Pakistan Institute of Development Economics

Determinants of Expansion of Micro and Small Firms and State of Entrepreneurship in Pakistan
Publication Year : 2019

This study empirically investigates the determinants of the expansion micro and small firms. To develop stylised facts regarding the overall state of entrepreneurship and explore the determinants of expansion a purpose-specific questionnaire was designed to gather information on various aspects of entrepreneurship. Using the questionnaire over 300 retail firms across different sectors have been surveyed in Rawalpindi, a populous city of Pakistan. Based on the responses received, the stylised facts on the state of entrepreneurship have been developed. Results from regression analysis suggests that initials conditions including, firms’ age, size of the firm at the beginning, experience of the entrepreneurs, informal finance (committee finance) and innovation are significant determinants of expansion of the firms. Except for size at the beginning, which negatively influences expansion, rest of the above referred variables exercise positive influence on expansion of the firms. Use of technology to make sales, literacy levels of the entrepreneurs and their risk behaviour do not significantly influence expansion.