Business performance in young Latin American firms

Abstract

This chapter offers new empirical evidence on the performance of young firms in a group of selected Latin American countries. The findings confirm their heterogeneous nature as well as their performance, highlighting the need to avoid generic and uniform strategies that assume narrow definitions of policy targets. A new taxonomy of young firms, according to their growth rates and size, allow us to identify some segments of dynamic young SMEs that are more productive than mature firms, and which could help close the productivity gap. Regression results confirm the negative association between growth rates and initial size, suggesting the need for growth in order to overcome the disadvantages associated with their limited scale during the initial stages of the business lifecycle. They also point out the importance of facilitating access to relevant "know how" and "know who" as well as removing the financial and regulatory constraints.