The examination of the factors of growth in the Hungarian small- and medium size business sector

Szerb, László and Ulbert, József (2006) The examination of the factors of growth in the Hungarian small- and medium size business sector. Hungarian Statistical Review, 84 (SN10). pp. 100-123. ISSN 0039-0690

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Abstract

Despite increasing interest, it is still a lack of rigorous model building and econometric method application in the area of small business growth in Hungary. This paper constructs an integrated conceptual model of growth. The model incorporates four major categories of variables such as personal demographic, personal behavioural, business demographic and business behavioural variables. To test the empirical validity of the model, different measures of growth, including employment, sales, equity and composite factors, are used in five empirical models. The stepwise regression method is proved to be a proper tool to identify the significant factors of business growth. However, the different dependent variables of growth are mainly influenced by different independent factors. Most observed outcomes corresponding to previous empirical results and the alterations can be explained by the limited market economy experience and the transitional nature of Hungary. Business behavioural factors of investment, technology development, exports, organizational change and strategic orientation are found to be the major determinants of business growth. Personal behavioural features like ownership experience in other businesses as well as business size, age, legal form, the number of founders and foreign owners are significant but less important determinants of growth.

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