Graduation rates of micro and small enterprises in the Netherlands: it’s all about our missing memory

Albert Kraaij; Klaas Molenaar

doi:10.3362/1755-1986.00019

Graduation rates of micro and small enterprises in the Netherlands: it’s all about our missing memory

Micro, small, and medium enterprises (MSMEs) are seen by governments and NGOs as engines of job creation, growth and generation of income. Policies and programmes are therefore based on the assumption that the solo self-employed and micro-sized entrepreneurs will graduate and become small. But we have known since the 1980s that this assumption needed to be looked at critically. Research in developing countries revealed that graduation hardly existed there. And if this is true in emerging economies, would it not also be valid in industrialized countries where rhetoric and policies are based on this assumption too? What we see in the South might be valid in the North as well. The research was repeated first in the Netherlands, focusing on graduation and job creation in MSMEs. In this paper, a longitudinal data set was used of a cohort of entrepreneurs in the Netherlands that started in 2008. In total, 629 entrepreneurs were surveyed annually for four years. A main finding of the paper is that graduation hardly existed and only 8.3 per cent created jobs over the course of four years. Policies worldwide need to be reassessed and reviewed in order to bring them in line with reality. We recommend global, in-depth, cross-country research to reconfirm these findings. A more thorough understanding can serve as a basis for new debate on the effectiveness of present policies and programmes on MSME development.

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