The impact of the environment on employment growth in SMEs

A great deal of empirical research has been devoted to the study of the impact of a firm's environmental characteristics on its growth. However, most of this work is centered on one or a few predictors. Furthermore, no research has provided an exhaustive list of all variables previously studied. We have tried to fill this gap and have tested on a sample of Belgian SMEs the potential influence of 15 variables on employment growth. On the basis of Mintzberg's classification (1979), we have grouped our variables into three sub-categories of determinants relating to the generosity or hostility of the environment; determinants relating to its stability or dynamism and determinants relating to its simplicity or complexity. Our results show that employment growth within SMEs is only influenced by two variables linked to the generosity sub-group. The results also tend to show that environment, at least if it is studied independently of other variables relating to the manager, the firm or its strategy, only has an extremely limited influence on the growth of SMEs. This leads us to question the validity of purely external approaches to examining a firm's growth, such as the theory of population ecology of organizations, for instance