IDEAS home Printed from https://ideas.repec.org/a/eee/wdevel/v37y2009i9p1453-1464.html
   My bibliography  Save this article

Small Firm Growth in Developing Countries

Author

Listed:
  • Nichter, Simeon
  • Goldmark, Lara

Abstract

Summary Although the vast majority of small firms in developing countries never expand beyond a few employees, some experience rapid and substantial growth. This study explores factors associated with small firm growth. We discuss key findings for four types of factors: (1) individual entrepreneur characteristics; (2) firm characteristics; (3) relational factors (such as social networks or value chains); and (4) contextual factors (such as the business environment). We conclude by suggesting implications for development practitioners.

Suggested Citation

  • Nichter, Simeon & Goldmark, Lara, 2009. "Small Firm Growth in Developing Countries," World Development, Elsevier, vol. 37(9), pages 1453-1464, September.
  • Handle: RePEc:eee:wdevel:v:37:y:2009:i:9:p:1453-1464
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0305-750X(09)00092-8
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. World Bank & International Finance Corporation, 2006. "Doing Business in 2006 : Creating Jobs," World Bank Publications, The World Bank, number 7421, June.
    2. James R. Tybout, 2000. "Manufacturing Firms in Developing Countries: How Well Do They Do, and Why?," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 11-44, March.
    3. Arne Bigsten & Paul Collier & Stefan Dercon & Marcel Fafchamps & Bernard Gauthier & Jan Willem Gunning & Abena Oduro & Remco Oostendorp & Cathy Patillo & Måns S–derbom & Francis Teal & Albert Zeufack, 2003. "Credit Constraints in Manufacturing Enterprises in Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 12(1), pages 104-125, March.
    4. Niels Bosma & Mirjam van Praag & Roy Thurik & Gerrit de Wit, 2004. "The Value of Human and Social Capital Investments for the Business Performance of Startups," Small Business Economics, Springer, vol. 23(3), pages 227-236, October.
    5. Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
    6. Berry, Albert & Rodriguez, Edgard & Sandee, Henry, 2002. "Firm and Group Dynamics in the Small and Medium Enterprise Sector in Indonesia," Small Business Economics, Springer, vol. 18(1-3), pages 141-161, Feb.- May.
    7. Akoten, John E & Sawada, Yasuyuki & Otsuka, Keijiro, 2006. "The Determinants of Credit Access and Its Impacts on Micro and Small Enterprises: The Case of Garment Producers in Kenya," Economic Development and Cultural Change, University of Chicago Press, vol. 54(4), pages 927-944, July.
    8. Kashyap, S. P., 1988. "Growth of small-size enterprises in India: Its nature and content," World Development, Elsevier, vol. 16(6), pages 667-681, June.
    9. Pablo Fajnzylber & William Maloney & Gabriel Montes Rojas, 2006. "Microenterprise Dynamics in Developing Countries: How Similar are They to Those in the Industrialized World? Evidence from Mexico," World Bank Economic Review, World Bank Group, vol. 20(3), pages 389-419.
    10. Evans, David S, 1987. "The Relationship between Firm Growth, Size, and Age: Estimates for 100 Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 567-581, June.
    11. Mirjam Schiffer & Beatrice Weder, 2001. "Firm Size and the Business Environment : Worldwide Survey Results," World Bank Publications, The World Bank, number 13988, November.
    12. Abigail Barr, 1998. "Enterprise performance and the functional diversity of social capital," CSAE Working Paper Series 1998-01, Centre for the Study of African Economies, University of Oxford.
    13. Måns Söderbom & Francis Teal, 2001. "Firm size and human capital as determinants of productivity and earnings," CSAE Working Paper Series 2001-09, Centre for the Study of African Economies, University of Oxford.
    14. Burki, Abid A. & Terrell, Dek, 1998. "Measuring production efficiency of small firms in Pakistan," World Development, Elsevier, vol. 26(1), pages 155-169, January.
