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Small Business Growth and Productivity


The submission portal for this special issue will open March 1, 2020


Guest Editors

Jun Li, University of Essex
Vania Sena, University of Essex
Andrew Henley, University of Cardiff
Zheng Li, Jilin University

Aims and Scope

Productivity growth has enormous societal implications. The slowdown of productivity growth around the world is a disturbing global phenomenon today (Eichengreen, Park & Shin, 2017; Haldane, 2017). Tackling productivity slowdown is among the most pressing contemporary public policy issues (Business, Energy and Industrial Strategy Committee, 2017). The within-country empirical evidence suggests that there is a long tail of companies with low, slow productivity growth as opposed to an upper tail of companies that has maintained high and rising levels of productivity (Andrews, Criscuolo & Gal, 2015). The phenomenon of productivity slowdown thus manifests itself in the co-existence of secular innovation (among leaders) and stagnation (among laggards) with the productivity laggards being unable to keep-up, or catch-up, with frontier companies (Haldane, 2017).

The striking pattern of secular innovation and stagnation poses challenges in entrepreneurship research in a number of ways. First, it poses the question as to whether young and high grow firms (HGFs) contribute to productivity growth. Small firm growth does not guarantee productivity-enhancing improvement (Henley, 2018). In an early meta-analysis of the economic value of entrepreneurship, Van Praag and Versloot (2007) find that entrepreneurial firms are not more productive and potentially less productive. More recent research has found that high growth firms are disproportionately young and make disproportionate contributions to productivity growth (Alon, Berger, Dent & Pugsley, 2018; Haltiwanger, Jarmin, Kulick & Miranda, 2016) and that firms are more likely to become HGFs when they exhibit higher total factor productivity (TFP) growth and firms that have had HGF experience tend to enjoy faster TFP growth (Du & Temouri, 2015). There is also evidence that young companies tend to exhibit faster rates of productivity growth albeit from a low base and greater dispersion in these growth rates than larger ones (Haldane, 2017). Firm growth may also be volatile and episodic (Anyadike-Danes & Hart, 2017; Daunfeldt & Halvarsson, 2015; Grover Goswami, Medvedev & Olafsen, 2019). So, we still do not know much about the drivers of growth in small firms and the connection between small firm growth and productivity improvement.

Second, it poses a challenge in understanding the productivity problems among the long-tail of low-productivity companies, mostly small firms. There is evidence showing that it is non-frontier companies that largely explain flat-lining productivity over recent years (Haldane, 2017). Indeed, our understanding of the characteristics of low-productivity companies is limited because of their large numbers and disparate characteristics. Yet given their scale, the returns to modest improvements in these firms could be dramatic.

Third, it poses a challenge in understanding the slow rates of diffusion of new innovation from leaders to the long lower tail of laggards. Recent empirical work by the OECD has highlighted that rates of technological diffusion from leaders to laggards have slowed, and perhaps even stalled, leading to productivity leaders pulling away from the lower tail (Andrews et al., 2015). What is responsible for the failing diffusion dynamics? Among a variety of forces, management failings may explain the failure of non-frontier companies to keep pace with innovation. Bloom & Van Reenen (2007) have found that weaknesses in management processes and practices go a long way towards explaining the long tail of low productivity manufacturing companies. 

Fourth, there is evidence that the national system of entrepreneurship enhances efficiency change via enhanced Kirznerian entrepreneurship in the short-run and has the positive effect on total factor productivity of Schumpeterian entrepreneurship in the long run (Acs, Lafuente, Sanders & Szerb, 2017). Yet, even though Israel is considered a successful start-up nation and its high tech industry is considered a world leader, the country’s average labor productivity is relatively low and has remained so for many years (Brand, 2017). While governments at various levels and in different countries have promoted and funded policy interventions, serious quantitative evaluation evidence is scarce, and rarely if ever addresses potential impact on productivity (Henley, 2018).

All the above-mentioned challenges have opened up opportunities for entrepreneurship research (Lafuente, Acs, Sanders & Szerb, 2019; Li & Rama, 2015). Yet, entrepreneurship is found to be practically absent from studies that examine the long-term relationships between economic variables and productivity development (Erken, Donselaar & Thurik, 2018). The purpose of the special issue will be to invite and include papers that identify and explore small firm growth and productivity in times of digitalization, deglobalisation and dispersion of wealth. It encourages theoretical and empirical papers on small firm growth and productivity that take account of these changes so as to improve the rigor and relevance of studies on this topic for academics, managers and policy makers.

Possible Topics

The Guest Editors encourage submissions of theoretical and empirical contributions investigating the long-term relationships between economic variables and productivity development, and the role of entrepreneurship. Possible topics include:

Drivers of small firm productivity growth: What are the characteristics of high and low productivity businesses? What are the characteristics/capabilities of owner-managers and firms that drive productivity growth? How do companies’ intangible assets influence growth and productivity?

