REGIONAL DETERMINANTS OF THE SMALL AND MEDIUM SIZE MANUFACTURING FIRM ENTRY IN A DEVELOPING COUNTRY: EVIDENCE FROM TURKEY

Year 2017, Volume: 4 Issue: 2, 154 - 163, 30.06.2017

Mustafa Ozer

https://doi.org/10.17261/Pressacademia.2017.445

Abstract

Purpose- This
study investigates regional determinants of the small and medium size firm
entry in the manufacturing sector for a developing country, Turkey, in which
regional economic development disparities are common.

Methodology- Panel
data was collected for the period between 2004 and 2009 and analysed by using
Feasible GLS estimation technique.

Findings- The
results show that entrepreneurship culture, the structure of the industry,
industry agglomeration overall are the most important factors stimulating the
entry rates. However, the number of patent application as a supply-side
variable seems to be the main deterrent of new firm entry by working as a fence
in front of new firms. The
average wage and low skill labor in labor force are the other factors that
negatively influence new firm formation in demand and supply side of the
economy.

Conclusion-
Some of these regional variables
affecting business formation in developed countries have no influence on the
small and medium size firm formation in developing countries. This suggests
that the determinants could be country specific. Therefore, policy makers
should be careful while using evidence from developed countries to stimulate
firm start-ups in developing countries.

Keywords

New firms; start-ups, regional determinants, regional development, Turkey

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