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How Flexible are Small Firms? An Analysis on the Determinants of Flexibility

Author

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  • Guven Sak
  • Erol Taymaz

    (Department of Economics, Middle East Technical University, Ankara)

Abstract

Although the standard microeconomic analysis is usually based on the assumption of the existence of a “representative firm,” it is known, as early as the time of the classical economists, that industrial economies are characterized by persistent heterogeneity among firms. Flexibility is one of the main sources of heterogeneity that is used to explain the vitality of small firms. It is suggested that small firms are more flexible than large firms; therefore, they can survive in an uncertain environment. This paper studies four sources of flexibility (technology, employment, networking, and entry/exit) in Turkish manufacturing industries. Whereas there are no differences between small and large firms in terms of flexibility of technology and employment practices, dynamic aspects, i.e. entry, exit, and growth processes are the main sources of small firm flexibility.

Suggested Citation

  • Guven Sak & Erol Taymaz, 2004. "How Flexible are Small Firms? An Analysis on the Determinants of Flexibility," Working Papers 0416, Economic Research Forum, revised Aug 2004.
    • Handle: RePEc:erg:wpaper:0416
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    References listed on IDEAS

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    Cited by:

    1. Elif Bascavusoglu-Moreau & Mustafa Colakoglu, 2011. "Impact of SME policies on innovation capabilities: The Turkish case," STPS Working Papers 1105, STPS - Science and Technology Policy Studies Center, Middle East Technical University, revised May 2011.
    2. Doran, Justin & Ryan, Geraldine, 2012. "Regulation and Firm Perception, Eco-Innovation and Firm Performance," MPRA Paper 44578, University Library of Munich, Germany.
    3. Besnik A. Krasniqi, 2007. "Barriers To Entrepreneurship And Sme Growth In Transition: The Case Of Kosova," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 12(01), pages 71-94.
    4. Andrei Yakovlev & Irina Levina & Anastasia Kazun, 2015. "Attitude to the National Leader Through the Lenses of Investment Climate Assessment: The Case of Russia," HSE Working papers WP BRP 98/EC/2015, National Research University Higher School of Economics.

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