Munich Personal RePEc Archive

Binding Constraints: Does Firm Size Matter?

Vargas, Jose P Mauricio (2012): Binding Constraints: Does Firm Size Matter?

[img]
Preview
PDF
MPRA_paper_41286.pdf

Download (1618Kb) | Preview

Abstract

Using Bolivian firm level data from the World Bank 2010 Enterprise Survey, we attempt to find evidence to support the idea that distinct formal firms (according to their size) have a distinct likelihood of facing obstacles. We propose that a potential endogeneity between firms' constraints and firm size should be considered. After calculating estimations from an IV-ordered probit with an ordinal endogenous regressor, the results suggest that the firm size affects the constraint level reported by firms, but not for all kind of obstacles. `Corruption', `Political Instability', and `Crime, Theft and Disorder' are obstacles which affect all firms; `Electricity' and `Transportation' are binding constraints to medium and large firms; and `Access to Financing' is a binding constraint to small firms. These findings are important because they can be directly extrapolated to public policy that is focused on the performance of firms.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.