What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania

Brown, J. David and Earle, John S. and Lup, Daniela (2003) What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania. Technical Report. W.E. Upjohn Institute for Employment Research, Kalamazoo, Michigan, USA.

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Abstract

Although the development of a new private sector is generally considered crucial to economic transition, there has been relatively little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account. The evidence for the effectiveness of technical assistance is weak: only assistance provided by foreign partners yields a positive effect. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.

Item Type: Monograph (Technical Report)
Additional Information: Upjohn Institute Working Paper No. 03-94
Keywords (uncontrolled): small firms, entrepreneurship, microfinance, business environment, Romania
Research Areas: A. > School of Law
A. > School of Law > Criminology and Sociology
Item ID: 21359
Useful Links:
Depositing User: Jennifer Basford
Date Deposited: 16 Feb 2017 11:11
Last Modified: 16 Feb 2017 11:11
URI: http://eprints.mdx.ac.uk/id/eprint/21359

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