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Determinants of small and medium sized fast growing enterprises in central and eastern Europe: a panel data analysis

Author

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  • Miroslav Mateev

    (American University in Bulgaria, Blagoevgrad)

  • Yanko Anastasov

    (American University in Bulgaria, Blagoevgrad)

Abstract

The purpose of this paper is to explore the main determinants of growth in small and medium sized enterprises (SMEs) in central and eastern Europe. The important role played by SMEs in the economic development of central and eastern European (CEE) countries has attracted the recent attention of academics and policymakers but remains relatively unexplored. Empirical research has suggested that firm growth is determined not only by the traditional characteristics of size and age but also by other firm-specific factors such as indebtedness, internal financing, future growth opportunities, process and product innovation, and organisational changes. Although growth in manufacturing and service SMEs in transition economies is well explained by the traditional firm characteristics of size and age, there is no empirical evidence concerning what other specific factors may be associated with SME growth and performance in these countries. Using a panel dataset of 560 fast growing small and medium enterprises from six transition economies we find that firm size when measured by firm total assets can explain to a large extent the growth in SMEs in these countries. When size is proxied by a firm’s number of employees the observed effect is marginal. Firm specific characteristics such as leverage, current liquidity, future growth opportunities, internally generated funds, and factor productivity are found to be important factors in determining a firm’s growth and performance. Age and ownership do not seem to be able to explain firm growth. The results of our empirical study have also some policy implications: we argue that governments in transition economies need to pay an increased attention to small and medium sized enterprises and try to create a business environment that will be beneficial for SME development.

Suggested Citation

  • Miroslav Mateev & Yanko Anastasov, 2010. "Determinants of small and medium sized fast growing enterprises in central and eastern Europe: a panel data analysis," Financial Theory and Practice, Institute of Public Finance, vol. 34(3), pages 269-295.
  • Handle: RePEc:ipf:finteo:v:34:y:2010:i:3:p:269-295
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Erhardt, Eva, 2017. "Who persistently creates jobs? Absolute versus relative high-growth firms," MPRA Paper 79295, University Library of Munich, Germany.
    2. Idrees Khawaja & Sajawal Khan, 2016. "Growth Diagnostics: Pakistan," PIDE-Working Papers 2016:143, Pakistan Institute of Development Economics.
    3. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    4. Thomas Gries & Ha van Dung, 2014. "Institutional environment, human capital, and firm growth: Evidence from Vietnam," Working Papers CIE 83, Paderborn University, CIE Center for International Economics.
    5. Sorin Gabriel ANTON, 2016. "The Impact Of Leverage On Firm Growth. Empirical Evidence From Romanian Listed Firms," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 147-158, December.
    6. Paulo Nunes & Marco Gonçalves & Zélia Serrasqueiro, 2013. "The influence of age on SMEs’ growth determinants: empirical evidence," Small Business Economics, Springer, vol. 40(2), pages 249-272, February.
    7. Murmann Johann Peter & Korn Jenny & Worch Hagen, 2014. "How Fast Can Firms Grow?," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 234(2-3), pages 210-233, April.
    8. Bruce Dwyer & Bernice Kotey, 2015. "Financing SME Growth: The Role of the National Stock Exchange of Australia and Business Advisors," Australian Accounting Review, CPA Australia, vol. 25(2), pages 114-123, June.
    9. Mosharref Hossain & Yusnidah Ibrahim & Mohan Uddin, 2016. "Towards the Factors affecting Small Firm Growth: Review of Previous Studies," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(5), pages 217-235, May.
    10. Marko Peric & Vanja Vitezic, 2016. "Impact of global economic crisis on firm growth," Small Business Economics, Springer, vol. 46(1), pages 1-12, January.
    11. Patrycja Grinberger & Natalia Nehrebecka, 2015. "Determinants of firm’s growth: empirical study of Polish listed companies," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 43.

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