Business Cycle and Small Business
Business Cycle and Small Business

Summary/Abstract: The authors present the object of small business dur-ing the business cycle. The article deals with a deep analysis of the economic indicators of small business, and the behavior of small business during the business cycle. There are pointed out two main economic indica-tors – the GDP and the ratio of employment. There are used statistical data to compare the impact of small busi-ness on the whole economy in Lithuania and in the USA. This study focuses on the behavior of small business compared to large business and tries to discern if there are differences in their activities related to cyclical changes in economy. Consequently, this study will attend to isolate general cyclical relationships rather than focus narrowly on small business activity over the months of recession. There is analyzed the period of 1999-2004 in Lithua-nian economy – there is made the analysis of part of the whole Lithuanian GDP created by small business in en-terprises with less than 250 employees; value added wealth created by small business relative to industry; also there is shown the relation of employees in small business related to different business sectors. Different industries do react differently to cyclical changes. Some of the most cyclically sensitive indus-tries, such as construction, are predominantly small businesses. Services industries, which produce a large proportion of small business GDP, tend to be less sensi-tive to the cycle than most other sectors. It is well-known that certain industries are more prone to cyclical volatility than others. Since the distribution of small businesses across industries is more different than the distribution of large businesses across industries, the differences in the coefficients relating small and large business GDP to overall GDP could be the result of either a business-size or an industry differential.

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