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The Growth and Decline of Small firms In Developing Countries

Author

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  • Alexander Coad
  • Jagannadha Pawan Tamvada
Abstract
Empirical work on micro and small firms has focused on developed countries. The little work that exists on developing countries is all too often based on small samples taken from ad hoc questionnaires. The census data we analyze are fairly representative of the structure of small business in India. Consistent with prior research on developed countries, size and age have a negative impact on firm growth in the majority of specifications. The decision to export is a double-edged sword – if successful it can accelerate the growth of successful firms, but it can also increase the probability of decline. While proprietary ownership results in faster growth, enterprises managed by women are less likely to grow and more likely to decline. Although many small firms are able to convert knowhow into commercial success, we find that many others do not have any technical knowledge and some are unable to use it to their benefit.

Suggested Citation

  • Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    • Handle: RePEc:esi:evopap:2008-08
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    2. Tasssew Woldehanna & Wolday Amha & Manex B. Yonis, 2018. "Correlates of business survival: empirical evidence on youth-owned micro and small enterprises in Urban Ethiopia," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-26, December.
    3. Coad, Alex, 2010. "Investigating the exponential age distribution of firms," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-30.
    4. Giorgio Barba Navaretti & Davide Castellani & Fabio Pieri, 2014. "Age and firm growth: evidence from three European countries," Small Business Economics, Springer, vol. 43(4), pages 823-837, December.
    5. Sandra M. Leitner, 2015. "Firm growth and financing constraints in the NMS-10 and the Western Balkan countries – a comparative analysis," wiiw Balkan Observatory Working Papers 115, The Vienna Institute for International Economic Studies, wiiw.
    6. Alex Coad, 2010. "The Exponential Age Distribution and the Pareto Firm Size Distribution," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 389-395, September.
    7. Saleem Gul & Muhammad Nouman, 2009. "Innovation In Pakistan's SMES: Making The Case For Coupling Model And Looking Beyond," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 1(1), pages 20-25, April.
    8. Jan Schulz & Daniel M. Mayerhoffer, 2021. "Equal chances, unequal outcomes? Network-based evolutionary learning and the industrial dynamics of superstar firms," Journal of Business Economics, Springer, vol. 91(9), pages 1357-1385, November.
    9. Thi Quynh Trang Do, 2009. "How firm characteristics affect the level of constrain to growth : An empirical analysis of micro and small firms in Vietnam," Post-Print halshs-00429732, HAL.
    10. Atushi Ishikawa & Shouji Fujimoto & Takayuki Mizuno & Tsutomu Watanabe, 2017. "Dependence of the decay rate of firm activities on firm age," Evolutionary and Institutional Economics Review, Springer, vol. 14(2), pages 351-362, December.
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    12. Alex Coad & Jaganaddha Tamvada, 2012. "Firm growth and barriers to growth among small firms in India," Small Business Economics, Springer, vol. 39(2), pages 383-400, September.

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    More about this item

    Keywords

    Entrepreneurship; Developing countries; Micro and Small businesses; Firm growth; Firm age; Barriers to growth; Declining firms; Female entrepreneurs Length 32 pages;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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