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SME Policies as a Barrier to Growth of SMEs

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  • TSURUTA Daisuke

Abstract

We investigate whether firms have incentives to retain their positions as small and medium enterprises (SMEs) to benefit from various SME policies. Using small business data from Japan, we show that firms are less likely to increase their registered capital so that they can continue to satisfy the requirement that retains their position as SMEs under the SME Basic Act. In addition, we find that, after the relaxation of this SME requirement under the act, firms were more likely to increase their registered capital. When firms do not increase their registered capital in order to keep their SME status, firm growth is impeded.

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  • TSURUTA Daisuke, 2017. "SME Policies as a Barrier to Growth of SMEs," Discussion papers 17046, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:17046
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    Cited by:

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    2. HOSONO Kaoru & HOTEI Masaki & MIYAKAWA Daisuke, 2022. "Causal Effects of a Tax Incentive on SME Capital Investment," Discussion papers 22048, Research Institute of Economy, Trade and Industry (RIETI).
    3. KG Suresh & Akanksha Saxena & M. Srikanth, 2023. "Comparing Financial Debt Choices of Existing and New SMEs in Indian Manufacturing Sector," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(3), pages 445-456, September.
    4. HOSONO Kaoru & TAKIZAWA Miho & TSURU Kotaro, 2017. "Size-dependent Policy and Firm Growth," Discussion papers 17070, Research Institute of Economy, Trade and Industry (RIETI).
    5. Kaoru Hosono & Masaki Hotei & Daisuke Miyakawa, 2023. "Causal effects of a tax incentive on SME capital investment," Small Business Economics, Springer, vol. 61(2), pages 539-557, August.
    6. A‐Reum Jung & Do‐Jin Jung, 2022. "The effects of size‐dependent policy on the sales distortion reporting: Focusing on the discretionary sales management of Korean SMEs," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(2), pages 301-320, March.
    7. Desiderio Romero-Jordán & Ismael Sanz-Labrador & José Félix Sanz-Sanz, 2020. "Is the corporation tax a barrier to productivity growth?," Small Business Economics, Springer, vol. 55(1), pages 23-38, June.
    8. Kamila Urbanska & Agnieszka Parkitna & Joanna Kubicka, 2021. "Success of SMEs in the Era of Pandemics," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 407-423.
    9. DaEun Kim & Sungchan Yeom & Myeong Chul Ko, 2020. "The Interactive Effect of Government Financial Support and Firms’ Innovative Efforts on Company Growth: A Focus on Climate-Tech SMEs in Korea," Sustainability, MDPI, vol. 12(22), pages 1-12, November.
    10. Sergio Ochoa Jiménez & Alma Rocío García García & Beatriz Alicia Leyva Osuna & Sacnicté Valdez del Río, 2021. "Entrepreneurial Behavior of SMEs and Characteristics of the Managers of Northwest Mexico," Social Sciences, MDPI, vol. 10(1), pages 1-15, January.
    11. Mariana Colacelli & Mr. Gee Hee Hong, 2019. "Productivity Drag from Small and Medium-Sized Enterprises in Japan," IMF Working Papers 2019/137, International Monetary Fund.
    12. Randall Jones & Yosuke Jin, 2017. "Boosting productivity for inclusive growth in Japan," OECD Economics Department Working Papers 1414, OECD Publishing.

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    More about this item

    JEL classification:

    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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