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Survival of Firms over the Product Life Cycle
... Thus, not only entries and exits but also the incumbent firms are part of the industries evolutionary process across the product life cycle. Higher levels of entry and exit rates tend to occur in emerging and growing industries, or in industries under rapid structural change (Gort and Klepper 1982;Klepper and Graddy 1990;Klepper and Miller 1995;Agarwal andGort 1996, 2002;Agarwal 1997;Klepper and Simons 2005;Agarwal and Audretsch 2001, among others). Large waves of entries-either bringing innovative and more competitive products to the markets or just trying out their luck-lead to large waves of exits of those competitors whose abilities are at the fringe. ...
... Thus, not only entries and exits but also the incumbent firms are part of the industries evolutionary process across the product life cycle. Higher levels of entry and exit rates tend to occur in emerging and growing industries, or in industries under rapid structural change (Gort and Klepper 1982;Klepper and Graddy 1990;Klepper and Miller 1995;Agarwal andGort 1996, 2002;Agarwal 1997;Klepper and Simons 2005;Agarwal and Audretsch 2001, among others). Large waves of entries-either bringing innovative and more competitive products to the markets or just trying out their luck-lead to large waves of exits of those competitors whose abilities are at the fringe. ...
... Full understanding of the underlying changes in market concentration requires all three to be included in an analysis. Many studies analyzing cohorts of entrants and products shown that, over time, some of the entrants leave the industry while the others take the exiting firms shares and expand (Muller 1976;Dunne and Hughes 1994;Baldwin and Rafiquazzaman 1996;Baldwin and Gorecki 1991;Agarwal andGort 1996, 2002). Traditional approach to market selection assumes that exit (entry) have significant role on entry (exit). ...
Structural evolution of the industries involves the mechanism of market selection, which comprises entry, exit as well as market share changes, mobility, of incumbent firms. However, entry and exit studies so far have paid attention to the interdependencies only between the entry and exit. In this paper, we include the third dimension of mobility for analyses. Industrial and Regional diversification, unemployment, and unit cost deters entry, exit and mobility of incumbents. However, regional diversification deters entry only for larger firms. Unit cost does not have clear effect on incumbent mobility. Industries with smaller sized firms and with higher growth volatility experience higher entry, exit and mobility. Growth cause more entry and mobility of incumbents and fewer exits. We also test the phenomenon that entry and exit activities symmetrically, simultaneously and with delay response to each other, considering mobility. We use a longitudinal data set from Portugal covering 1986–1993 time period and 320 six-digit industries. We classify industries into growing, mature and declining parts. According to the estimation results, growing industries experience significantly more entry, exit and changes in market shares among incumbents. Although the argument that declining industries experience less entry has support, its positive significance on exit equation has some weak support. Overall, the results support that entry, exit and incumbent mobility response to unobserved common determinants. Moreover, additional estimation results suggest that also there is interdependence among entry, exit and incumbent mobility.
... By contrast, in the mature and declining stages, the industry evolves towards standardisation, and markets tend to grow at a more stable rate. According to Agarwal [14], probability of survival significantly differs across evolutionary stages. Early entrants enjoy a higher probability of survival, although the probability does not monotonically decrease with age. ...
... To look at some examples, category 3329 had the largest number of production sites, and both the industrial spatial concentration and the number of industrial agglomeration units were growing positively, but the survival rate of the category was the lowest among all industries. As Agarwal (1997) points out that the life stage an industry is in affects its survival performance, analysing from life cycle theories, this can indicate that the life cycle of category 3329 might be in a relatively early stage, thus the growth momentum was strong, but the survival status was unstable. ...
The COVID-19 pandemic has impacted the industry immensely and, in some cases, irreversibly. This research pioneers in studying how the pandemic have influenced the survival and spatial distribution of the health-related manufacturing industry (HRMI) in Taiwan. Eight categories of HRMI are examined, with their change in survival performances and spatial concentration between 2018 and 2020. Average Nearest Neighbour and Local Indicators of Spatial Association are conducted, to visualise the distribution of industrial clusters. We found the pandemic did not shock the HRMI in Taiwan, but actually induced its growth and spatial concentration to a certain extent. Additionally, due to it being a knowledge-intensive industry, the HRMI mainly concentrate in metropolitan areas with which universities and science parks may have largely supported. However, the spatial concentration and cluster scope growth do not necessarily accompany the improvement of spatial survival, which may be resulted from the different life cycle stages an industry category is in. This research fills in the gap of medical studies with literatures and data from the field of spatial studies. It provides interdisciplinary insights under the condition of pandemic.
