This paper examines the determinants of short run employment growth in very
small firms in the Services sector. The study shows evidence of non linear
ities in the growth-size relationship, and it is argued that these non line
arities reflect the short run constraints that small firms face in adjustin
g to demand shocks. The paper also suggests that there are other systematic
influences on growth apart from size. The paper draws on survey evidence f
rom the Northern Region of the United Kingdom.