Small firm growth in post-conflict Sri Lanka: micro-level evidence from two cities

Abstract

Most empirical studies regarding micro and small enterprises focus on mature firms in developed countries implying that the growth of such enterprises in post-conflict situations remains largely unexplored. This paper examines embryonic firms in post-conflict Sri Lanka using data collected via a purpose-designed survey administered to 243 emerging enterprises in 2012. The results indicate that firm age positively affects growth, a finding which is opposed to that of most studies. As in previous studies, firm size negatively influences growth. Faster growth was experienced by businesses in the construction and related manufacturing sector which were the first to emerge following the restoration of peace. Previous business experience is critical to growth of private enterprises. Conversely, entrepreneur's education has no significant effect on firm growth. These findings highlight the need for a policy dialogue to create profitable business opportunities to consolidate the gains from peace.