Determinants of Intended Expansion of Polish Small Firms*

This paper investigates the determinants of Polish small firm’s intentions to expand production in the context of possible economic expansion on accession to the EU. Using a non-linear specification a model is developed using twenty-seven explanatory variables derived from a questionnaire given to Polish small firms in late 1999 asking about their motivations in expanding production. Seven of these variables are found to be significant, namely: the existence of export and franchising activity, a recent increase in fixed assets, the difficulty in obtaining a bank loan, the level of human capital, the technological level of the firm’s products and the estimated proportionate change in income from 1997 to 1999. Significant catch-up gains exist for small but fast growing firms. JEL classification: C22, C52, L00, P27