The Peter Pan syndrome for small and medium-sized enterprises: Evidence from Korean manufacturing firms

Abstract

This study examines whether government support for small and medium-sized enterprises (SMEs), aimed at stimulating their growth, achieves its intended goal. We argue that government subsidies create the incentive for SMEs to remain small in order to keep receiving such support and thus SMEs are reluctant to grow. We call this phenomenon the Peter Pan syndrome. Using a dataset of Korean manufacturing firms during the period of 2010-2012, we find that the Peter Pan syndrome indeed exists and that the likelihood of the Peter Pan syndrome is conditioned by factors that influence their incentive to remain as SMEs.