Did firm age, experience, and access to finance count? SME performance after the global financial crisis

Abstract

This paper examines the relationships between firm age and entrepreneurs experience on SME performance after the 2008/09 global financial crisis. We find that in general the crisis had a long-lasting scarring effect on the SME sector, but there is evidence of some recovery in performance. Interestingly, the well-established, and negative, firm age-growth relationship still holds, but entrepreneurial experience did not have any substantive effects on small business performance. Our findings suggest that the severity of the crisis meant that previous entrepreneur experiences had little value in this unique and uncertain environment. However, young firms still accounted for a disproportionately high share of growth, especially among the fastest growing firms.

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Notes

  1. 1.

    The nature of empirical evidence has been found to be dependent on the inclusion or exclusion of exiting firms in the estimation sample, and whether sample firms were below or above the minimum efficient scale (Teruel-Carrizosa 2010).

  2. 2.

    Before 2008, the equivalent Annual Small Business Survey was conducted annually.

  3. 3.

    The six waves are: December 2010, February 2011, August 2011, November 2011, February 2012 and June 2012. No firms were re-surveyed in more than one Barometer wave.

  4. 4.

    We also try to allow for cluster effects (by sector) in our analyses as robustness checks but that does not change our findings substantially.

  5. 5.

    Lagged performance is only available when using the Barometer data set.

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Acknowledgements

Initial funding for this study was provided by the UK Department for Business, Innovation and Skills.

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Correspondence to Marc Cowling.

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Cowling, M., Liu, W. & Zhang, N. Did firm age, experience, and access to finance count? SME performance after the global financial crisis. J Evol Econ 28, 77–100 (2018). https://doi.org/10.1007/s00191-017-0502-z

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Keywords

  • Firm age
  • Entrepreneurs experience
  • Job dynamics
  • Sales dynamics
  • Financial crisis

JEL Classification

  • L25
  • L26