Productivity and Profitability Among Small Family Business: Development and Analysis of a Unique Data Base

摘要

Results of this study show that, at least in two SIC code industries studied, firms with nine or less employees differed in important ways from those with more than nine employees. Most importantly, smaller firms appear to be more profitable and exhibit greater efficiency and productivity. Smaller firms are found to be more profitable than the larger firms. The results may indeed point to an underlying economic reality of small businesses. That is, size of business does affect profitability. Smaller businesses, those with nine or less employees, are more profitable than those with 10 to 45 employees; and those businesses with less than 49 employees are more profitable than those with more than 49. But, why is this the case. Many observers of small business perceive the typical model to be the 'mom and pop store,' i.e., a family run business that functions solely to produce an adequate income to support the family. The evidence provided herein contradicts this; instead, it suggests that these businesses are economically viable and more profitable than larger businesses.