Binding Constraints: Does Firm Size Matter?

Jose P Mauricio Vargas

MPRA Paper from University Library of Munich, Germany

Abstract: Using Bolivian firm level data from the World Bank 2010 Enterprise Survey, we attempt to find evidence to support the idea that distinct formal firms (according to their size) have a distinct likelihood of facing obstacles. We propose that a potential endogeneity between firms' constraints and firm size should be considered. After calculating estimations from an IV-ordered probit with an ordinal endogenous regressor, the results suggest that the firm size affects the constraint level reported by firms, but not for all kind of obstacles. `Corruption', `Political Instability', and `Crime, Theft and Disorder' are obstacles which affect all firms; `Electricity' and `Transportation' are binding constraints to medium and large firms; and `Access to Financing' is a binding constraint to small firms. These findings are important because they can be directly extrapolated to public policy that is focused on the performance of firms.

Keywords: Firm; Size; Constraints; IV-oprobit (search for similar items in EconPapers)
JEL-codes: C42 D21 L25 O12 (search for similar items in EconPapers)
Date: 2012-09-04
New Economics Papers: this item is included in nep-bec and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:41286

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