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Growth expectations of business owners: impact of human capital, firm characteristics and environmental transition

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  • Ruta Aidis

    (UCL School of Slavonic and East European Studies)

  • Tomasz Marek Mickiewicz

    (UCL School of Slavonic and East European Studies)

Abstract

This paper presents an empirical study based on a survey of 399 owners of small and medium size companies in Lithuania. Applying bivariate and ordered probit estimators, we investigate why some business owners expect their firms to expand, while others do not. Our main findings provide evidence that SME owner's generic and specific human capital matter. Those with higher education and 'learning by doing' attributes, either through previous job experience or additional entrepreneurial experience, expect their businesses to expand. The expectations of growth are positively related to exporting and non-monotonically to enterprise size. In addition, we analyse the link between the perceptions of constraints to business activities and growth expectations and find that the factors, which are perceived as main business barriers, are not necessary those which are associated with reduced growth expectations. In particular, perceptions of both corruption and of inadequate tax systems seem to affect growth expectations the most.

Suggested Citation

  • Ruta Aidis & Tomasz Marek Mickiewicz, 2005. "Growth expectations of business owners: impact of human capital, firm characteristics and environmental transition," UCL SSEES Economics and Business working paper series 50, UCL School of Slavonic and East European Studies (SSEES).
    • Handle: RePEc:see:wpaper:50
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