Institutional Effects on the Evolution of the Size Distribution of Firms

Magnus Henrekson () and Dan Johansson ()

No 497, Working Paper Series from Research Institute of Industrial Economics

Abstract: In this paper it is argued that the size distribution of firms may largely be determined by institutional factors. This hypothesis is tested in an exploratory fashion by studying the evolution of the size distribution of firms over time in Sweden for a period spanning from the late 1960s to the early 1990s. The data used is divided into finer size classes compared to most previous studies. This gives more scope for investigating the impact of institutions. Moreover, we use a unique data set, starting in 1984, to take account of corporate groups and government ownership. The analysis shows a poor development for intermediate-sized (10-199 employees) firms. This is likely to reflect the existence of a threshold that many firms are either unwilling or unable to cross. The analysis of the institutions and rules of the game determining the entrepreneurial and business conditions in Sweden indicate that the conditions have been unfavorable for small firms, and hence that too few small firms have managed to grow out of the smallest size classes. The conclusion is supported by an international comparison of the number of firms in different size classes. Data indicate that Sweden has fewer small (10-99) employees), and more large (500+) firms per capita than other European countries.

Keywords: Business taxation; Industrial policy; Industrial structure; Size distribution (search for similar items in EconPapers)
JEL-codes: H30 J21 L52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pub
Date: 1998-03-01
Note: Published in Small Business Economics, Vol. 12, No. 1, 1999.
View citations in EconPapers

Published in Small Business Economics, 1999, pages 13.

Downloads: (external link)
http://www.ifn.se/wfiles/wp/wp497.pdf (application/pdf)

Related works:
Working Paper: Institutional Effects on the Evolution of the Size Distribution of Firms (1998)
Journal Article: Institutional Effects on the Evolution of the Size Distribution of Firms (1999)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:iuiwop:0497

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics
Address: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Contact information at EDIRC.
Series data maintained by Elisabeth Gustafsson ().