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Are Small Firms Really Less Productive?

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  • Erol Taymaz

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Abstract

Small and medium-sized establishments (SMEs) account for a large proportion of industrial employment and production in almost all countries. Moreover, the recent literature emphasizes the role SMEs play in nurturing entrepreneurship and generating new products and processes. Although SMEs could be a source of new ideas and innovations, there are substantial productivity differences between small and large establishments. In this paper, we analyze three sources of productivity differentials: technical efficiency, returns to scale, and technical change. Our analysis on the creation, survival, and growth of new establishments in Turkish manufacturing industries in the period 1987–1997 shows that all these three factors play a very important role in determining the survival probability and growth prospects of new establishments. Copyright Springer 2005

Suggested Citation

  • Erol Taymaz, 2005. "Are Small Firms Really Less Productive?," Small Business Economics, Springer, vol. 25(5), pages 429-445, December.
  • Handle: RePEc:kap:sbusec:v:25:y:2005:i:5:p:429-445
    DOI: 10.1007/s11187-004-6492-x
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    File URL: http://hdl.handle.net/10.1007/s11187-004-6492-x
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    References listed on IDEAS

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    1. P.A. Geroski & José Mata & Pedro Portugal, 2003. "Founding Conditions and the Survival of New Firms," Working Papers w200301, Banco de Portugal, Economics and Research Department.
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    More about this item

    Keywords

    Productivity; efficiency; innovation; firm dynamics; D24; L11; L25;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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