Small Firm Behaviour in Sri Lanka

Jonathan Batten*, Samanthala Hettihewa

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

7 Citations (Scopus)


This paper investigates the behaviour of small firms in Sri Lanka using a countrywide cross-sectional survey. The 73 responding firms provide information on whether certain variables: the firm's utilisation of assets; labour; technology; family savings; and access to bank financing, vary with four firm-specific factors: industry; family ownership; size; and whether the firm's manager was also an owner of the firm. Sampled small firms are mostly family owned and owner managed although a significant number of family owned firms are managed by non-family managers. Most firm's under-utilise assets, use existing rather than the latest technology, and are reliant upon family savings. Statistical analysis provides evidence of significant cross-sectional variation in small firm practice. The results are explained in terms of the cost of acquiring new technology, asymmetries and opacity in financial information, and the non-value maximising behaviour of firm owners who are also firm managers.

Original languageEnglish
Pages (from-to)201-217
Number of pages17
JournalSmall Business Economics
Issue number3
Publication statusPublished - 1999


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