Growth expectations and financial performance of small businesses: evidence from Latvia

Ruta Aidis, Tomasz Mickiewicz, Arnis Sauka

Research output: Working paper

Abstract

By applying regulatory focus theory, this paper investigates the impact of both initial confidence and of exactness of growth expectations on subsequent financial performance of the small firms. Drawing on the unique data set based on the repeated survey design, we make one of the first attempts to explore the complexity of this relationship empirically. Overall the findings suggest that controlling for other relevant factors, including actual growth, the entrepreneurs having higher growth expectations perform significantly better later on in terms of profitability. In addition, education has a strong modifying effect: the impact of high growth expectations on subsequent profit performance is stronger for entrepreneurs with lower level of education.
Original languageEnglish
Place of PublicationLondon (UK)
PublisherUniversity College London
Number of pages36
Publication statusPublished - Jan 2008

Publication series

NameEconomics Working Paper
PublisherUCL SSEES : Centre for comparative economics
No.85

Keywords

  • entrepreneurial cognition
  • expectations
  • performance
  • regulatory focus theory

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