... On the other hand, in industries with low minimum efficient scale, relatively lower growth rates but higher survival rates would be experienced since,in this case, the need for growth and loss of work at sub-optimal scales will not be too serious. Agarwal and Gort (1996), Audretsch (1999, 2001), Agarwal (1997, 1998),and Jamali et al. (2015 point out that there is a positive relationship between size and the probability of survival and growth, especially in industries that are in the early stages of their life cycle. Duune et al. (1988Duune et al. ( , 1989 showed that firm survival and growth rates are systematically different in different industries. ...
... Findings Mansfild (1962) Minimum efficient size of the firm affectsthe growth and exit of firms Jovanovic (1982), Geroski (1991Geroski ( , 1995, Mata et al (1995) Growth is a function of size and age In industries where the minimum efficient scale is low, the growth rates are relatively lower Agarwal and Audretsch (1999, 2001) Agarwal (1997, 1998 A positive relationship between size and the likelihood of survival and growth holds in particular in industries that are in earlier stages of their life cycles Audretsch(1991), Audretsch&Mahmood (1994) and Mata & Portugal (1994) Technological progress relative to the performance of firms Dome et al. (1995) The growth of firms generally increases with technology usage, capital intensity(K/L), and productivity Olley and Pakes (1992), Bailey et al. (1992), Liu and Tybout (1993), and Bailey et al. (1994) Higher measured productivity is correlated with higher growth rates Dixit (1989) and Hoppenhayn (1992) A greater degree of sunk costs should reduce the likelihood of exit and lead to lower observed growth rates for surviving firms Dunne et al (1989), Audretsch and Mahmood, (1995), and Ozler and Tymaz (2004) Growth and failure of firms systematically dependon the firms' ownership type ...
his paper focuses on growth,an essential aspect of firm performance,in the manufacturing sector in Malaysia between the years 2010 and 2016. It analyzes the effects of IT (information technology) on the growth of 153 firms during this period. The evidence suggests that some factors such as productivity, capital-labor ratio, sunk cost, technology usage, and minimum economies of scale are important for the growth of firms. This paper shows that apart from these variables, information technology expenditure also affects the growth of firms. Dynamic panel data,a generalized method of the moment, is used and observed that IT expenditure negatively affects firms' growth,though it is a fast return investment. Moreover,it shows that information technology in firms with a low level of productivity does not stimulate growth.
... Examples of research articles Agarwal (1994Agarwal ( , 1997Agarwal ( , 1998; Agarwal & Gort (1996 Mainstream economics PhD programs during the early 1990s largely utilized neoclassical equilibrium theory, characterized by steady state, marginal analysis. Microeconomics and industrial organization (IO) course texts (Carlton & Perloff, 1990;Varian, 1992) utilized the linear "structure-conductperformance" (SCP) paradigm to distinguish market structures (e.g., perfect competition, monopoly), which then determined firm conduct (strategy), for performance implications in terms of both firm profitability and social welfare (Bain, 1951;Schamalensee, 1989). ...
... A key process takeaway for me was the importance of such data-building investments; while several publications stemmed from the original intent and design, others arose from unanticipated insights due to an immersion in the context and follow-on collaboration opportunities with other scholars. For example, per intention, some studies hypothesized and tested the effect of industry characteristics (life-cycle stages, technological intensity, intermediate v. final goods sector) and firm characteristics (size, age, startup v. established firm) on firm entry and survival (Agarwal, 1996(Agarwal, , 1997Agarwal & Audretsch, 1999Agarwal & Gort, 1996. Other studies, which also shaped my research focus and interest in industry emergence rather than later stages (e.g., shake-outs), surfaced from the data construction efforts. ...
