Getting smaller: syze dynamics of employer enterprises in Portugal

Firm size distribution has always drawn a great deal of attention in Portugal, often related to the so-called lack of performance and competitiveness, in comparison to bigger sized international firms , due to the overall small dimension of the internal market (especially for nontradeables) and to the country’s type of specialisation model. In fact during the last decades, there has been an increasing number of smaller sized enterprises and a decrease of firm size across all main sectors, for both observed entrants and exiters in the market. In this paper we describe the size dynamics of active employer enterprises in Portugal, from 1985 to 2007, by applying to the Quadros de Pessoal dataset the methodology and definitions of the OECD/Eurostat Manual on Business Demography Statistics. We observe that firm size has been decreasing in Portugal over all broad sectors, regions and entrants and exiters from the market and also that firm size distribution is right-skewed, evolving over time towards a lognormal distribution