Parinduri, Rasyad (2012): The effects of owners' family hardship on micro and small firms' growth: an evidence from Indonesia.
Download (177kB) | Preview
I examine whether family hardship experienced by owners of micro and small firms affects the firms' growth. Based on a representative sample of owners of firms in Indonesia, and using deaths of owners' family members as a measure of hardship, I estimate the effects of family hardship on firms' total assets. I find that family hardship leads to about 30 percent smaller assets on average. Moreover, the magnitude of the effects is larger the smaller the firms are. These findings indicate that growth of micro and small firms is severely constrained by the availability of resources such as internally generated finance.
|Item Type:||MPRA Paper|
|Original Title:||The effects of owners' family hardship on micro and small firms' growth: an evidence from Indonesia|
|Keywords:||micro and small firms, growth of assets, family hardship, Asia, Indonesia|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L26 - Entrepreneurship
|Depositing User:||Rasyad Parinduri|
|Date Deposited:||26. May 2012 04:26|
|Last Modified:||13. Feb 2013 09:06|
Acs, Z. and Audretsch, D.B. (1988) Innovation in Large and Small Firms: An Empirical Analysis. American Economic Review, 78, pp. 678-690.
Acs, Z. and Audretsch, D.B. (1990) Innovations and Small Firms. Cambridge MA: The MIT Press.
Becchetti, L. and Trovato, G. (2002) The Determinants of Growth for Small and Medium Sized Firms. The Role of the Availability of External Finance. Small Business Economics, 19, pp. 291-306.
Berger A.N. and Udell, G.F. (1990) Collateral, Loan Quality, and Bank Risk. Journal of Monetary Economics, 25, pp. 21-42.
Butters, J.K. and Lintner, J. (1945) Effect of Federal Taxes on Growing Enterprises. Boston: Harvard University Press.
Brock,W.A. and Evans, D. (1989) Small Business Economics. Small Business Economics 1, pp. 7–20.
Carpenter, R. and Peterson, B.C. (2002) Is the Growth of Small Firms Constrained by Internal Finance? Review of Economics and Statistics. 84, pp. 298-309.
Fajnzylberm O., Maloney, W.F. and Montes-Rojas, G.V. (2009) Releasing Constraints to Growth or Pushing on a String? Policies and Performance of Mexican Micro-Firms. Journal of Development Studies, 45, pp. 1027-1047
Frankenberg, E. and Thomas, D. (2000) The Indonesia Family Life Survey (IFLS): Study Design and Results from Waves 1 and 2. March 2000. DRU-2238/1-NIA/NICHD.
Guariglia, A. (2008) Internal Financial Constraints, External Financial Constraints, and Investment Choice: Evidence from a Panel of UK Firms. Journal of Banking and Finance, 32, pp. 1795–1809
Guariglia, A., Liu, X. and Song, L. (2011) Internal Finance and Growth: Microeconometric Evidence on Chinese Firms. Journal of Development Economics, 96, pp. 79-94.
Hartarska, V., and Nadolnyak, D. (2008) An Impact Analysis of Microfinance in Bosnia and Herzegovina. World Development, 36, pp. 2605–2619.
Holtz-Eakin, D., Joulfaian, D. and Rosen, H.S. (1994) Sticking It Out: Entrepreneurial Survival and Liquidity Constraints. Journal of Political Economy, 102, pp. 53-75.
Hubbard, R.G.. (1998) Capital Market Imperfections and Investment. Journal of Economic Literature, 36, pp. 193-225.
Hutchinson, J. and Xavier, A. (2006) Comparing the Impact of Credit Constraints on the Growth of SMEs in a Transition Country with an Established Market Economy. Small Business Economics, 27, pp. 169-179.
Lee, I., Lockhead, S., Ritter, J. and Zhao, Q. (1996) The Costs of Raising Capital. Journal of Financial Research, 19, pp. 59-74.
Myers, S.C. and Majluf, N.S. (1984) Corporate Financing and Investment Decisions when Firms Have Information that Investors do Not. Journal of Financial Economics, 13, pp. 187-221.
Nichter, S. and Goldmark, L. (2009) Small Firm Growth in Developing Countries. World Development, 37, pp. 1453-1464.
Schiantarelli, F. (1995) Financial Constraints and Investment: A Critical Review of Methodological Issues and International Evidence, pp. 177-213, in J. Peek and E. Rosengren (eds.), Is Bank Lending Important for the Transmission of Monetary Policy?. Federal Reserve Bank of Boston Conference Series no. 39.
Stam, E. (2000) Growth beyond Gibrat: Firm Growth Processes and Strategies. Small Business Economics, 35, pp. 129-135.
Stiglitz, J. (1985) Credit Markets and Capital Control. Journal of Money, Credit, and Banking, 17, pp. 133-52.
Stiglitz, J. and Weiss, A. (1981) Credit Rationing in Markets with Imperfect Information. American Economic Review, 71, pp. 293-410.
Strauss, J., Beegle, K., Sikoki, B., Dwiyanto, A., Herawati, Y. and Witoelar, F. (2004) The Third Wave of the Indonesia Family Life Survey (IFLS3): Overview and Field Report. March 2004. WR-144/1-NIA/NICHD
Tambunan, T. (2008) SMEs Development in Indonesia: Do Economic Growth and Government Support Matter? International Journal of Asia-Pacific Studies, 4, pp. 113-136.
Thee, K.K. (2006) Policies for Private Sector Development in Indonesia. ADB Institute Discussion Paper No. 46
Tsoukalas, J.D. (2006) Financing Constraints and Firm Inventory Investment: A Reexamination, Economic Letters, 90, pp. 266-271.