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Dice thrown from the beginning? An empirical investigation of determinants of firm level growth expectations

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  • Siri Terjesen
  • László Szerb

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Abstract

This study investigates three competing but complementary perspectives on factors related to entrepreneurial firm growth. We examine individual (entrepreneur) firm and national environment factors associated with the growth expectations of nascent, baby and established firms. Using 25,384 data points from Global Entrepreneurship Monitor (GEM)’s survey of entrepreneurial activity in 35 countries, we find male gender, personal acquaintance with an entrepreneur, innovative product/service, low levels of competition and based in less-developed countries are associated with high growth expectations for all three business stages. Nascent and baby firms’ business growth expectations are also linked to having higher levels of start-up capital and outside investment. In contrast to some previous research, we find that a firm’s initial size is the best predictor of growth expectations. Altogether, size-related factors determine not only initial growth expectations, but also growth expectations at later firm stages. The law of disproportionate growth (i.e. a small number of firms are responsible for most expected job creation) holds for both start-ups and established businesses, although the latter are more rare. While both start-up and established firm growth expectations are higher in the developing countries, the fastest growing young firms are mainly found in developed countries.

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  • Siri Terjesen & László Szerb, 2008. "Dice thrown from the beginning? An empirical investigation of determinants of firm level growth expectations," Estudios de Economia, University of Chile, Department of Economics, vol. 35(2 Year 20), pages 153-178, December.
  • Handle: RePEc:udc:esteco:v:35:y:2008:i:2:p:153-178
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    Cited by:

    1. Karin Sirec & Dijana Mocnik, 2013. "Determinants Of Growth Aspirations: Empirical Evidence Of The South-Eastern European Countries," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 11(1), pages 3-15.
    2. repec:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-017-9837-y is not listed on IDEAS
    3. R. Sandra Schillo & Ajax Persaud & Meng Jin, 2016. "Entrepreneurial readiness in the context of national systems of entrepreneurship," Small Business Economics, Springer, vol. 46(4), pages 619-637, April.
    4. Jorge, Velilla, 2017. "Feminization of entrepreneurship in developing countries? Evidence from GEM data," MPRA Paper 79997, University Library of Munich, Germany.
    5. Molina, Jose Alberto & Ortega, Raquel & Velilla, Jorge, 2017. "Older entrepreneurs-by-necessity using fuzzy set methods: differences between developed and developing countries," MPRA Paper 76982, University Library of Munich, Germany.
    6. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9791-0 is not listed on IDEAS
    7. repec:gem:wpaper:1201 is not listed on IDEAS
    8. Pete, Stefan & Nagy, Agnes & Matis, Dumitru & Gyorfy, Lehel Zoltan & Benyovszki, Annamaria & Petru, Tunde Petra, 2011. "Early-stage entrepreneurial aspirations in efficiency-driven economies," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(2), pages 5-18, June.
    9. Siepel, Josh & Cowling, Marc & Coad, Alex, 2017. "Non-founder human capital and the long-run growth and survival of high-tech ventures," Technovation, Elsevier, vol. 59(C), pages 34-43.
    10. Molina, Jose Alberto & Velilla, Jorge, 2016. "La innovación como determinante pare el emprendimiento
      [Innovation as determinant of entrepreneurship]
      ," MPRA Paper 71471, University Library of Munich, Germany.
    11. Atilla Öner, M. & Kunday, Özlem, 2016. "A study on Schumpeterian and Kirznerian entrepreneurship in Turkey: 2006–2013," Technological Forecasting and Social Change, Elsevier, vol. 102(C), pages 62-71.
    12. repec:ksa:szemle:1695 is not listed on IDEAS
    13. Ozcam, Ahmet & Karadeniz, Esra, 2012. "The Determinants of the Growth Expectations of Turkish Entrepreneurs in the Way up the Entrepreneural Ladder Using Ordinal Logistic Model (OLM)," MPRA Paper 49908, University Library of Munich, Germany.
    14. Gimenez-Nadal, J. Ignacio & Lafuente, Miguel & Molina, José Alberto & Velilla, Jorge, 2016. "Resampling and Bootstrap to Assess the Relevance of Variables: A New Algorithmic Approach with Applications to Entrepreneurship Data," IZA Discussion Papers 9938, Institute for the Study of Labor (IZA).
    15. Jolanda Hessels & Brigitte Hoogendoorn & Peter van der Zwan & Nardo de Vries, 2013. "Global Entrepreneurship Monitor The Netherlands 2012," Scales Research Reports H201314, EIM Business and Policy Research.
    16. Claudia Álvarez & David Urbano & José Amorós, 2014. "GEM research: achievements and challenges," Small Business Economics, Springer, vol. 42(3), pages 445-465, March.

    More about this item

    Keywords

    Entrepreneurship; firm growth expectations; develop vs. developing countries;

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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