Flexibility, Firm-Specific Turbulence and the Performance of the Long-lived Small Firm

Bernadette Power and Gavin Reid

Review of Industrial Organization, 2005, vol. 26, issue 4, 415-443

Abstract: The hypothesis that flexibility enhances the long run prospects of the small firm is explored by examining precipitating causes of organizational change within it, and consequential adjustments. The study is fieldwork based and uses evidence gathered directly from entrepreneurs. New measures of flexibility and firm-specific turbulence are used to explain long-run performance, measured over 28 distinct attributes. Econometric estimates (using GLS and Heckman selectivity correction) are reported, on the relationship between flexibility, firm-specific turbulence and performance. Firm-specific turbulence is shown to have a negative effect on performance, but the latter is enhanced by increasing the flexibility of the small firm. Copyright Springer 2005

Keywords: Flexibility; firm-specific turbulence; performance; small firms (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s11151-005-0224-5

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