Annalisa Croce

ICT services and small businesses’ productivity gains: An analysis of the adoption of broadband Internet technology

Abstract We analyse the impact of the adoption of broadband Internet technology on the productivity performance of small and medium enterprises (SMEs). We distinguish access to the broadband infrastructure from the adoption of complementary services, i.e., different types of broadband software applications. The empirical analysis considers a sample of 799 firms observed from 1998 to 2004 that are representative of the population of Italian SMEs. Our econometric estimates indicate that the impact of the adoption by SMEs of basic broadband applications is negligible (or even negative). Conversely, SMEs are found to benefit from adopting selected advanced broadband applications depending on several contingent factors: (i) their industry of operations (services vs. manufacturing); (ii) the relevance of the specific broadband software applications for SMEs’ industry of operation; and (iii) the undertaking of complementary strategic and organisational changes.

Productivity Growth in Private Equity-Backed Family Firms

We study the reluctance of family firms to accept private equity (PE) investors and the impact of PE on family firms’ performance. We analyze the productivity growth in a sample of 257 PE–backed family firms, 143 of which were run by the founding generation. We compare these firms with both non–PE–backed family firms and non family PE–backed firms. We find that family firms accessing PE show lower productivity growth before the initial PE round, which is driven by an imbalance between inputs and output, especially in founder–controlled firms. Our results also confirm the positive impact of PE involvement on productivity growth in founder–controlled firms.

Policy Reforms for Venture Capital in Europe

This timely book brings together cutting-edge research on the important subject of science and innovation policies. The contributors – distinguished social science scholars – tackle the key challenges of designing and implementing public policies in the context of the new knowledge economy.

Angel Financing and the Performance of High-Tech Start-Ups

In this paper, we investigate what drives the performance of high‐tech start‐ups receiving angel financing, while taking a closer look at the capabilities (i.e., experience) and investment behavior of business angels (BAs). We exploit a new data set (extracted from Crunchbase), which consists of 1,933 high‐tech start‐ups that received at least one financing round from a BA. The results indicate that the experience of BAs in early stage investments is positively associated with additional receipt of follow‐on rounds of financing and sequential capital injections from venture capitalists (VCs). Later‐stage experience is positively associated with the start‐ups success (i.e., probability to be listed or acquired), but reduces the need for new VCs to invest in the start‐up. Furthermore, we find consistent evidence that start‐ups that combine BA and VC financing experience higher levels of funding amounts, additional VC financing, and an improved likelihood of success. Finally, we find that the co‐localization of BA investors and start‐ups in the same area facilitates the attraction of VC financing.

How business angel groups work: Rejection criteria in investment evaluation:

In this article, we study the decision-making criteria that business angels (BAs) adopt when screening business opportunities in the different assessment phases (pre-screening, screening and due diligence). We exploit an original dataset of 1942 ventures that sought angel investment from 2008 to 2014 from the members of Italian Angels for Growth (IAG). Results have shown that the emphasis that BAs place on rejection criteria and contact channels varies along the three considered stages of the investment process. In particular, we found that business proposals brought to the attention of BAs by venture capitalists are more likely to get through the pre-screening stage, suggesting an important quality certification role played by venture capitalists. Moreover, at the screening stage (in comparison with the pre-screening stage), proposals are rejected more often for reasons related to the characteristics of the entrepreneur and management team and less often for the lack of business innovativeness. Finally, business proposals showing lower levels of profitability are more likely to be rejected after the due diligence.

Output-based incentive regulation: Benchmarking with quality of supply in electricity distribution

Incentive regulation is moving towards new schemes where standard efficiency mechanisms are combined with output-based incentives (related to quality of supply, sustainability and innovation). Assessing performance of regulated utilities requires models capable to account for these different regulatory objectives. Benchmarking analysis has been in use for a long time; however, whether these models should incorporate even quality as an additional regulated output is still a matter of debate. In this paper we study how benchmarking DEA models can be designed to correctly accommodate all regulated variables, including continuity of supply. To this end, we discuss different models to measure technical efficiency, using a comprehensive and balanced panel for 115 electricity distribution Zones, that belong to the largest Italian utility. Our results show that, for our data set, quality significantly affects efficiency scores. We thus claim that the effect of additional regulated outputs should always be tested in benchmarking models.

Is the Italian Government effective in relaxing the financial constraints of high technology firms

The present work analyses the effect of public finance on firm investments in a longitudinal sample of 293 Italian unlisted owner-managed, new technology-based firms (NTBFs), observed over a 10-year period from 1994 to 2003. We find that large, old NTBFs and those located in the north of Italy are not financially constrained, while small, young NTBFs and those located in the south of Italy rely significantly on internal capital to finance their investments. Public finance may play a prominent role for these latter firms. Indeed, empirical evidence shows that receipt of public subsidies by financially constrained NTBFs results in a reduction of investment–cash flow sensitivity in the long run. We interpret these results as an indication of the relaxation of financial constraints. Moreover, we find that, after receiving public finance, young and small firms increase their investment rate while NTBFs located in the southern regions do not. Nonetheless, small and young NTBFs benefit greatly from public intervention, but are less likely to obtain public support than their larger and older peers. Italian policy measures have also paid particular attention to NTBFs located in the south of Italy, but we find that public finance has no effect on the investment rate for southern NTBFs. This evidence raises some doubts about the overall efficacy of Italian governmental intervention in this domain.

BUSINESS ANGELS RESEARCH IN ENTREPRENEURIAL FINANCE: A LITERATURE REVIEW AND A RESEARCH AGENDA: BUSINESS ANGELS RESEARCH IN ENTREPRENEURIAL FINANCE

Since the seminal works of Wetzel, research on business angels (BAs) has emerged as a new and promising research field. This review analyses the current knowledge on BAs, identifying the main contents and outcomes. We also provide a bibliometric analysis to illustrate the evolution of the research field, the level of dispersion of the scientific community, the main outlets for publication and the different methodological approaches adopted. Through the analysis of backward and forward citations, we depict the current knowledge base on which BA research is grounded and whether it has any impact on other research fields.

Does informal risk capital relax the financial constraints of high-tech entrepreneurial ventures?

This work analyses the effect of informal risk capital financing on a firm’s investment/cash flow sensitivity (ICFS) in a sample of 498 Italian privately held high-tech entrepreneurial ventures (HTEVs) observed from 1996 to 2008. To detect financial constraints, we resort to an error correction model (ECM). We find that the receipt of informal risk capital in the seed stage results in reduced ICFS, indicating a persistent relaxation of financial constraints.

How and When Venture Capital Affects the Investment of Portfolio Firms

This work studies how and when venture capital (VC) affects the investment of its portfolio firms. We estimate an Error Correction Model that takes into account the non-linearity of the investment curve on a sample of 361 young high-tech firms in 6 European countries. The direct effect of VC on firms investment is positive and significant only when internal financial constrains are limited. The indirect effect of VC determines a structural change in the investment curve through the reduction of external financial constraints. This effect is particularly significant when firms receive follow-on rounds.