Firm Size Distribution and the Effects of Ownership Type

Abstract

Size distribution is generally accepted as an important characteristic of business structure, one which impacts on competitiveness, with firm size often regarded as the key determinant of entrepreneurial innovativeness. This article describes the size distribution of enterprises taken from a statistical set of Slovak business entities with a special focus on the relation between size and ownership of the businesses. A change in the probability firm size distribution is an undisputable indicator of a change in the business structure. This article seeks to create an eventual starting point for better policymaking in Slovakia, a country which bases its competitiveness primarily on large and medium-sized foreign investments. The authors’ main objective is to determine the size distribution type of the firms. The Anderson-Darling and Kolmogorov-Smirnov tests were used to determine if the dataset has been taken from a population with a specific distribution. Among the main results with regard to Slovak business structure, a statistically significant dependence was shown between the ownership type and the size type of SMEs. The authors confirmed the Pareto, Power and Generalized Gamma distributions as appropriate probability distributions of firm sizes. The probability distribution of SMEs in general as well as according to individual ownership type shows a Lévy distribution. The authors used the environment of the R programming language along with the software EasyFit.