Firm Performance and Selection in an emerging Economy: Micro Evidence from Slovenia

We investigate the determinants of firm survival and growth (employment and sales), in the context of transition from plan to market, using firm data from Slovenia spanning from 1994 to 1998 and OLS and Heckman selection models. Firm and industry pre-transition conditions including size, ownership, financial constraints, trade and market structure are used to understand what firms best performed in the Slovenian transition. Small, private, exporting and capital intensive firms grew the fastest. Large firms with positive profits and higher sunk costs were more likely to survive compare to firms with harder financial constraints, high costs or trading abroad.