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Institutional Effects on the Evolution of the Size Distribution of Firms

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  • Henrekson, Magnus
  • Johansson, Dan

Abstract

In this paper it is argued that the size distribution of firms may largely be determined by institutional factors. This hypothesis is tested in an exploratory fashion by studying the evolution of the size distribution of firms over time in Sweden for a period spanning from the late 1960s to the early 1990s. The data used is divided into finer size classes compared to most previous studies. This gives more scope for investigating the impact of institutions. Moreover, we use a unique data set, starting in 1984, to take account of corporate groups and government ownership. The analysis shows a poor development for intermediate-sized (10-199 employees) firms. This is likely to reflect the existence of a threshold that many firms are either unwilling or unable to cross. The analysis of the institutions and rules of the game determining the entrepreneurial and business conditions in Sweden indicate that the conditions have been unfavorable for small firms, and hence that too few small firms have managed to grow out of the smallest size classes. The conclusion is supported by an international comparison of the number of firms in different size classes. Data indicate that Sweden has fewer small (10-99) employees), and more large (500+) firms per capita than other European countries.

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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 12 (1999)
Issue (Month): 1 (February)
Pages: 11-23

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Handle: RePEc:kap:sbusec:v:12:y:1999:i:1:p:11-23

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Web page: http://www.springerlink.com/link.asp?id=100338

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  1. Carlsson, Bo & Braunerhjelm, Pontus, 1993. "Entreprenörskap, småföretag och industriell förnyelse 1968-1991," Working Paper Series 372, Research Institute of Industrial Economics.
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  8. David Blanchflower & Andrew J. Oswald, 1990. "What Makes an Entrepreneur? Evidence on Inheritance and Capital Constraints," NBER Working Papers 3252, National Bureau of Economic Research, Inc.
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  10. Lindh, Thomas & Ohlsson, Henry, 1998. "Self-Employment and Wealth Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 25-42, March.
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  12. Blau, David M, 1987. "A Time-Series Analysis of Self-employment in the United State," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 445-67, June.
  13. Nooteboom, B., 1993. "Firm size effects on transaction costs," Open Access publications from Tilburg University urn:nbn:nl:ui:12-376115, Tilburg University.
  14. repec:fth:iniesr:482 is not listed on IDEAS
  15. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-26, November.
  16. Eliasson, Gunnar & Kazamaki Ottersten, Eugenia, 1994. "Om förlängd skolgång," Working Paper Series 412, Research Institute of Industrial Economics.
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