This chapter uses an evolutionary lens to depict a journey that is also a destination for a lifelong learner passionate about upward mobility in intellectual, psychological, and economic realms. A mainstay of the research endeavors has been the study of innovation and enterprise. Starting as an economist studying the evolution of technologies and industries, the scholarly journey progressed to strategic management to examine firm and industry evolution and then to strategic entrepreneurship to examine individual, firm, and industry evolution. Currently, the research focuses on the interplay of enterprise and markets through an integration of economics, psychology, and sociology perspectives to understand the causes and consequences of enterprising individuals, organizations, and economies.
... They require strong commitment and involvement by individuals who try to achieve these goals. However, differently from other studies, the core goal considered herein is the survival of the firm (Suarez & Utterback, 1995;Westhead, 1995;Agarwal, 1997;Gimeno et al., 1997;Ireland et al., 2005;Sapienza et al., 2006;Santarelli & Vivarelli, 2007;Geroski et al., 2010;Delmar et al., 2013;Huggins et al., 2017) that can be considered a marker of efficiency achieved (Agarwal, 1997) and stands for the ability to overcome liability of smallness (Freeman et al., 1983) and of newness (Stinchcombe, 1965;Hannan & Freeman, 1984). Differently from growth, which is affected by external factors, such as competition and dynamics of the market (Smolarski & Kut, 2011), survival seems to depend on other factors that are innovativeness (Hyytinen et al., 2015) or support offered by stakeholder (Pajunen, 2006;Korunka et al., 2010;Kessler et al., 2012;Au et al., 2016). ...
... They require strong commitment and involvement by individuals who try to achieve these goals. However, differently from other studies, the core goal considered herein is the survival of the firm (Suarez & Utterback, 1995;Westhead, 1995;Agarwal, 1997;Gimeno et al., 1997;Ireland et al., 2005;Sapienza et al., 2006;Santarelli & Vivarelli, 2007;Geroski et al., 2010;Delmar et al., 2013;Huggins et al., 2017) that can be considered a marker of efficiency achieved (Agarwal, 1997) and stands for the ability to overcome liability of smallness (Freeman et al., 1983) and of newness (Stinchcombe, 1965;Hannan & Freeman, 1984). Differently from growth, which is affected by external factors, such as competition and dynamics of the market (Smolarski & Kut, 2011), survival seems to depend on other factors that are innovativeness (Hyytinen et al., 2015) or support offered by stakeholder (Pajunen, 2006;Korunka et al., 2010;Kessler et al., 2012;Au et al., 2016). ...
The present paper aims to investigate the relevance that love money – i.e. financial resources provided by family, friends, and fools – can have on vocational behavior, standing for personal goals that are occupational in nature. In particular, the relationship between the above-cited financial resources and “core goals” (i.e. the survival of entrepreneurial firms) is tested by leveraging on second-hand data about Italian entrepreneurs retrieved from Global Entrepreneurship Monitor – GEM website and referring to the years 2012-2014 and by applying estimated Logit models. Achieved results show that financial resources provided by fools do not affect the survival of entrepreneurial firms. On the contrary, financial resources provided by family and friends do it. Noticeably, the impact of financial resources provided by family or by friends varies in terms of intensity and according to entrepreneurial profiles, in particular to gender and age. After highlighting the main limitations of this paper, some hints for further research are proposed in the last part of the paper.
... Los hallazgos anteriores son similares a los realizados por Liang y Park (2010) para el estudio de fondos de cobertura, y los resultados en la materia de supervivencia en otras industrias mostrados por Agarwal (1997) o Pérez et al. (2004, donde, en el largo plazo, el tamaño absoluto de una empresa favorece su permanencia en el mercado. ...
... Revisión de LiteraturaDentro de la amplia literatura que utiliza el análisis de supervivencia en una industria, destaca el trabajo deAgarwal (1997), donde analiza la supervivencia de las empresas a lo largo de la vida útil del producto que ofrecen. El autor concluye que los de reciente entrada y los que tienen una mayor capacidad para crecer presentan una mayor probabilidad de supervivencia; además, encuentra que el tamaño de la empresa tiene un impacto negativo en la tasa de riesgo y, con ello, una probabilidad de supervivencia mayor. ...
p> Objetivo : analizar la evolución de los competidores en el mercado de las Administradoras de Fondos para el Retiro (Afores) en México, identificando los determinantes de permanencia en el mercado.
