SME default prediction is a long-standing issue in the finance and management literature. Proper estimates of the SME risk of failure can support policymakers in implementing restructuring policies, rating agencies and credit analytics firms in assessing creditworthiness, public and private investors in allocating funds, entrepreneurs in accessing funds, and managers in developing effective strategies. Drawing on the extant management literature, we argue that introducing management- and employee-related variables into SME prediction models can improve their predictive power. To test our hypotheses, we use a unique sample of SMEs and propose a novel and more accurate predictor of SME default, the Omega Score, developed by the Least Absolute Shortage and Shrinkage Operator (LASSO). Results were further confirmed through other machine-learning techniques. Beyond traditional financial ratios and payment behavior variables, our findings show that the incorporation of change in management, employee turnover, and mean employee tenure significantly improve the model's predictive accuracy.

Many international organisations emphasize the need of public grant schemes evaluations. An evaluation provides the opportunity to assess the socio-economic impact achieved by the grant and allows for a refinement of such policy instruments in order to make public funding more effective in achieving the objectives. In this paper, we investigate the effects of a business development grant scheme. More specifically we question whether firms' performance measures increased after participating in this grant scheme. Methodically, we match grant receiving firms with grant non-receivers and estimate the average treatment effect on the treated using a two way fixed effects regression. Our results point towards a positive effect of the grant scheme, which is particularly evident for firms of smaller size. Our estimated dose-response functions show that the share of grant amount in firm profits needs to be high enough for the grants to be effective. According to back-of-the envelope analysis, benefits outweigh the direct scheme costs.

Impact evaluations of entrepreneurship policies targeting young firms have been somewhat neglected thus far in the literature. While most research studies focus on the impact of research and development (R&D) grants, a larger percentage of young firms would benefit from grants that assist them in other activities. In this paper we examine the impact of small business development grants on survival and performance of young firms. We study this topic in the context of a long recession in Croatia (2009 to 2014), which makes it possible to better observe the effect of the public instrument intervention. As the grants were too small to produce any direct effects, the positive effects were achieved indirectly, through enabling young firms to get bank loans, either by means of certification effect or because of behavioural additionality which raised their ability to apply for loans. The results show positive impact on firm survival after the recession.

Export boosting is a policy agenda in developed and developing countries. Previous work has found that a small number of Superstars contribute disproportionally to the economy's overall exports. Differently from Superstars, this study is the first to define high growth exporters (HGXs), provide their economic importance and depict their micro-level anatomy. By tracking HGXs in Croatia for over a quarter of a century, 44 out of 100 Superstars in 2019 were previously HGXs. Industry-wise, HGXs are concentrated in manufacturing, information and communication technology, transportation and storage sectors. HGXs are located in higher export active regions, neighboring advanced markets. HGXs represent only 0.5% of all firms and 18% of high growth firms (HGFs) in the economy, but are responsible for about 25% of new exports, and 5% of new jobs. During their growth episode, HGXs hire more employees from technology intensive industries with previous experience in exporting. They often hire on a single year work contract, and more frequently send new employees to work abroad. HGXs have the highest number of new products, and the concentration of HGXs' main export products decreases over time, thus, the growth is driven by multiple products and the simultaneous increase in the number of new export markets. HGXs export to closer markets than Superstars, but to more distant markets than other HGFs and exporters who tend to be more active in less developed markets. HGXs tend to increase their presence in the EU Single Market, introduce new products and substantially increase their unit price.

Firm-product data provide information for various research questions in international trade or innovation economics. However, working with this data requires harmonizing product classifications consistently over time to avoid internal validity issues. The researcher must consider product code changes in the classification systems over the observation period. Harmonization is required because classification systems like the EU classifications Combined Nomenclature (CN) for goods or the Prodcom for the production of manufactured goods undergo several changes. We have addressed this problem and developed an approach to harmonize product codes. This approach tracks product codes from 1995 to 2022 for CN and 2001 to 2021 for Prodcom. Additional years can be conveniently updated. We provide the harmonized product codes for CN and Prodcom in the selected period's first (or last) year. Our approach is summarized in an easy-to-use R package so that researchers can consistently track product codes for their period. We demonstrate the importance of harmonization using the micro-level trade data for Croatia as a case study. Our approach facilitates working with firm-product data, allowing the analysis of important research questions.

Policy-makers and scholars often assume that a higher incidence of high-growth firms (HGFs) is synonymous with vibrant regional economic dynamics, and that HGF shares are persistent over time as Entrepreneurial Ecosystems (EEs) have slowly-changing features. In this paper we test these hypotheses, which are deeply rooted in the EE literature. We draw upon Eurostat data for up to 20 countries over the period 2008-2020 and study HGF shares in NUTS-3 regions in Europe. Analysis of regional rankings yields the puzzling finding that the leading EEs in Europe, apparently, are in places such as southern Spain and southern Italy. These places would not normally be considered Europe's foremost entrepreneurial hotspots. Additional results do not provide strong support for the hypothesis that more developed regions feature higher HGF shares. We do find evidence consistent with HGF shares displaying persistency over time. However, we show that more developed regions do not have higher persistence in their HGF shares, and that the strength in persistence does not increase across the HGFs distribution, which does not support pathdependency as the main mechanism behind the observed persistence. Overall, we call for a more nuanced interpretation of both regional HGF shares and the EEs literature.