The Impact of Dynamics in Large Enterprises on the Dynamics of Small Enterprises and the Shadow Economy in the Wood Industry

Abstract

The paper analyses the impact of the dynamics of the large enterprises in the wood industry on the dynamics of small enterprises and the shadow economy in this industry. We use the unique firm-level survey data for the sample of small enterprises in the wood industry in Slovenia. We find relatively a small impact of the dynamics and size structure of the large enterprises on the dynamics of small enterprises in the wood industry. The important impact is found for the dynamics of the large enterprises on the shadow economy in the wood industry. The empirical results imply implications for the regulatory system to provide a proper institutional enabling framework for the formal sector, a proper financial system for financing at acceptable assurance and costs, and an informal education schemes to provide basic business knowledge and good practices.