Explaining The Factors Affecting the Growth of Small and Medium-Sized Enterprises’ Value Added in Iranian Economy

The role of small and medium-sized enterprises (SMEs) in various aspects of national economies is a substantial issue that has attracted the attention of many researchers and policy makers. The potential of SMEs in job creation, fostering the dynamism of the economic sectors, strengthening the economic resilience, promoting the innovation levels, and improving the economic growth are known as the most pivotal features of these enterprises. The present study focusing on Iranian economy, seeks to analyze the impact of factors affecting the growth of SMEs’ value added in 22 two-digit ISIC codes, using panel data approach for the period of 2005-2015. The findings of this study indicate that innovation growth in SMEs has a positive significant effect on their value added growth; furthermore, an increase in the openness degree of Iranian economy has not affected the growth of SMEs’ value added positively. Moreover, the growth of production inputs used in traditional growth models (physical capital, labor, and human capital) can have a positive significant effect on SMEs’ value added growth.