ing from much of the detailed intercountry variation summarized in the Table, a striking stylized fact emerges, particularly if Japan were to be included as well. The oldest and formerly dominant industrial economies of Britain and the US still have the smallest (Western) smallfirm shares, in spite of a relatively high growth rate of this share in the UK. The faster growing and more competitive Japanese, West German and also Italian economies have much larger smallfirm shares, and Italy's has been growing rapidly as well. It would be intriguing to relate these facts to the differing systems of industrial organization and corporate governance in these countries along the following lines. The dominant role of the stockmarket and close relationship between top managerial pay and firmsize in the Anglo-American systems have encouraged what Baker, Jensen and Murphy (1989) called "wasteful growth and diversification", at the cost of profitability and long-term tangible investment. Lack of mutual commitments with other stakeholders such as workers and customers has at the same time provided entrepreneurs with incentives to make quick capital gains from product innovation, rather than fostering development, process innovation and more competitive production (Florida and Kenney, 1990). Lack of infrastructure of the kind provided by most European competitors, from public transport to training, has blocked growth. In spite of policies to stimulate entrepreneurial start ups, less regulated labour markets, and better developed venture capital, the high rate of both hostile and friendly acquisition of successful small enterprise by empire-building corporate managers in the UK and US have kept small-firm shares relatively low in these countries. In Japan, Germany Small Business Economics 5: 239-243, 1993. © 1993 Kluwer Academic Publishers. Printed in the Netherlands. This content downloaded from 157.55.39.112 on Wed, 07 Sep 2016 05:32:34 UTC All use subject to http://about.jstor.org/terms