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Flexible or fragile? The growth performance of small and young businesses during the global financial crisis — Evidence from Germany

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  • Bartz, Wiebke
  • Winkler, Adalbert

Abstract

Do crisis times hamper or foster entrepreneurship? We analyze the relative growth performance of small and young firms within the German Mittelstand during the 2009 crisis. We find that small firms exhibit a relative growth advantage compared to larger firms in both stable and crisis times, and interpret this as a flexibility advantage of small size. By contrast, young firms, which show stronger growth in stable times, are disproportionately negatively affected by the crisis. A similar pattern holds for firms showing characteristics commonly associated with a more entrepreneurial attitude. Thus we conclude that crises are detrimental to entrepreneurship.

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  • Bartz, Wiebke & Winkler, Adalbert, 2016. "Flexible or fragile? The growth performance of small and young businesses during the global financial crisis — Evidence from Germany," Journal of Business Venturing, Elsevier, vol. 31(2), pages 196-215.
  • Handle: RePEc:eee:jbvent:v:31:y:2016:i:2:p:196-215
    DOI: 10.1016/j.jbusvent.2015.10.002
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    2. Olga N. Kusakina & Natalia V. Bannikova & Svetlana S. Morkovina & Tatiana N. Litvinova, 2016. "State Stimulation of Development of Small Entrepreneurship in Developing Countries," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 276-284.
    3. Brixy, Udo & Murmann, Martin, 2016. "The growth and human capital structure of new firms over the business cycle," IAB Discussion Paper 201642, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. A. Arrighetti & F. Landini & A. Lasagni, 2016. "Swimming Upstream Throughout the Turmoil: Evidence on Firm Growth During the Great Recession," Economics Department Working Papers 2016-EP04, Department of Economics, Parma University (Italy).

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