Small Firms and the Process of Economic Development: Explanations and Illustrations from Britain, Italy and the United States

Abstract

In Chapter 2 it was shown that the structure of employment units was changing in many OECD countries, and it appeared to be broadly true that since the 1970s a higher proportion of total employment was found in smaller firms. These ‘comparative static’ pictures were, however, unable to illuminate the dynamic changes taking place at the level of the individual enterprise and so in Chapters 3 and 4 the growth and decline of employment within individual units over a period of time was traced. Broadly Chapter 3 showed that in the United States, and to a lesser extent Canada, small firms were creating jobs faster than large firms but that the techniques for assessment had led some commentators to over estimate that contribution. Chapter 4 showed that outside North America such changes were less clear-cut but it appeared to be the case that the growth of the small firm sector had exceeded that of the large firm sector. Whilst such statistical analysis, with all its uncertainties, does help in quantifying the magnitude of such developments it does not provide an explanation of these developments.