Small Firm Births and Macroeconomic Fluctuations

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Using different definitions of what constitutes a small firm, this paper analyses the effect of business conditions on the start-up of small firms. It is found that small firm births exhibit a pro-cyclical behaviour, irrespective of the threshold used to define a small firm. The smallest new firms, however, seem to be less responsive to the opportunity cost of capital. Finally, no relationship was found between entry of small firms and industry growth and profiability.
Original languageEnglish
JournalReview of Industrial Organization
Issue number2
Pages (from-to)173-182
Number of pages10
Publication statusPublished - Apr 1996
Externally publishedYes

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