This paper examines the set of factors influencing the change in the size distribution of establishments for the Spanish manufacturing industry. An empirical model for the share of small establishments is proposed and estimated using a panel data set of 56 manufacturing sectors during the period 1982-1992. The paper analyses the set of factors determining the shift in size distribution toward an increased presence of small units during the period. The results obtained suggest the existence of important technological entry barriers for small establishments. In addition, entry costs to foreign markets act as a barrier, reducing the share of small business in sectors open to international competition. In contrast, the share of small establishments appears positively associated with increases of import penetration and to entry and exit rates.

Key words: market structure, size, dynamic adjustment.
JEL classification: L11, L60.