Employment Growth Among MSMEs in Assam, India: The Role of Firm-specific Characteristics and Human Capital

This study examines the effects of firm characteristics and human capital on employment growth in micro, small and medium enterprises (MSMEs) in a less-developed region of an emerging economy. For this purpose, a structured questionnaire was used to collect data from 200 randomly selected MSMEs in the Cachar district of Assam, India. We have used descriptive statistics and robust regression analysis to analyse the collected data and validate the proposed hypotheses. The results indicate that firm size and age are negatively linked to employment growth, implying that smaller and younger firms tend to have higher growth rates. Additionally, the sector in which a firm operates and its geographic location are important determinants of MSME employment growth. Specifically, manufacturing and service-based enterprises exhibit a higher level of employment growth than those engaged in ‘repairing and maintenance’. Urban-based MSMEs also grow faster than their rural counterparts. Concerning human capital, the study shows clear evidence that the level of education and accumulated business experience of MSME owners/managers positively affect employment growth. Based on these findings, several policy recommendations are put forward. JEL Codes: C83, L6, L8, L25