However industry stakeholders demand a more firm-focused policy of innovation. Government efforts in this direction have been hindered by a lack of a consistent body of knowledge on innovation at the firm level. In particular the Australian literature focusing on firm level antecedents of innovation is limited and fragmented. This study examines the role of learning capabilities in innovation and competitive advantage. Based on a survey of manufacturing firms in Queensland the study finds that both technological and non·technological innovations lead to competitive advantage. The findings contribute to the theory competitive advantage and firm level antecedents of innovation. Implications for firm level innovation strategies and behaviour are discussed. In addition, the findings have important implications for Queensland government's current initiatives to build a Smart State through innovation.