Growth of Small and Medium-Sized Firms in Germany

Betriebswirtschaftliche Forschung und Praxis (Business Research and Practice), Vol. 5, No. September/October, 2009

35 Pages Posted: 23 Nov 2005

See all articles by Alwine Mohnen

Alwine Mohnen

TUM School of Management; IZA Institute of Labor Economics

Julia Nasev

Ludwig-Maximilians-University Munich

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.

Keywords: employment growth, determinants of growth, small and medium-sized enterprises, Gibrat's law

JEL Classification: M13, M12, L25

Suggested Citation

Mohnen, Alwine and Nasev, Julia, Growth of Small and Medium-Sized Firms in Germany. Betriebswirtschaftliche Forschung und Praxis (Business Research and Practice), Vol. 5, No. September/October, 2009, Available at SSRN: https://ssrn.com/abstract=852785

Alwine Mohnen

TUM School of Management ( email )

Arcisstrasse 21
Munich, DE 80333
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Julia Nasev (Contact Author)

Ludwig-Maximilians-University Munich ( email )

Geschwister-Scholl-Platz 1
Munich, 80539
Germany

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