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See detailSpillovers to small business credit risk
Wolff, Christian UL

in Small Business Economics (2020)

Do large credit risk shocks spill over to small businesses and affect their real economic activity? Using information on small business credit risk, we find that small businesses show increased default ... [more ▼]

Do large credit risk shocks spill over to small businesses and affect their real economic activity? Using information on small business credit risk, we find that small businesses show increased default and bankruptcy rates following a shock to a customer industry. On an industry level, the shock to a customer industry is followed by a decrease in industry markups, disproportionate closure of firms, and cutbacks in inventories. Our analysis quantifies the elevated credit risk among small businesses and suggests a non-negligible 0.83% increase in expected losses on a diversified loan portfolio following a credit risk shock. This study provides banks and supervisors with greater clarity on timing and on the extent of elevated small business credit risk. It also allows them to assess the exposure of a bank portfolio to fluctuations in small business default rate. Such improved default prediction reduces credit rationing to the small business economy. [less ▲]

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See detailHow shared pre-start-up moments of transition and cognitions contextualize effectual and causal decisions in entrepreneurial teams
Tryba, Anne; Fletcher, Denise Elaine UL

in Small Business Economics (2019), 52(3), 1-24

Although it is reported that early venture decisions are influenced by the relationships and common history of entrepreneurial team members, little is known about how the mutual interests and ambitions ... [more ▼]

Although it is reported that early venture decisions are influenced by the relationships and common history of entrepreneurial team members, little is known about how the mutual interests and ambitions experienced in the pre-start-up phase provide a shared and relational context for joint decisions. Drawing on a multiple case study approach of nine entrepreneurial teams in new ventures, this study identifies the shared pre-start-up moments of transition during which team members’ prior work and life patterns start to change. We show that in these intense moments, shared entrepreneurial cognition evolves among team members – the relationality of which provides a unique social context for decision behaviors. Our findings conclude that effectual behaviors advance a theory of context because in simultaneously working with effectual and causal logics (albeit with varying intensities), team decisions are realized that are consistent with the relational context that emerges in the pre-start-up moment. [less ▲]

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See detailIs Success Hereditary? Evidence on the Performance of Spawned Ventures
Dick, Johannes; Hussinger, Katrin UL; Blumberg, Boris et al

in Small Business Economics (2013)

A common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses. Prior literature discusses the former employers’ characteristics that influence the ... [more ▼]

A common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses. Prior literature discusses the former employers’ characteristics that influence the creation of entrepreneurial ventures. An investigation of whether these characteristics also affect the success of the spawned ventures is missing so far. This paper contributes to the literature by showing that entrepreneurial ventures spawned by well performing firms are financially more successful than ventures stemming from poorly performing firms. This suggests that spawned entrepreneurs are able to exploit valuable knowledge from their previous employers which impacts their ventures’ performance positively. The analysis is based on a linked employee–employer data set for the Netherlands for the period 1999–2004. [less ▲]

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See detailThe Evolution of the Distribution of Plant Size: Evidence from Luxemburg
Bertinelli, Luisito UL; Cardi, Olivier; Pamukçu, Mehmet Teoman et al

in Small Business Economics (2006), 27(4), 301-311

In a recent paper, [Cabral, L. M. B. and J. Mata, 2003, American Economic Review, 93, 1075–1090] using Portuguese manufacturing data have shown for the first time that the plant size distribution is ... [more ▼]

In a recent paper, [Cabral, L. M. B. and J. Mata, 2003, American Economic Review, 93, 1075–1090] using Portuguese manufacturing data have shown for the first time that the plant size distribution is significantly right-skewed at the early part of the life cycle and then changes to become more log-normal. Using a similar proxy for plant age we compare this stylised fact for both Luxembourg manufacturing and services. Use of plants’ true age, however, reveals that the size distribution reverses back towards right-skewness for very old plants. We confirm the finding that the right-skewness is likely driven by financial constraints. Copyright Springer 2006 [less ▲]

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See detailFactor substitution, average firm size and economic growth
Aquilina, M.; Klump, Rainer UL; Pietrobelli, C.

in Small Business Economics (2006), 26(3), 203-214

This paper extends the Lucas (1978, The Bell Journal of Economics 9(2), 508-523) analysis of firm size by taking into account a normalised aggregate CES production function. In a general equilibrium ... [more ▼]

This paper extends the Lucas (1978, The Bell Journal of Economics 9(2), 508-523) analysis of firm size by taking into account a normalised aggregate CES production function. In a general equilibrium framework it is proved that there is an inverse relation between the elasticity of substitution and average firm size. If interpreted together with the fact that richer countries are characterised by a higher elasticity of substitution, this result can explain why the recent literature finds a positive association between the importance of SMEs in an economy and its stage of development, but seems to fail in finding causality between the two. Both have a common origin: a high value of the elasticity of substitution. This paper also provides a first empirical test of the theory proposed using cross-country data from both developed and developing countries. © Springer 2006. [less ▲]

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