What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania

Technical report


Brown, J., Earle, J. and Lup, D. 2003. What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania. Kalamazoo, Michigan, USA W.E. Upjohn Institute for Employment Research. https://doi.org/10.17848/wp03-94
TypeTechnical report
TitleWhat makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania
AuthorsBrown, J., Earle, J. and Lup, D.
Abstract

Although the development of a new private sector is generally considered crucial to economic transition, there has been relatively little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account. The evidence for the effectiveness of technical assistance is weak: only assistance provided by foreign partners yields a positive effect. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.

Keywordssmall firms, entrepreneurship, microfinance, business environment, Romania
PublisherW.E. Upjohn Institute for Employment Research
Place of publicationKalamazoo, Michigan, USA
Publication process dates
Deposited16 Feb 2017
Accepted01 Jan 2003
Output statusPublished
Additional information

Upjohn Institute Working Paper No. 03-94

Digital Object Identifier (DOI)https://doi.org/10.17848/wp03-94
LanguageEnglish
SeriesUpjohn Institute working paper
Institution nameW.E. Upjohn Institute for Employment Research
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