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What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania

Brown, J. David, Earle, John S. and Lup, Daniela (2003) What makes small firms grow?: finance, human capital, technical assistance, and the business environment in Romania. Upjohn Institute working paper, 03-94. W.E. Upjohn Institute for Employment Research, Kalamazoo, Michigan, USA.

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Abstract

Although the development of a new private sector is generally considered crucial to economic transition, there has been relatively little empirical research on the determinants of startup firm growth. This paper uses panel data techniques to analyze a survey of 297 new small enterprises in Romania containing detailed information from the startup date through 2001. We find strong evidence that access to external credit increases the growth of both employment and sales. Taxes appear to constrain growth. The data suggest that entrepreneurial skills have little independent effect on growth, once demand conditions are taken into account. The evidence for the effectiveness of technical assistance is weak: only assistance provided by foreign partners yields a positive effect. A wide variety of alternative measures of the business environment (contract enforcement, property rights, and corruption) are tested, but none are found to have any clear association with firm growth.

Item Type: Monograph (Working Paper)
Official URL: http://www.upjohninst.org/
Additional Information: © 2003 the authors
Library of Congress subject classification: H Social Sciences > H Social Sciences (General)
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Sets: Research centres and groups > Employment Relations and Organisational Behaviour Group
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 03-94
Date Deposited: 13 Sep 2011 13:21
URL: http://eprints.lse.ac.uk/38156/

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