The Influence of Some Macroeconomic Factors on the Growth of Micro Firms in the United States

Abstract

The purpose of this study was to investigate the influence of some aggregate domes-tic economic forces (i.e., government consumption expenditures and gross Investment; gross private domestic investment and personal consumption expenditures) on the growth of micro firms (businesses with fewer than 20 employees) in the U.S. between the years 1988-2012. The study classified micro firms into three categories (a) firms with employment between 0 and 4 employees, (b) firms with employment between 5 and 9 employees, and (c) firms with employment between 10 and 19 employees. In aggregation, the firms are termed “very small enterprises” by the U.S. Census Bureau. The data for the period 1988-2012 was reviewed, analyzed, and subjected to statistical analysis. It was found that a strong positive correlation exists between each of the aggregate domestic forces and the number of micro-firms in each of the three categories of micro-firms as well as all micro-firms in aggregate. The OLS regression results show all macro variables significantly affecting the growth of micro firms in the size range 10-19 employees. The evidence is more mixed in the other two size categories. The stepwise regression results are more mixed.