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Individual, organizational and environmental determinants of new firm employment growth: evidence from Latin America

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Abstract

New ventures are increasingly playing an important role in Latin American economies. However, little is known about the determinants of new firm growth in this context. The purpose of this study is to gain an understanding of the factors influencing new firm growth in Argentina, Brazil, Mexico and Peru. Individual, organizational and environmental factors are included in an empirical model, which is tested using data collected by face-to-face interviews with 582 entrepreneurs. Different specifications of employment growth and regression approaches are employed. Results suggest that growth strongly depends on the characteristics of the entrepreneur. National environment and firm-related factors are also important factors in determining growth.

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Notes

  1. The analytical framework proposed by Storey (1994) has been used in many studies. Storey (1994) proposes a framework with three main factors: the starting resources of the entrepreneur, the characteristics of the firm, and the strategy. All these three components need to combine appropriately in order the firm achieve rapid growth. The three sets of variables may be considered as overlapping or intersecting circles and they cannot be considered as completely independent influences.

  2. Buenos Aires city and urban areas of Buenos Aires in Argentina; Lima in Peru; Sao Paulo and Campinas in Brazil, and Federal District and Guadalajara in Mexico.

  3. While absolute growth measures over estimate growth of larger firms, relative measures have the opposite effect (Davidsson & Wiklund, 1999; Weinzimmer et al., 1998).

  4. In all the growth calculations we used first year and end year data. Calculating growth in this manner may hide fluctuations in employment levels over smaller spans of time. However, firm founders were asked for the number of employees in the third year since start-up. Only a small rate of the founders (12%) reported that their firms had peaks or troughs.

  5. This model is also appropriate when categorical variables predominate within the set of independent variables. Additionally, methods based on the maximum likelihood estimation, such as the logistic regression method, are appropriate to avoid the potential sample selection bias.

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Acknowledgments

The authors would like to thank Hugo Kantis, Universidad Nacional General Sarmiento (Argentina), for his support to this study. The study has received financial support from the Spanish Ministry of Science and Technology (Project SEC2004-07242-C03-01/ECON).

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  1. Departamento de Economía de la Empresa, Universidad Autónoma de Barcelona, 08193, Bellaterra, Barcelona, Spain

    Joan-Lluis Capelleras & Rodrigo Rabetino

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  1. Joan-Lluis Capelleras
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Correspondence to Joan-Lluis Capelleras.

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Capelleras, JL., Rabetino, R. Individual, organizational and environmental determinants of new firm employment growth: evidence from Latin America. Int Entrep Manag J 4, 79–99 (2008). https://doi.org/10.1007/s11365-006-0030-z

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