Firm growth in BRICS: What really matters?

Abstract

The article examines a number of constraints in terms of access to finance, corruption, infrastructure, crime, competition, and performance measures etc. hindering firm growth in BRICS countries using the comprehensive company-level data from the World Business Environment Survey (WBES). Starting with a total of 37 factors impeding the operation and growth of businesses, the article regroups them into 8 using factor analysis. The article then applied Multilevel Mixed-Effects Linear Regression controlling for country random effects to estimate a model to assess the significance and extent of these factors on firm growth after controlling for other country and firm level effects. The results demonstrate that with the exception of two factors (Moral Hazard & Adverse Selection, Government Subsidies), all other factors namely Law and Order, Export-Import, Financial, Macroeconomic, Environmental & Regulatory Constraint, Tax and service regulation play a statistically significant role on the firms' operation and growth and such findings are found to be robust in terms of alternative model specifications and estimation techniques.