Binding Constraints: Does Firm Size Matter?
AbstractUsing Bolivian firm level data from the World Bank 2010 Enterprise Survey, we attempt to find evidence to support the idea that distinct formal firms (according to their size) have a distinct likelihood of facing obstacles. We propose that a potential endogeneity between firms' constraints and firm size should be considered. After calculating estimations from an IV-ordered probit with an ordinal endogenous regressor, the results suggest that the firm size affects the constraint level reported by firms, but not for all kind of obstacles. `Corruption', `Political Instability', and `Crime, Theft and Disorder' are obstacles which affect all firms; `Electricity' and `Transportation' are binding constraints to medium and large firms; and `Access to Financing' is a binding constraint to small firms. These findings are important because they can be directly extrapolated to public policy that is focused on the performance of firms.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 41286.
Date of creation: 04 Sep 2012
Date of revision:
Firm; Size; Constraints; IV-oprobit;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
- C42 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Survey Methods
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-22 (All new papers)
- NEP-BEC-2012-09-22 (Business Economics)
- NEP-SBM-2012-09-22 (Small Business Management)
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