Método : se analizan las tasas de salida de las Afores desde el inicio de sus funciones (diciembre 1997) usando el modelo de Cox de riesgos proporcionales de supervivencia para estimar la contribución de cofactores como tamaño, importancia relativa en el mercado, y usando el análisis envolvente de datos (DEA, por sus siglas en inglés) para identificar la eficiencia global de la industria y las eficiencias particulares de cada institución.
Resultados : los factores que determinan la supervivencia son: la eficiencia tecnológica global del mercado, el tamaño absoluto de las Afores y si la salida del mercado es liquidación.
Limitaciones : el estudio considera únicamente factores observados a las eficiencias tecnológicas de cada Afore, y no tiene acceso a información interna que podría ayudar a identificar mejor los determinantes de eficiencia.
Principales hallazgos : tamaño absoluto y eficiencia global predominan para explicar la permanencia de una Afore en el mercado sobre otros determinantes, como su participación relativa, asociación a un banco, participación relativa en la industria, tipo de entrada, o la reforma al sistema implementada en 2008.</p
... Par analogie à la population humaine dont les individus naissent, grandissent, migrent et meurent, les entreprises, que le droit qualifie d'ailleurs de « personnes » morales (Afchain, 2007;Duchange, 2014;Lhasbellaoui-Serra, 2005), naissent, croissent, changent de localisation, se multiplient et disparaissent. Il s'agit, en stratégie d'entreprise, de la théorie du cycle de vie de l'entreprise (Rajshree Agarwal, 1997 naissances. Si l'on tient compte de la dimension spatiale, la prise en compte des migrations devient intéressante. ...
... Fait par lequel une entreprise cessée décide de reprendre une activité économique.3 "It doesn't matter if you're selling bananas, airplanes, or whatever," Hamilton says ─ the mortality rate is the same. ...
Introduction
The failure and survival of companies is a subject of curiosity for researchers from a variety of backgrounds. Demographers have shown little interest in business demography, and more specifically in business survival and failure, whereas methods of demographic analysis are increasingly used in this field. In the absence of longitudinal data over a long period of time, researchers have very often dealt with the survival of firms at five years and rarely at ten years of the creation, and has focused on smaller samples than might be desirable, hence the need to analyze the survival of firms over a longer period, in this case 17 years, and over several different cohorts, in this case 18 cohorts. Moreover, the results of previous studies on the factors of firm failure are not convergent and do not take into account the period effect and the specific conditions prevailing in the year of creation, hence the need for an analysis of the factors of firm mortality in terms of age, period and cohort. The objectives of this study are, on one hand, to analyze the survival of companies 17 years after their creation and, on the other hand, to analyze age, period and cohort effects on the firm mortality rates in France.
Methods
We use individual open data from the Bank of France. The study is based on a sample of 391,474 companies created between 2000 and 2017. Longitudinal and cross-sectional demographic analysis allowed us to establish lifetables by regions, by cohort and by period and to derive the statistics of the firm lifespans, including mortality rates and survival probabilities. Age-period-cohort modelling from aggregate data, classified by cohort and by age, allowed us to identify age, period and cohort effects on the mortality rates of the firms.
Results
Our results indicate a survival rate of 17 % seventeen years after creation for metropolitan France. The survival rates differ by region. They are negatively correlated with the hierarchical rank position of the regions. Finally, the results of the age-period-cohort analysis indicate, on one hand, a decline in the longevity of firms and, on the other hand, lower survival probabilities for the cohorts created during the 2008 financial crisis and those that went through it at younger ages.
Conclusion
With information on the cohorts and on the period of observation, the Age-Period-Cohort model would predict firm mortality rates by age, and vice versa.
