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Are there non-linearities between SME growth and its determinants? A quantile approach

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  • Zélia Serrasqueiro
  • Paulo Maç�s Nunes
  • Jo�o Leit�o
  • Manuel Armada

Abstract

This article uses quantile regressions to study the relationship between the growth of Portuguese small and medium enterprises (SMEs) and its determinants. To control a sample selection bias, we use a two-step estimation. In the first stage, we verified that past growth, size, age, R&D intensity, and cash flow are important determinants for the survival of Portuguese SMEs. Then, after controlling for possible bias of data, we now find that relationships between determinants and growth in Portuguese SMEs present significant non-linearities over growth distribution: (i) Gibrat's Law cannot be rejected in the context of reductions in the size of Portuguese SMEs, but is rejected when company size increases; (ii) debt and R&D intensity are restrictive determinants of Portuguese SME growth when there is reduction in size, being determinants promoting growth in the case of increased size; (iii) age is a restrictive factor of Portuguese SME growth only when there is an increase in size; and (iv) cash flow, although a determinant promoting Portuguese SME growth regardless of the level of growth, takes on greater importance when there is a reduction in size. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

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Bibliographic Info

Article provided by Oxford University Press in its journal Industrial and Corporate Change.

Volume (Year): 19 (2010)
Issue (Month): 4 (August)
Pages: 1071-1108

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Handle: RePEc:oup:indcch:v:19:y:2010:i:4:p:1071-1108

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Cited by:
  1. Coad, Alex & Segarra Blasco, Agustí & Teruel Carrizosa, Mercedes, 2010. "Like milk or wine: Does firm performance improve with age?," Working Papers 2072/179572, Universitat Rovira i Virgili, Department of Economics.
  2. Marco Capasso & Elena Cefis & Alessandro Sapio, 2013. "Reconciling quantile autoregressions of firm size and variance–size scaling," Small Business Economics, Springer, vol. 41(3), pages 609-632, October.
  3. Paulo Nunes & Marco Gonçalves & Zélia Serrasqueiro, 2013. "The influence of age on SMEs’ growth determinants: empirical evidence," Small Business Economics, Springer, vol. 40(2), pages 249-272, February.
  4. Giorgio Barba Navaretti & Davide Castellani & Fabio Pieri, 2012. "Age and firm growth. Evidence from three European countries," Working Papers 1217, Department of Applied Economics II, Universidad de Valencia.
  5. Filipe Silva & Carlos Carreira, 2012. "Measuring Firms' Financial Constraints: A Rough Guide," GEMF Working Papers 2012-14, GEMF - Faculdade de Economia, Universidade de Coimbra.
  6. Sánchez-Vidal, F. Javier, 2014. "High debt companies' leverage determinants in Spain: A quantile regression approach," Economic Modelling, Elsevier, vol. 36(C), pages 455-465.

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