Productivity and firm size in India

De, Prabal K.; Nagaraj, Priya

doi:10.1007/s11187-013-9504-x

Cited by 62 publications

(55 citation statements)

References 34 publications

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“…The advantages of greater market power and access to economies of scale and scope garnered by increased size are not necessary conditions for efficient production. In fact, small firms have generally been found to be more productive than large firms, see De and Nagari (2014), Nguyen and Rezuek (1991). Furthermore, the rate of profitability is not necessarily higher for larger enterprises.…”

Section: Discussionmentioning

confidence: 99%

“…Leibenstein 1992) of the relationship between firm size, the diversity of competitive strategy and performance for a sample of Scottish, long-lived and typically small firms. We contribute to the growing empirical literature on firm growth and performance which seeks to explain why firms tend to remain small (De and Nagari 2014;Hsieh and Klenow 2012;andJohansson 1999, 2010). Indeed, there is emerging evidence of a shrinking in firm size, as measured by employment, across western economies, such as the United States, United Kingdom, France, Germany, and Italy, see Rosa and Hanoteau (2012) and Dosi et al (2008).…”

Section: Introductionmentioning

confidence: 99%

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Performance and Strategy: Simultaneous Equations Analysis of Long-lived Firms

Power

Reid

2015

International Journal of the Economics of Business

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A simultaneous equations model of performance, strategy and size is tested using fieldwork evidence on long-lived firms in Scotland. Estimation is by I3SLS, with correction for sample selection bias. The contributions of this paper are that it: (a) grounds estimation on fieldwork evidence; (b) calibrates performance and competitive strategy; (c) tests and models endogeneity; and (d) computes robust trade-off elasticities between firm size and performance. It shows how this trade-off provides the entrepreneur with two strong incentives: (i) to seek greater efficiency typically by an increase in the human capital of the 'core' workforce; (ii) to achieve higher levels of performance by adopting more diverse competitive strategies. AbstractA simultaneous equations model of performance, strategy and size is tested using fieldwork evidence on long-lived firms in Scotland. Estimation is by I3SLS, with correction for sample selection bias. The contributions of this paper are that it: (a) grounds estimation on fieldwork evidence; (b) calibrates performance and competitive strategy; (c) tests and models endogeneity; and (d) computes robust trade-off elasticities between firm size and performance. It shows how this trade-off provides the entrepreneur with two strong incentives: (i) to seek greater efficiency typically by an increase in the human capital of the 'core' workforce; (ii) to achieve higher levels of performance by adopting more diverse competitive strategies. JEL: C42, D21, G33, L2, M13, M21 firm achieves only moderate growth and often remains small (i.e. less than 50 employees: 2003/361/EC-definition), or even contracts. Though fast growing firms provide new employment in the small firm sector 1 , long-lived small firms provide continued employment in communities, and create positive externalities over time. Many barriers to growth of the small entrepreneurial firm (e.g. financial, motivational, organizational) have been identified (Coad and Tamvada 2012; Davidsson, Achtenhagen and Naldi 2010; Wiklund, Shin and Taejong 2003; Henrekeson and Johnsson 1999; and Heneman, Tanksy and Camp 2000) but further study is required of how they inhibit growth, see Barber, Metcalfe and Porteous (1989) and Petrakis (1997). Size has different significance for large compared to small firms. For example, Lee (2009) has found that for large publically traded US companies there is a positive relationship between size and performance. The importance of both initial start-up size (Mata and Portugal 1994; and Strotmann 2007) and current size (Mata, Portugal and Guimarães 1995) have been emphasised in studies of small firm survival and post-entry growth, yet the tendency for firms to remain small has been neglected.Contrary to Lee's (2009) findings for large firms, in small firms a control motive by the entrepreneur can limit output growth, denying the firm efficiency gains from growth. Given fixity of the entrepreneurial input, limits (e.g. of cognition) to the span of control encourage diminishing returns. This leads to a trade-off bet...

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Section: Discussionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Performance and Strategy: Simultaneous Equations Analysis of Long-lived Firms

Power

Reid

2015

International Journal of the Economics of Business

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“…These include industry, firm age (in years since founding), and size (represented by the natural log of the number of the firm's full-time employees) (Collins et al 2009;Uhlenbruck et al 2006). Firm size and age might influence access to economic or political opportunities and motivation to engage in illegal behavior as a result of having acquired many of the resources needed to be competitive or having established influential relationships with relevant constituents in the past (De and Nagaraj 2014). In addition, older firms are thought to have less concern for survivability than younger firms (Stinchcombe 1965).…”

Section: Control Variablesmentioning

confidence: 99%

Distributive justice, corruption, and entrepreneurial behavior

2016

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This article introduces equity theory to the economic growth literature to examine whether a relationship exists between perceptions of distributive justice and the productivity of entrepreneurial behavior. Using survey responses from 317 entrepreneurs in India, we find that productive entrepreneurship is positively related to distributive justice perceptions but negatively related to perceptions that corruption is pervasive. In contrast, nonproductive forms of entrepreneurship are negatively related to distributive justice but positively related to corruption. Unexpectedly, the findings also show that corruption mediates the relationship between distributive justice and legal entrepreneurial behavior while distributive justice mediates the relationship between corruption and illegal entrepreneurial behavior. We conclude with a discussion of the study's findings and their implications for entrepreneurship and economic growth.

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“…For example, Coad and Tamvada (2012), using firm-level data from the third census of registered small-scale firms, showed that firms headed by females grow slower after controlling for other factors. De and Nagaraj (2014) have also used data from Indian manufacturing firms to show that firms with better liquidity turn out to be the most productive. Deshpande and Sharma (2013) highlighted the ethical and racial disparity in indicators of business performance.…”

Section: Introductionmentioning

confidence: 99%

Gender, small firm ownership, and credit access: some insights from India

2018

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Using a comprehensive dataset on micro, small, and medium enterprises in India, we examine whether the gender of the owner matters in firm performance and in credit access from institutional sources. The study finds significant underperformance in the size, growth, and efficiency of firms owned by women when compared to those owned by men. In line with the evidence in the existing literature, our findings also support the view that women-owned firms are disadvantaged in the market for small-business credit. These findings suggest that addressing gender discrimination in the small-business credit market could help, partly, in bridging the performance gap between male-and female-owned firms.

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Productivity and firm size in India

Cited by 62 publications

References 34 publications

Performance and Strategy: Simultaneous Equations Analysis of Long-lived Firms

Performance and Strategy: Simultaneous Equations Analysis of Long-lived Firms

Distributive justice, corruption, and entrepreneurial behavior

Gender, small firm ownership, and credit access: some insights from India

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