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In this process, the institutional framework has had an influence in the evolution of SMEs, with certain strengths and weaknesses in terms of supporting the development of SMEs. The quantitative contribution of SMEs, however, has been declining over time, both in number of establishments, staffing, and production, which reveals the increasing relevance of large industries.
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The main findings are that SMEs are crucial within the Ecuadorian industrial fabric, because of its specialization in products that contribute to satisfying basic needs, but also because they provide parts and supplies to other companies. Data from the Banco Central del Ecuador (BCE, Central Bank of Ecuador), the Instituto Nacional de EstadÃstica y Censos (INEC, National Institute of Statistics and Census), regulations and research around the SME sector have been used. Literature review is the main data collection methodology, and the databases used are from official sources. The main periods of the analysis are: i) the 1990s, ii) 2000-2008 and iii) 2009-2019 however, the decades of the 1970s and 1980s have been included in the first part of the article for their relevance. To this end, the focus is on companies related to the manufacturing sector in Ecuador.
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The main objective of this article is to analyze the evolution of Ecuadorian Small and Medium-Sized Enterprises (SME), their contribution to the national economy, institutional framework, and internal operating characteristics. Finally, the study finds that after firms entering to invest in advertising, firms experience an improvement on TFP, labor productivity, and gross revenue growth, which are in favor of learning by advertising hypothesis. Also, the findings are that continuing advertising investment strategy firms have higher TFP, labor productivity, and gross revenue than exiting advertising investment firms, suggesting self-selection in the exit side of the market but not in the entry side of the market. The estimation results show that manufacturing firms which invest in advertising have an Advertising Premia on economic and productivity indicators, this premia is higher on economic outcomes. For this, this paper estimates the total factor productivity (TFP) at firm-level using a semi-parametric approach to reduce the simultaneous and endogeneity problems in the selection of inputs. In addition, this looks for evidence on how the different advertising strategies may affect productivity and gross revenue in both advertising and non-advertising firms. Particularly, this study analyzes if firms that have advertising investments have better economic and productivity performance compare to non-advertising investment firms. This paper examines how the firm´s advertising investments are related to different measures of economic and productivity performance during 2007 - 2017 in Ecuadorian manufacturing.