SSE/EFI Working Paper Series in Economics and Finance
On the Growth of Micro and Small Firms
Abstract: The relationships between firms' size, age and their
growth rate are examined for a large sample of micro and small firms in
Sweden. These firms have employees numbering in the range of 1-100 and are
operating in a geographically concentrated area. Micro and small firms
dominate the industrial structure and thus their growth patterns are
crucial to the economic growth of the region. The period of study is of
particular interest because it allows us to evaluate the effects of various
regional development policy programs on the growth and formation of firms.
The data is an unbalanced panel covering the period 1993-1998. We allow for
the exit and entry of firms. Growth rate is defined in terms of the number
of employees, sales and assets. In the estimation of growth rate we control
for various factors characterizing the sample firms, their capital
structure, performances, human capital, and local labor market conditions.
Our results show that the relationship between growth, size and the age of
firms is very sensitive with respect to the methods of estimation,
functional forms and growth and size definitions.
Keywords: Micro and small firms; firm age and size; firm growth; Gibrat's law; panel data; Sweden; (follow links to similar papers)
JEL-Codes: C23; D21; D92; L60; R58; (follow links to similar papers)
27 pages, August 14, 2000
- This paper is published as:
Heshmati, Almas, (2001), 'On the Growth of Micro and Small Firms: Evidence from Sweden', Small Business Economics, Vol. 17, No. 3, pages 213-218
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