IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

What Affects New and Established Firms’ Expansion? Evidence from Small Firms in Russia

  • Valentina Hartarska

    ()

  • Claudio Gonzalez-Vega

    ()

Registered author(s):

    Research on financial constraints of very small firms is scarce because it is difficult to observe and measure their transactions. Previous studies on small enterprises in post-communist countries have focused either on the effect of financing constraints on business growth (Budina et al., 2000, Economics of Transition 8(2), 453–475; Bratkowski et al., 2000, Economics of Transition 8(1), 101–116) or on the effect of property rights (Johnson et al., 2002, American Economic Review 92(5), 1335–1357). This paper provides evidence on both. It turns out that financing constraints and property rights considerations affects investment in firms of different age differently. Younger firms face higher information costs and their expansion is more dependent on the availability of internal funds than is the expansion of older firms. This paper also finds that while the financial sector did not channel funds to the most successful businesses, there is evidence that loans were given to firms that had more transparent transactions. Results also indicate that the security of property rights does not influence investment in young firms, which is interpreted to mean that only the most efficient entrepreneurs entered the market. In older small firms, investment is negatively influenced by the index of security of property rights suggesting that these firms might have “secured” their property rights by bribes. Improvements in the security of property rights, therefore, would help more micro enterprises to be born as well as decrease transaction cost of established enterprises. Copyright Springer 2006

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://hdl.handle.net/10.1007/s11187-006-0012-0
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 27 (2006)
    Issue (Month): 2 (October)
    Pages: 195-206

    as
    in new window

    Handle: RePEc:kap:sbusec:v:27:y:2006:i:2:p:195-206
    Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100338

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    as in new window
    1. Pissarides, Francesca & Singer, Miroslav & Svejnar, Jan, 2003. "Objectives and constraints of entrepreneurs: evidence from small and medium size enterprises in Russia and Bulgaria," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 503-531, September.
    2. Anderson, Ronald W. & Kegels, Chantal, 1998. "Transition Banking: Financial Development of Central and Eastern Europe," OUP Catalogue, Oxford University Press, number 9780198290131.
    3. Jozef Konings & Ana Xavier, 2002. "Firm Growth and Survival in a Transition Country: Micro Evidence from Slovenia," LICOS Discussion Papers 11402, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:27:y:2006:i:2:p:195-206. 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: (Sonal Shukla)

    or (Christopher F. Baum)

    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 references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link 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 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.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.