Ayyagari, MeghanaDemirguc-Kunt, AsliMaksimovic, Vojislav2015-09-232015-09-232015-08https://hdl.handle.net/10986/22671This paper uses survey data from 120 developing countries to compare the role of institutions with firm characteristics at the time of creation of the firm in explaining the size, growth, and productivity of firms over their lifecycle. The study finds that firm-level characteristics have comparable, and sometimes even larger, power than institutional factors in predicting size and growth, but not productivity. In particular, size at birth plays a key role in predicting variation in firm size and growth since birth over the firm lifecycle, whereas country factors dominate in predicting variation in labor productivity over the firm lifecycle. The study also finds that older firms are larger, partly because of the selection of more efficient firms. The findings point to the importance of initial founding conditions in explaining variations in size and growth over the firm lifecycle across countries.en-USCC BY 3.0 IGOCORRELATIONSJOBSEMPLOYMENTRIGHTSMOTIVATIONECONOMIC GROWTHACCOUNTINGEMPLOYMENT SHAREPOLITICSTIMEINFORMAL SECTORPREVIOUS SECTIONRESEARCH WORKING PAPERSINCOMEFIRM PRODUCTIVITYFIRM DYNAMICSPROPERTY RIGHTSINFORMATIONENTREPRENEURSPOLITICAL ECONOMYCOMPANIESJOBEFFECTSINCENTIVESLOANFIRM SURVIVALFIRM SIZEASSOCIATIONSPRODUCTIVITY INCREASEMACHINERYSMALL BUSINESSEMPLOYMENT LEVELTOTAL FACTOR PRODUCTIVITYFIRM EXITDEVELOPMENT ECONOMICSTESTSFIRM LEVELMANUFACTURING INDUSTRYPRODUCTIVITYCORPORATE FINANCELABOR PRODUCTIVITYOBSERVATIONFINANCIAL INSTITUTIONSBUSINESS SERVICESCAPITAL MARKETMARKETSFIRMORGANIZATIONSLENDERSINDICATORSRESEARCHFIRM SIZE DISTRIBUTIONLABORENTERPRISESLICENSINGMORTALITYFINANCESIZE OF FIRMSEFFICIENCYCORPORATE STRATEGYMETHODSUNEMPLOYMENTEQUITYENTREPRENEURIAL ABILITYDEVELOPMENT RESEARCHINVESTORSFIRMSWORKERSWAGESPOLICIESSCIENCEOWNERSHIP STRUCTURELISTED COMPANYAGEVALUECREATIVE DESTRUCTIONAGE GROUPSDOMINANT FIRMINCOME DISTRIBUTIONPRIVATE FIRMSENTERPRISEPRODUCTIVE FIRMSFIRM PERFORMANCEJOB CREATIONSAMPLESSIZEMARKETECONOMIC THEORYCOMPANYSURVEYSECONOMICSDIVERSIFICATIONSURVEY INSTRUMENTSMANAGEMENTREGRESSION ANALYSISSHAREHOLDERSMANUFACTURING INDUSTRIESHIGH-TECH INDUSTRIESTHEORYESTIMATINGINVESTMENTRISKSAMPLINGFINANCIAL MARKETSCONTRACTINGBUSINESS ENVIRONMENTCORPORATE OWNERSHIPBANKINGEMPLOYEELABOR INTENSITYSURVEY DATALAWLENDINGESTIMATESSMALL FIRMSPRODUCTIVITY DISPERSIONMERGERFIRM GROWTHENTREPRENEURSHIPMETHODOLOGYOUTCOMESFIRM-LEVEL PRODUCTIVITYSEEEXOGENOUS VARIABLECORPORATE ACQUISITIONSSIZE OF FIRMCREDIT LINESEMPLOYEESCORPORATE GOVERNANCEWorking PaperWorld Bank10.1596/1813-9450-7406