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Abstract:
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Following earlier work by Audretsch
et al.
(2002), we assume that an optimal size-class structure exists,
in terms of achieving maximal economic growth rates. Such an optimal structure is likely to exist as
economies need a balance between the
core competences
of large firms (such as
exploitation
of
economies of scale) and those of smaller firms (such as flexibility
and
exploration of new ideas).
Accordingly, changes in size-class structure (i.e., changes in the relative shares
in
economic activity
accounted for by
micro, small, medium-sized and large firms) may affect macro-economic growth.
Using a unique data base of the EU-27 countries for the period 2002-2008
for five broad sectors
of
economic activity
and
four
size-classes, we find empirical support which suggests that, on average for
these countries over this period, the share of
micro and
large firms may have been ‘above optimum’
(particularly in lower income EU countries)
whereas the share of medium-sized firms may have been
‘below optimum’
(particularly in higher income EU countries). This evidence suggests that the transition
from a ‘managed’ to an ‘entrepreneurial’ economy
(Audretsch and Thurik, 2001)
has not been
completed yet in all countries of the EU-27.
Keywords:
small firms, large firms, size-classes, macro-economic performance |
