What is Obstructing the Growth of Finnish Companies?

Annu Laurikka

No 160, ETLA Reports from The Research Institute of the Finnish Economy

Abstract: Abstract The study examines the relationship between firm size and its management’s subjectively perceived growth constraints and financing limitations. Additionally, it explores Finland’s business size dynamics and their development from 2008 to 2022. The results indicate that company size transitions are rare, with most businesses remaining in their original size category. However, growth potential is particularly identified in medium-sized and Mittelstand companies. Heavy regulation and administrative obligations are the most commonly reported barriers to growth. Furthermore, up to half of Mittelstand and large companies report growth barriers due to higher cost levels compared to competitors. A more detailed analysis shows that company size, when measured by the number of employees, has only a limited effect on growth barriers. Differences become clearer when measured by revenue, though ownership structure, growth ambition, and industry are also significantly associated with many growth barriers. Small businesses more frequently face constraints related to debt aversion, capacity limitations, sales and marketing challenges, and finding skilled labor. Financial barriers do not vary significantly across company sizes, but larger companies are less frequently hindered by the availability of debt and equity financing for investments compared to smaller businesses.

Keywords: Business growth; Growth barriers; Financial constraints; Company size dynamics; Mittelstand companies (search for similar items in EconPapers)
JEL-codes: D22 L11 L20 L21 L25 L53 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2025-03-05
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