Growth of Small and Medium-Sized Firms in Germany

Mohnen, Alwine und Nasev, Julia (November 2005): Growth of Small and Medium-Sized Firms in Germany. SSRN : Social Science Research Network

Abstract

We examine firm growth in the German SME-sector using a sample of companies obtained by a survey of two well known German SME networks - Arbeitsgemeinschaft selbstandiger Unternehmer (ASU) and Bundesverband Junger Unternehmer (BJU). On the basis of the law of proportionate growth (Gibrat's Law), a firm-growth model by Jovanovic (1982) as well as implications of the legal form and human capital theory we derive hypothesis on factors influencing firm growth. Our results show that growth is negatively related to firm size and age. We confirm that firms under limited liability display higher growth rates than firms under full liability. Besides, we find that the human capital of employees and the entrepreneur have a significant impact on growth.

• Item Type: Paper
• Keywords: employment growth; determinants of growth; small and medium-sized enterprises; Gibrat's law
• Faculties: Munich School of Management
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: M13, M12, L25
• Language: English