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The Growth and Decline of Small firms In Developing Countries

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Author Info
Alexander Coad ()
Jagannadha Pawan Tamvada ()

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Abstract

Empirical work on micro and small firms has focused on developed countries. The little work that exists on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze are fairly representative of the structure of small business in India. Consistent with prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. The decision to export is a double-edged sword – if successful it can accelerate the growth of successful firms, but it can also increase the probability of decline. While proprietary ownership results in faster growth, enterprises managed by women are less likely to grow and more likely to decline. Although many small firms are able to convert knowhow into commercial success, we find that many others do not have any technical knowledge and some are unable to use it to their benefit.

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Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2008-08.

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Date of creation: Oct 2008
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Handle: RePEc:esi:evopap:2008-08

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Keywords: Entrepreneurship; Developing countries; Micro and Small businesses; Firm growth; Firm age; Barriers to growth; Declining firms; Female entrepreneurs Length 32 pages;

Find related papers by JEL classification:
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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