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Drivers of growth in Tunisia: young firms vs incumbents

Author

Listed:
  • Hassan Arouri

    (National Institute of Statistics)

  • Adel Ben Youssef

    (University of Nice Sophia-Antipolis)

  • Francesco Quatraro

    (University of Torino)

  • Marco Vivarelli

    (Universita’ Cattolica del Sacro Cuore
    UNU-MERIT
    IZA)

Abstract

The aim of this paper is to investigate the growth dynamics of young small firms (in contrast with larger and older incumbents) in a developing country context, using a unique and comprehensive dataset of non-agricultural Tunisian companies. Our results suggest that significant differences between young and mature firms can be found as far as the drivers of their growth are concerned. The key finding being that—while consistently with the extant literature Gibrat’s law is overall rejected—the negative impact of the initial size is significantly larger for young than mature firms. This result has interesting policy implications: since smaller young firms are particularly conducive to employment generation, they can be considered good candidate for targeted accompanying policies addressed to sustain their post-entry growth.

Suggested Citation

  • Hassan Arouri & Adel Ben Youssef & Francesco Quatraro & Marco Vivarelli, 2020. "Drivers of growth in Tunisia: young firms vs incumbents," Small Business Economics, Springer, vol. 54(1), pages 323-340, January.
    • Handle: RePEc:kap:sbusec:v:54:y:2020:i:1:d:10.1007_s11187-018-00133-6
    DOI: 10.1007/s11187-018-00133-6
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    Cited by:

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    2. Julie Ann Elston & Alois Weidinger, 2023. "An empirical examination of firm growth in the MENA region through the lens of Gibrat’s law," Small Business Economics, Springer, vol. 60(1), pages 121-131, January.
    3. Florian Léon, 2020. "Firm growth in developing countries: Driven by external shocks or internal characteristics?," Working Papers hal-03004383, HAL.
    4. Wadho, Waqar & Goedhuys, Micheline & Chaudry, Azam, 2019. "Do young innovative companies create more jobs? Evidence from Pakistani textile firms," MERIT Working Papers 2019-002, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    5. Wadho, Waqar & Goedhuys, Micheline & Chaudhry, Azam, 2019. "Young innovative companies and employment creation, evidence from the Pakistani textiles sector," World Development, Elsevier, vol. 117(C), pages 139-152.
    6. Guerzoni, Marco & Riso, Luigi & Vivarelli, Marco, 2023. "The Law of Proportionate Effect: A test based on the graphical model methodology," GLO Discussion Paper Series 1248, Global Labor Organization (GLO).

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    More about this item

    Keywords

    Firm’s growth; Young firms; Gibrat’s law; Tunisia;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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