Chart 1 shows the ratio of the percentage of total gross value added produced by firms of different sizes to the percentage of total firms belonging to each category. Clumsy and maybe counterintuitive because the important determinant is the denominator, the message is clear. The countries on the left, including Spain, have lots of small and inefficient enterprises and a few large, productive businesses. The remaining graphics show how this kind of organization evolves in the real world of a long-lasting recession.
Large and medium-sized firms were able to defend their profitability far better than small and micro companies.
Looked at from the point of view of revenues, the legions of Spanish companes employing fewer than ten persons, took the brunt of the damage - although this very remarkable difference may point to other, non-measurable, deficiencies of this type of structure. Not least of these would be their greater agility when it comes to defrauding the tax man, the social security system and the gatherers of statistics. Simply put, the marginal benefit to the government of chasing down cheaters of this size is scant and the resultant data may understate their resilience.
In terms of ability to collect debts, firms with more than 250 employees held a clear advantage over the competition and microfirms did the worst. The results for the other two groups clearly do not conform with the expected.
Charles Butler and Javier García Echegaray