Entrepreneurial firm life cycle dynamics and productivity: What are firm life cycle dynamics and its drivers? What explains small firm growth non-linearities and hurdles? What is the role of high growth in influencing economy-wide aggregate productivity? How do HGFs drive within-firm TFP growth? How is aggregate TFP growth driven through resource reallocation, either organically or through mergers and acquisitions?

Long tail of low-productivity non-frontier firms: What are the characteristics of the long tail of low-productivity non-frontier firms?  What explains the high heterogeneity in absorptive capacity of small firms? Which firm characteristics drive management practices?

Diffusion dynamics and productivity growth: What explain innovation spill-over and its effect on new firm formation and performance? What is the evidence of technology and innovation adoption, diffusion and productivity? What are the magnitudes of the potentially direct and indirect productivity growth enhancing effects and their channels, such as increasing human capital and innovation?

Entrepreneurial system and productivity: how does country-level/ region-level entrepreneurship impact firm productivity? Are regional differences the main factor explaining the long tail of firms? how does the national/regional system of entrepreneurship trigger productivity by increasing the beneficial effects of different types of entrepreneurship, namely Kirznerian and Schumpeterian entrepreneurship? how do the sub-indexes that form the entrepreneurial system variable affect productivity? How do local norms and entrepreneurial culture influence small firm growth and productivity? How does regional path dependence influence small firm growth and productivity?

Effect of productivity interventions: how effective is support for the creation and growth of frontier firms? What is the impact of policies that support productivity improvements of long tail of low-productivity non-frontier firms? How does the utilisation of business support influence productivity?

Submissions

Papers should be submitted via the journal’s online submission system available through the journal homepage. When submitting please choose the special issue: “Small business growth and productivity” as the article type from the drop down menu. All papers must follow the guidelines outlined by the journal for submission, available at:
http://www.emeraldgrouppublishing.com/products/journals/author_guidelines.htm?id=ijebr#13

For any questions interested authors can contact the corresponding guest editor: Jun Li ([email protected])

Submission deadline: 31st May 2020

References

Acs, Z. J., Lafuente, E., Sanders, M., & Szerb, L. (2017). Productivity and growth: the relevance of the national system of entrepreneurship. Working paper WP17-03, Financial and Institutional Reforms to build an Entrepreneurial Society (FIRES) Project. Available at http://www. projectfires. eu/publications/working-papers.

Alon, T., Berger, D., Dent, R., & Pugsley, B. (2018). Older and slower: The startup deficit’s lasting effects on aggregate productivity growth. Journal of Monetary Economics, 93, 68-85.

Andrews, D, Criscuolo, C and Gal, P (2015), Frontier firms, technology diffusion and public policy: micro evidence from OECD, OECD Productivity Working Paper No 2.

Anyadike-Danes, M. and Hart, M. (2017), The UK’s high growth firms and their resilience over the Great Recession, Research Paper No. 62, ESRC Enterprise Research Centre, University of Warwick.

Bloom, N., & Van Reenen, J. (2007). Measuring and explaining management practices across firms and countries. The quarterly journal of Economics, 122(4), 1351-1408.

Brand, G. (2017). Why Does the Start-Up Nation Still Have Low Productivity. Policy Paper, 9. Taub Center for Social Policy Studies in Israel. Jerusalem, Israel.

Business, Energy and Industrial Strategy Committee (2017) The Government’s Productivity Plan: Government Response to the Business, Innovation and Skills Committee’s Second Report of Session 2015–16. 10 January 2017, the House of Commons, UK.

Daunfeldt, S. O., & Halvarsson, D. (2015). Are high-growth firms one-hit wonders? Evidence from Sweden. Small Business Economics, 44(2), 361-383.

Du, J., & Temouri, Y. (2015). High-growth firms and productivity: evidence from the United Kingdom. Small Business Economics, 44(1), 123-143.

Eichengreen, B., Park, D., & Shin, K. (2017). The global productivity slump: Common and country-specific factors. Asian Economic Papers, 16(3), 1-41.

Erken, H., Donselaar, P., & Thurik, R. (2018). Total factor productivity and the role of entrepreneurship. The Journal of Technology Transfer, 43(6), 1493-1521.

Grover Goswami, A., Medvedev, D., & Olafsen, E. (2019). High-Growth Firms: Facts, Fiction, and Policy Options for Emerging Economies. Washington: The World Bank.

Haldane, A. (2017) Productivity Puzzles, speech given at London School of Economics, London, 27 March 2017.

Haltiwanger, J., Jarmin, R. S., Kulick, R. B., & Miranda, J. (2016). High growth young firms: Contribution to job, output and productivity growth. US Census Bureau Center for Economic Studies Paper No. CES-WP-16-49.

