Small enterprises (SEs) are increasingly playing an important role in Sri Lankan economy.
However, little is known about the determinants of firm growth in terms of employee growth.
The purpose of this study is to gain an understanding of the factors influencing employee growth
through developing and testing an employee growth model. Human capital, social capital,
access to external resources and internal capabilities & business structure are included in the
model, which is tested using data collected by face-to-face interviews with 97 entrepreneurs.
Using path analysis approach the results of the study revealed that certain variables of human
capital (i.e, training with work experience in same field) social capital (i.e., organizational networks
with network maintenance, resources sharing with SEs), access to external resources (i.e.,
access to inputs) and internal capabilities & business structure (i.e .. innovation and imitations
and number of products with employee incentives) have significant positive effects on employee
growth.