    15. Mccormick, Dorothy, 1999. "African Enterprise Clusters and Industrialization: Theory and Reality," World Development, Elsevier, vol. 27(9), pages 1531-1551, September.
    16. Colombo, Massimo G. & Grilli, Luca, 2005. "Founders' human capital and the growth of new technology-based firms: A competence-based view," Research Policy, Elsevier, vol. 34(6), pages 795-816, August.
    17. Sleuwaegen, Leo & Goedhuys, Micheline, 2002. "Growth of firms in developing countries, evidence from Cote d'Ivoire," Journal of Development Economics, Elsevier, vol. 68(1), pages 117-135, June.
    18. Fafchamps, Marcel, 2000. "Ethnicity and credit in African manufacturing," Journal of Development Economics, Elsevier, vol. 61(1), pages 205-235, February.
    19. Schmitz, Hubert, 1999. "Collective Efficiency and Increasing Returns," Cambridge Journal of Economics, Oxford University Press, vol. 23(4), pages 465-483, July.
    20. Alvarez, Roberto & Crespi, Gustavo, 2003. "Determinants of Technical Efficiency in Small Firms," Small Business Economics, Springer, vol. 20(3), pages 233-244, May.
    21. McPherson, Michael A. & Liedholm, Carl, 1996. "Determinants of small and micro enterprise registration: Results from surveys in Niger and Swaziland," World Development, Elsevier, vol. 24(3), pages 481-487, March.
    22. Fausto Hernández‐Trillo & José A. Pagán & Julia Paxton, 2005. "Start‐up Capital, Microenterprises and Technical Efficiency in Mexico," Review of Development Economics, Wiley Blackwell, vol. 9(3), pages 434-447, August.
    23. Paul Robson & Bernard Obeng, 2008. "The Barriers to Growth in Ghana," Small Business Economics, Springer, vol. 30(4), pages 385-403, April.
    24. Boomgard, James J. & Davies, Stephen P. & Haggblade, Steven J. & Mead, Donald C., 1992. "A subsector approach to small enterprise promotion and research," World Development, Elsevier, vol. 20(2), pages 199-212, February.
    25. repec:fth:oxesaf:2001-9 is not listed on IDEAS
    26. Winter, Sidney G., 1995. "Small and medium-size enterprises in economic development : possiblities for research and policy," Policy Research Working Paper Series 1508, The World Bank.
    27. Variyam, Jayachandran N. & Kraybill, David S., 1992. "Empirical evidence on determinants of firm growth," Economics Letters, Elsevier, vol. 38(1), pages 31-36, January.
    28. Thorsten Beck & Asli Demirgüç‐Kunt & Vojislav Maksimovic, 2005. "Financial and Legal Constraints to Growth: Does Firm Size Matter?," Journal of Finance, American Finance Association, vol. 60(1), pages 137-177, February.
    29. Kevane, Michael & Wydick, Bruce, 2001. "Microenterprise Lending to Female Entrepreneurs: Sacrificing Economic Growth for Poverty Alleviation?," World Development, Elsevier, vol. 29(7), pages 1225-1236, July.
    30. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    31. Nobuyuki Harada, 2007. "Which Firms Exit and Why? An Analysis of Small Firm Exits in Japan," Small Business Economics, Springer, vol. 29(4), pages 401-414, December.
    32. Paula Kantor, 2005. "Determinants Of Women'S Microenterprise Success In Ahmedabad, India: Empowerment And Economics," Feminist Economics, Taylor & Francis Journals, vol. 11(3), pages 63-83.
    33. Cooper, Arnold C., 1993. "Challenges in predicting new firm performance," Journal of Business Venturing, Elsevier, vol. 8(3), pages 241-253, May.
    34. Mead, Donald C. & Liedholm, Carl, 1998. "The dynamics of micro and small enterprises in developing countries," World Development, Elsevier, vol. 26(1), pages 61-74, January.
    35. Michael J. Pisani & José A. Pagán, 2004. "Self-employment in the era of the new economic model in Latin America: a case study from Nicaragua," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 16(4), pages 335-350, July.
    36. David B. Audretsch & Dirk Dohse, 2007. "Location: A Neglected Determinant of Firm Growth," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 143(1), pages 79-107, April.
