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Growth Dynamics of Young Small Firms: Evidence from Tunisia

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  • Arouri, Hassan
  • Ben Youssef, Adel
  • Quatraro, Francesco
  • Vivarelli, Marco

Abstract

The aim of this paper is to investigate the growth dynamics of young small firms (in contrast with larger and older incumbents) in a developing country context, using a unique and comprehensive dataset of non-agricultural Tunisian companies. Our results suggest that significant differences between young and mature firms can be found as far as the drivers of their growth are concerned. The key finding being that - while consistently with the extant literature Gibrat’s law is overall rejected - the negative impact of the initial size is significantly larger for young than mature firms. This result has interesting policy implications: since smaller young firms are particularly conducive to employment generation, they can be considered good candidate for targeted accompanying policies addressed to sustain their post-entry growth.

Suggested Citation

  • Arouri, Hassan & Ben Youssef, Adel & Quatraro, Francesco & Vivarelli, Marco, 2018. "Growth Dynamics of Young Small Firms: Evidence from Tunisia," GLO Discussion Paper Series 197, Global Labor Organization (GLO).
    • Handle: RePEc:zbw:glodps:197
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    References listed on IDEAS

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    More about this item

    Keywords

    firm’s growth; young firms; Gibrat’s law; Tunisia;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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