Big Constraints to Small Firms’ Growth? Business Environment and Employment Growth across Firms

Abstract

Using data on more than 56,000 enterprises in 90 countries, this study finds that objective conditions in the business environment vary substantially across firms of different sizes and that there are important nonlinearities in their impact on employment growth. The study focuses on four areas: access to finance, business regulations, corruption, and infrastructure. The results, particularly on the impacts of finance and corruption on growth, depend on whether and how the analysis accounts for the possible endogeneity of the business environment. Controlling for endogeneity revises the finding that small firms benefit most from access to finance, particularly for sources of finance associated with investment and growth. The findings are also sensitive to how “small” is defined. Differentiating micro (fewer than 10 employees) from other small firms shows that, while small firms can be disadvantaged in such an environment, micro firms tend to be proportionally less affected by a weak business climate—and, on occasion, it can help them to grow. Overall, allowing different size classifications provides insights into the impact of the business environment that are lost in more aggregate analyses.

Análisis bibliométrico de la influencia de la corrupción y la regulación en la actividad emprendedora

“…El efecto de la velocidad del dinero desaparece ante el desarrollo financiero. Añadido a esto, Aterido et al (2011), con un total de 70 citas recibidas, encuentran un efecto positivo de la facilidad de acceder al crédito en las grandes y medianas empresas, no así en las pequeñas o micro empresas.…”

“…A su vez, la permanencia en el sector informal puede influir en la recaudación de impuestos por parte del estado (Aterido et al, 2011). A su vez, Autio y Fu (2015) esperan que las investigación sobre los análisis de tamaño del sector empresarial informal y su relación con el alivio de la pobreza sean ampliados en el futuro.…”

Investment climate, outward orientation and manufacturing firm productivity: new empirical evidence

“…At the macroeconomic level, various empirical studies have used cross-country analysis to highlight the critical role of good governance and institutions (Acemoglu et al, 2001;Engerman and Sokoloff, 2002). More recently, the emergence of enterprise survey data has led to a growing literature that evaluates the determinants of firms' performance (Dollar et al, 2005, Pande andUdri, 2005;Aterido et al, 2011) 1 . By adding a micro economic perspective that captures firms' main constraints, this new approach strengthens the empirical literature which may be used to formulate policy recommendations.…”

“…2 Bastos and Nasir (2004); Escribano and Guash (2005); Dollar et al (2005), Aterido and Hallward (2007); Aterido et al (2011).…”

Financial Development and Employment: Evidence from Transition Countries

“…He argues that the distribution of managerial talent in society is necessarily transformed into a corresponding distribution of firm sizes given that a manager's talent and ability are the limiting factors in production. Likewise, Aterido, Hallward-Driemeier & Pàges (2011) study the impact of access to finance measured at the local level on firms' employment growth. They find a positive effect of increased access to finance on employment growth for medium and large firms but no effect for micro and small firms.…”