Survival and Growth Strategies on Europe’s Geographical Periphery
Edited by Helena Lenihan, Bernadette Andreosso-O’Callaghan and Mark Hart
Chapter 2: Why do SMEs Grow? A Rejection of Gibrat’s Law for Spanish Firms (1994–2002)
2. Why do SMEs grow? A rejection of Gibrat’s law for Spanish firms (1994–2002) Mercedes Teruel-Carrizosa INTRODUCTION One of the main concerns of policymakers and researchers has been the analysis of the engines of economic growth. Researchers agree that the dynamism and the capacity of small firms is a key variable that influences economic development (Carre and Thurik, 1998; Robbins et al., 2000). There is an extensive international literature related to small firms and their importance in terms of job creation (Acs and Audretsch, 1989; Carre and Thurik, 1998; Fariñas and Moreno, 2000; Calvo, 2006). Firm growth has been one of the most studied topics in the economic literature. Whether firm performance responds to the firms internal and external changes or random factors, the economic literature has tried to search the leitmotiv of firm growth. The reason is that firm growth affects the market structure where firms operate. Whether small firms grow faster is not just a mere causality. There are a large number of contributions noting that firms are highly flexible with possibilities to grow and capacity to increase their size (Nooteboom, 1994). However, there are few studies showing the differences between manufacturing and service industries as well as the reasons for those different patterns. From all these dimensions, the firm growth literature studies the relationship between firm size and growth. Several reasons justify the importance of such analysis. First, it is a strategy for firm survival in the long run. Second, the knowledge of firms’ growth...
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