Firm Dynamics by Age and Size Classes and the Choice of Size Measure

Abstract

The relationship of firm size and age to its growth and survival differs according to whether size is measured by sales or employment. Using a large and representative dataset of Greek firms over the period 1999-2014, we find the following patterns. Controlling for age, there is a strong negative growth-size relationship when measuring size with sales, but a strong positive one when measuring size with employment. Controlling for size, there is a positive monotonic survival-age relationship when measuring size with sales, whereas survival is negatively related with age for young firms when we measure size with employment. Our results indicate that public policies aimed at supporting Small and Medium-sized Enterprises (SMEs) should be specialized to the employment scale and the sales scale of enterprises, separately.