engleski

Predicting Growth of SMEs – A Multilevel Approach

Small and medium-sized enterprises are more efficient, more adaptable, contribute more to employment and are more resistant to the economic crisis compared to large enterprises. The Croatian economy, like the economies of most other countries, consists mainly of small and medium- sized enterprises. Therefore, the overall state of these enterprises has a strong impact on the whole economy and the well-being of its members. It is in the interest of the economy that small and medium-sized enterprises grow. How they grow, what affects their growth, and whether it is possible to predict that growth has become a popular research topic. Early studies assumed that it was primarily the characteristics of the owner or manager that influenced enterprise growth. Today, characteristics of the enterprise are gaining more attention, while the characteristics of the environment are very unduly underrepresented. The aim of this study is to build a predictive model for growth, measured by sales, that considers enterprise and environment characteristics as predictors. The enterprise characteristics include innovation, export, financial ratios, and firmographic characteristics. Environment characteristics include the global crisis of 2008, membership in the European Union, and macroeconomic indicators - gross domestic product, inflation, and unemployment rate. To obtain the growth model, two datasets were used. The first was a balanced panel dataset of 13808 Croatian small and medium-sized enterprises over the period between 2001 and 2015. The second dataset included macroeconomic indicators and variables related to EU membership and the global crisis. Panel modelling techniques were used to build the models. A total of 7 models is presented, 6 of which are static models and one dynamic model. Out of the 6 static models three are fixed effects models, and three are random effects models. The models confirmed that sales growth can be predicted by using enterprise and environment characteristics. Increasing values of innovation, export, financial ratios, gross domestic product, EU accession, and the global crisis had a positive effect on sales growth of Croatian enterprises. On the other hand, the increase in the inflation rate and unemployment rate had a negative impact on sales growth. Moreover, it was confirmed that inflation and export mutually reinforce i.e., amplify, the impact of growth. The most notable contribution lies in the use of a large number of variables covering many groups. They range from those that appear in many studies, such as innovation and export, to those which are rarely included, such as financial ratios. The results on factors influencing growth at the macroeconomic level are of particular interest, some of which have not previously been included in quantitative models of small and medium-sized enterprise growth. Another advantage over other studies is the use of interaction effects, which provide insight into how variables influence each other's impact on sales growth. Finally, the use of a panel dataset allowed for analysis of a better quality and more reliable results.

enterprise growth, sales growth, enterprise characteristics, environment characteristics, panel data modelling, interaction effect

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