Firm growth and barriers to growth among small firms in India
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Empirical work on micro and small firms focuses on developed countries, while existing work on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze here are fairly representative of small business structure in India. Consistent with findings from prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. Enterprises managed by women have lower expected growth rates. Proprietary firms face lower growth on the whole, especially if they are young firms. Exporting has a positive effect on firm growth, especially for young firms and for female-owned firms. Although some small firms are able to convert know-how into commercial success, we find that many others are unable to translate it into superior growth.
KeywordsEntrepreneurship Developing countries Micro and small businesses Firm growth Firm age Barriers to growth Declining firms Female entrepreneurs Robust regression
JEL ClassificationsL26 L25
We are grateful to the Ministry of Small Scale Industries, Government of India, for giving access to the data, and also to Wim Naude, Ulrich Witt, and participants at the UNU-Wider workshop on "Entrepreneurship and Economic Development" (Helsinki, August 2008), as well as to two anonymous referees and the editor (Marco Vivarelli) for many helpful comments. The usual caveat applies.
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