    37. Geertz, Clifford, 1978. "The Bazaar Economy: Information and Search in Peasant Marketing," American Economic Review, American Economic Association, vol. 68(2), pages 28-32, May.
    38. Daniels, Lisa, 1999. "The role of small enterprises in the household and national economy in Kenya: A significant contribution or a last resort?," World Development, Elsevier, vol. 27(1), pages 55-65, January.
    39. Arne Bigsten & Mulu Gebreeyesus, 2007. "The Small, the Young, and the Productive: Determinants of Manufacturing Firm Growth in Ethiopia," Economic Development and Cultural Change, University of Chicago Press, vol. 55(4), pages 813-840, July.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," World Bank Research Observer, World Bank Group, vol. 30(2), pages 277-305.
    2. Idrees Khawaja & Nasir Iqbal, 2019. "Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan," PIDE-Working Papers 2019:160, Pakistan Institute of Development Economics.
    3. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    4. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    5. Calza, Elisa & Goedhuys, Micheline, 2016. "Entrepreneurial heterogeneity and the design of entrepreneurship policies for economic growth and inclusive development," MERIT Working Papers 2016-043, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    6. Reeg, Caroline, 2015. "Micro and small enterprises as drivers for job creation and decent work," Discussion Papers 10/2015, German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE).
    7. Micheline Goedhuys & Leo Sleuwaegen, 2010. "High-growth entrepreneurial firms in Africa: a quantile regression approach," Small Business Economics, Springer, vol. 34(1), pages 31-51, January.
    8. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
    9. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    10. Alex Coad & Jaganaddha Tamvada, 2012. "Firm growth and barriers to growth among small firms in India," Small Business Economics, Springer, vol. 39(2), pages 383-400, September.
    11. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    12. Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute of Labor Economics (IZA).
    13. Sleuwaegen, Leo & Goedhuys, Micheline, 2002. "Growth of firms in developing countries, evidence from Cote d'Ivoire," Journal of Development Economics, Elsevier, vol. 68(1), pages 117-135, June.
    14. Subash Sasidharan & S. N. Rajesh Raj, 2014. "The Growth Barriers of Informal Sector Enterprises: Evidence from India," The Developing Economies, Institute of Developing Economies, vol. 52(4), pages 351-375, December.
    15. Rajesh SN Raj & Kunal Sen, 2016. "Moving out of the bottom of the economy? Constraints to firm transition in the Indian informal manufacturing sector," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-20, December.
    16. Rijkers, Bob & Söderbom, Måns & Loening, Josef L., 2010. "A Rural-Urban Comparison of Manufacturing Enterprise Performance in Ethiopia," World Development, Elsevier, vol. 38(9), pages 1278-1296, September.
    17. Masakure, Oliver & Cranfield, John & Henson, Spencer, 2008. "The Financial Performance of Non-farm Microenterprises in Ghana," World Development, Elsevier, vol. 36(12), pages 2733-2762, December.
    18. de Carvalho, Antonio Gledson, 2008. "The Effect of Size and Institutional Development on the Growth of Brazilian Firms," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 62(4), December.
    19. Arne Bigsten & Mans Söderbom, 2006. "What Have We Learned from a Decade of Manufacturing Enterprise Surveys in Africa?," World Bank Research Observer, World Bank Group, vol. 21(2), pages 241-265.
    20. Alex Coad, 2007. "Firm Growth : a Survey," Post-Print halshs-00155762, HAL.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:37:y:2009:i:9:p:1453-1464. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nithya Sathishkumar). General contact details of provider: http://www.elsevier.com/locate/worlddev .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.