The determinants of growth for SMEs. A longitudinal study from French manufacturing firms
AbstractThis paper investigates the structural and strategic determinants of firm growth using a unique data set for French firms employing between 10 and 250 employees in 1997 and active over the period 1997-2007. Starting from the idea that firm growth is not only a random process but that some regularities may be emphasized, we consider a growth model that combines different elements presented as determinant in the firm’s growth path. Results based on two families of multinomial logit model do not confirm the conclusions about the exclusive role played by the previous size. In addition, thanks to the references to legal structure, market share and localization, one observes these variables shape strongly the individual growth path. However environment and structural elements are not the only elements to focus on in order to provide an explanation of the employment growth rate at the firm level. Strategic factors matter too. In particular we demonstrate the crucial role of labor costs and financial structure as explanatory variables of firm growth.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2010-28.
Length: 29 pages
Date of creation: 2010
Date of revision:
Firm growth; SMEs; Gibrat’s law; French manufacturing; multinomial logistic regression;
Find related papers by JEL classification:
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
- D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-12-18 (All new papers)
- NEP-BEC-2010-12-18 (Business Economics)
- NEP-CSE-2010-12-18 (Economics of Strategic Management)
- NEP-ENT-2010-12-18 (Entrepreneurship)
- NEP-SBM-2010-12-18 (Small Business Management)
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