Henley, A. (2018) Small Business Growth and Productivity: Evidence Review, Productivity insight network, https://productivityinsightsnetwork.co.uk/app/uploads/2018/07/Evidence-Review_Small-Business-Growth-and-Productivity.pdf (accessed 5/7/2019)

Lafuente, E., Acs, Z. J., Sanders, M., & Szerb, L. (2019). The global technology frontier: productivity growth and the relevance of Kirznerian and Schumpeterian entrepreneurship. Small Business Economics, 1-26.

Li, Y., & Rama, M. (2015). Firm dynamics, productivity growth, and job creation in developing countries: The role of micro-and small enterprises. The World Bank Research Observer, 30(1), 3-38.

Van Praag, C.M. and Versloot, P.H. (2007), What is the value of entrepreneurship? A review of recent research, Small Business Economics, 29(4): 351-82.

Short Biographies of the Guest Editors

Jun Li, University of Essex


Jun Li is Senior Lecturer in Entrepreneurship and Innovation at Essex Business School, University of Essex. He previously held post at Chinese Academy of Sciences and was President of Chinese Economic Association (UK/Europe) in 2012-2013. He currently serves as Editor-in-Chief of Journal of Entrepreneurship in Emerging Economies. His research explores entrepreneurship and policies, innovation management, and Chinese entrepreneurship. His publications include Financing China’s Rural Enterprises (London: Routledge, 2002), China’s Economic Dynamics: A Beijing Consensus in the Making (London: Routledge, 2014), Incentive for Innovation in China (London: Routledge, 2015) and papers in leading journals such as Entrepreneurship and Regional Development, Journal of Business Research, amongst others.

Vania Sena, University of Essex

Vania Sena is Professor of International Business at Essex Business School, University of Essex. She previously worked at Leeds University Business School (LUBS), University of Leeds and at Aston Business School (ABS), Aston University. Her first degree was awarded with laude by the University of Naples, Federico II, Naples, Italy; her postgraduate studies in Economics were carried out at the University of York, UK, where she was awarded both the MSc and the DPhil in Economics. Her research focuses mainly on the econometric analysis of the determinants of productivity growth, both at the micro and macro level. She also has an interest into the use of alternative methods (based on linear programming analysis) to the measurement of productivity. Her most recent research looks at the relationship among innovation activities, spatial concentration of human capital and total factor productivity. Her work has been published in Small Business Economics, Journal of Comparative Economics, The Economic Journal, Scandinavian Journal of Economics, European Journal of Operational Research, Oxford Bulletin of Economics and Statistics, and Regional Studies, amongst others. Her work has been funded by several bodies including ESRC, Innovate UK, Nuffield Institute, NESTA, Leverhulme Trust, IPO, UKTI and British Academy. In 2011, she was visiting fellow at the Institute for Quantitative Social Science and Harvard University.

Andrew Henley, University of Cardiff

Andrew Henley is Professor of Entrepreneurship and Economics at Cardiff Business School. He has previously held senior appointments at Swansea and Aberystwyth Universities, and has a PhD in Economics from the University of Warwick. He is a Fellow of the Learned Society of Wales. He is currently a member of the project team of ESRC Productivity Insights Network, leading one of the work streams and contributing to thematic work on small business. He has held previous ESRC awards and was formerly Director of the European Social Fund supported LEAD Wales programme delivering leadership and business growth support to Welsh SMEs. He has served in a number of advisory roles, including as a member of the First Minister of Wales’ Economic Research Advisory Panel (2002-2012) and committee member and Vice-Chair of the ESRC’s Capability Committee, and Strategic Advisory Network (2012-2019). He has published extensively in the field of self-employment and small business growth and leadership, including papers in Small Business Economics, Entrepreneurship and Regional Development, International Small Business Journal, Journal of Small Business Management, Regional Studies, European Economic Review, and Journal of the European Economic Association.

Zheng Li, Jilin University

Zheng Li is Professor of Economics at School of Economics, Director of China Center for Public Sector Economy (one of the Key Research bases on Humanities and Social Sciences established by Ministry of Education), Deputy Director of Institute on Entrepreneurship and Innovation, and Director of China-Israel Center for Entrepreneurship and Innovation at Jilin University. He is the Founding Chair of Global Entrepreneurship and Innovation Conference (GEIC). He serves as the Jilin Provincial Government Advisory Committee member (economic and social development and environmental). He is the Standing Director of China Economics Laws and China Economic Development Research Association. He has a Ph.D. in Economics from Jilin University and was a visiting scholar in School of Entrepreneurship and Business of University of Essex, United Kingdom and Faculty of Economics and Econometrics, University of Amsterdam, the Netherlands. He has published extensively in the field of Entrepreneurship, innovation and China economy. He is the author of Creating the Entrepreneurial Economy Theory and Policy and the series Report on Independent Innovation of Central State-owned Enterprises. He has received several awards, including ones from Ministry of Education ‘New Millennium Talent’, Kuang Yaming Distinguished Professor of Jilin University, BaoGang Excellent Teacher Award, and Changchun City ‘Outstanding Expert’.