Small vs. Young Firms Across the World: Contribution to Employment, Job Creation, and Growth

By Meghana Ayyagari, Asli Demirgüç-Kunt, Vojislav Maksimovic. 2011

527 citations recorded by the source corpus.

This paper investigates the contribution of small firms to employment, job creation, and growth in developing countries. While small firms (< 20 employees) have the smallest share of aggregate employment, the SME sector's (<100 employees) contribution is comparable to that of large firms. Small firms have the largest shares of job creation, and highest sales growth and employment growth, even after controlling for firm age. Large firms, however, have higher productivity growth. Conditional on size, young firms are the fastest growing and large mature firms have the largest employment shares but small young firms have higher job creation rates.

Subfields: Accounting, Economics and Econometrics, Management of Technology and Innovation

View Paper: https://www.semanticscholar.org/paper/b9a09c6959d1d2d91ff2fe6318c9d5b888556086

Citations in the corpus

• Financial Constraints and Small and Medium Enterprises: A Review* (2020, unknown): “They serve as an engine of job creation (Birch, 1987; Neumark et al., 2011; Ayyagari et al., 2011) and are seedbeds of developing entrepreneurial talent and innovation (Acs and Audretsch, 1987; Acs et al., 1994; Brunswicker and Vanhaverbeke, 2015).”
• Do Interventions Targeted at Micro-Entrepreneurs and Small and Medium-Sized Firms Create Jobs? A Systematic Review of the Evidence for Low and Middle Income Countries (2014, unknown): “Because most employment in low- and middle income countries is in micro, small and medium-sized enterprises (MSMEs) (see e.g. Ayyagari et al., 2011), these firms are often targeted by such interventions.”
• What are the biggest obstacles to growth of SMEs in developing countries? – An empirical evidence from an enterprise survey (2016, unknown): “For example, Ayyagari, Demirgüç-Kunt, and Maksimovic (2011) investigated the role SMEs play in creating jobs and showed that SMEs with less than 250 employees were the engine of growth in many countries.”
• Defining firm competitiveness: A multidimensional framework (2020, unknown): “Access to finance is an important determinant of firm performance along a number of distinct aspects, including investment, growth, firm size distribution (Ayyagari et al., 2011), and innovation (Beck et al. 2008).”
• Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS? (2017, unknown): “It is estimated that more than 95% of enterprises across the orld are SMEs and they account for approximately 60% of priate sector employment (Ayyagari et al., 2011).”
• Marketing innovation and sustainable competitive advantage of manufacturing SMEs in Ghana (2019, unknown): “Ayyagari et al. (2011) confirmed the finding of Yeh-Yun Lin and Yi-Ching Chen (2007) in the Ghanaian context that many innovations come from SMEs.”
• The Relationship between Competitive Strategy and Firm Performance in Micro and Small Businesses in Ghana: The Moderating Role of Managerial and Marketing Capabilities (2015, unknown): “Thus, MSBs are instrumental in value-added creation, industrial change and innovation, poverty reduction, wealth generation, and job creation (Ayyagari et al., 2011; Kanyabi & Devi, 2011).”
• Firm Innovation in Emerging Markets: The Role of Finance, Governance, and Competition (2011, unknown): “2See Ayyagari, Demirgüç-Kunt, and Maksimovic (2011), Ayyagari, Beck, and Demirgüç-Kunt (2007), and Beck, Demirgüç-Kunt, and Levine (2005).”
• In with the Big, Out with the Small (2014, unknown): “A number of papers in this vein suggest that small firms grow faster, both in developed and developing countries ( see, among others, Evans 1987a, b; Gunning and Mengistae 2001; Ayyagari, Demirguc-Kunt, and Maksimovic 2011; Neumark, Wall, and Zhang 2011 .”
• Age and firm growth. Evidence from three European countries (2013, unknown): “Das (1995) analyses the computer hardware industry in India, obtaining that growth increases with age, and Ayyagari et al. (2011) find that in a sample of 47,745 firms in 99 developing countries taken from the World Bank Enterprise Surveys between 2006 and 2010, small but mature firms have the large”
• E-commerce adoption by SMEs in developing countries: evidence from Indonesia (2017, unknown): “They contribute not only in terms of their numbers but also to job creation and poverty reduction (Wit and Kok 2014; Ayyagari et al. 2011; Neumark et al. 2011; Kotelnikov 2007).”