The Peter Pan syndrome for small and medium‐sized enterprises: Evidence from Korean manufacturing firms

Abstract

This study examines whether government support for small and medium‐sized enterprises (SMEs), aimed at stimulating their growth, achieves its intended goal. We argue that government subsidies create the incentive for SMEs to remain small in order to keep receiving such support and thus SMEs are reluctant to grow. We call this phenomenon the Peter Pan syndrome. Using a dataset of Korean manufacturing firms during the period of 2010–2012, we find that the Peter Pan syndrome indeed exists and that the likelihood of the Peter Pan syndrome is conditioned by factors that influence their incentive to remain as SMEs.

The effects of size‐dependent policy on the sales distortion reporting: Focusing on the discretionary sales management of Korean SMEs

“…Choi and Lee (2020) conducted an empirical analysis of the Peter Pan Syndrome found in Korean SMEs. Their study reveals that the Peter Pan Syndrome heightens the closer a SME is to the SME eligibility criteria, such as employee size and paid‐in capital.…”

“…This bunching effect is caused by the “Peter Pan Syndrome,” in which companies counterintuitively avoids growth. Some argue that the support and benefits provided by the Korean government as an attempt to shelter SMEs and promote their development are the direct cause of this phenomenon (Choi & Lee, 2020). The various benefits given to SMEs in contrast with the assortment of regulations put on larger firms give SMEs a legitimate incentive to secure support and dodge regulations from the government by impeding sales right before they are deemed a big firm.…”

“…A telling indicator is the 17% of the SMEs that responded that they have managed their reports to look as if they had not grown. Choi and Lee (2020) conducted an empirical analysis of the Peter Pan Syndrome found in Korean SMEs. Their study reveals that the Peter Pan Syndrome heightens the closer a SME is to the SME eligibility criteria, such as employee size and paid-in capital.…”