The determinants of entrepreneurship and small business growth in Kosova: evidence from new and established firms

This paper aims to provide an in-depth analysis of the important factors explaining small firm growth contextualised in a very unique transition economy – Kosova. Although the small business literature suggests that there is a range of complex factors explaining small business growth, there is still scarce evidence on whether these interpretive frameworks are sufficient in explaining small firm growth in a transition context. For this purpose, this paper uses survey data from a randomly selected sample of 350 Small- and Medium-sized Enterprises (SMEs). Based on this data set, the Ordinary Least Square (OLS) regression is employed in order to compare the impact of the three sets of factors (the firm, the entrepreneur and the business environment) on the growth of new versus the more established small firms. Our findings generally refute Gibrat's Law and support Jovanovic's Learning Theory. We also find that a multiplant firm, the separation of ownership and management, the age of the entrepreneur at the startup and entrepreneurial teams exert a positive effect on firm growth. The findings support the view that the prior unemployment status of the entrepreneur is negatively linked with growth. The paper provides some important conclusions and implications for policymakers and entrepreneurs.