Keywords: business demography, firm survival, demographic analysis, age-period-cohort model
JEL codes: R11, G33, J11
... While creative destruction-through firm entry and exit-is essential for economic progress, establishing a conducive ecosystem for firm survival is also necessary for sustainable private sector development and socioeconomic cohesion. There is an extensive literature identifying firm-level characteristics (such as size, age, indebtedness, and productivity) as well as macroeconomic conditions and institutional features as key contributing factors to growth and survival probability among firms (Evans, 1987;Hall, 1987;Audretsch, 1991;Audretsch and Mahmood, 1995;Ericson and Pakes, 1995;Agarwal, 1997;Zingales, 1998;Agarwal and Audretsch, 2001;Agarwal and Gort, 2002;Bond and others, 2003;Bunn and Redwood, 2003;Clementi and Hopenhayn, 2006;Bridges and Guariglia, 2008;Musso and Schiavo, 2008;Byrne, Spaliara, and Tsoukas, 2016). To the best of our knowledge, however, there is no paper analyzing the impact of taxation on firms' survival prospects. ...
This paper investigates the impact of taxation on firm survival, using hazard models and a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995–2015. We find ample evidence that a lower level of effective marginal tax rate improves firms’ survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms’ survival probability is found to exhibit a non-linear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
... Higher management approachability (Action 1). As the organization becomes larger, specific attention to the projects by the management fades away (Agarwal, 1997). We recommend keeping both formal and informal interactions between management and the project team levels at regular intervals. ...
Purpose
The purpose of this paper is to develop a framework to manage the strategy to counter disruptive innovation by identifying stronger attributes and key strategic areas for improvements in an engineering services context with less freedom to orchestrate product innovation. The authors also validate the combined use of multi-grade fuzzy, Importance-Performance Analysis (IPA) and gap analysis in developing the strategy to mitigate turbulence.
Design/methodology/approach
The paper presents a framework using a combination of Dynamic Capabilities and Organizational Agility to develop the strategy. The study uses data gathered from a 60-member engineering project team working on an Aircraft Engine Controller design to identify 50 attributes and the related importance and performance ratings. The research study is designed using a three-tier approach. First, multi-grade fuzzy is utilized to measure the overall firm response agility index. In the second step, the IPA is used to analyze the strength and weaknesses of the firm and to identify the attributes where the firm needs to focus. In the past step, gap analysis is used to prioritize the identified attributes. The findings are validated by panel discussions with a different group of experts from the project team and action points were arrived at.
Findings
This research work finds that the firms’ response agility index of 6.97 is comparable to that of the Original Equipment Manufacturers (OEMs) from previous literature, but still needs a better agility score to effectively counter turbulence from disruptive innovations. It also identifies seven key areas for improvement and their relative priority to effectively improve the response agility by utilizing the least number of resources, the reasons for the gap and the mitigation strategy to close the gap. The findings highlight a few key differences between an engineering services firm in comparison to OEMs and Software Services firms.
Practical implications
The findings help the practitioners with a comparative agility score of an engineering services firm, and an effective way of measuring agility, identify key focus areas and prioritize the actions using a simple set of data that could be collected regularly to keep track of the improvements. The provided strategic framework to improve the agility score can be used for continuous improvement.
Originality/value
This paper contributes to the existing literature by developing a framework for outsourcing services companies to cope with the turbulence by using dynamic capabilities and organizational agility. It also adds to the literature by extending the validity of IPA and gap analysis in making strategic decisions in an industrial set-up.
... sector development and socioeconomic cohesion. There is an extensive literature on the role of firm characteristics (such as size, age, leverage, and productivity) and macroeconomic conditions and institutional features in explaining firm performance and survival probability (Agarwal, 1997;Agarwal & Audretsch, 2001;Agarwal & Gort, 2002;Audretsch, 1991;Audretsch & Mahmood, 1995;Bond et al., 2003;Bridges & Guariglia, 2008;Bunn & Redwood, 2003;Byrne et al., 2016;Clementi & Hopenhayn, 2006;Ericson & Pakes, 1995;Evans, 1987;Hall, 1987;Musso & Schiavo, 2008;Zingales, 1998). These studies identify that both firm-level factors and country-level developments are critical to profitability and growth prospects among nonfinancial firms across the world. ...
This paper investigates the impact of taxation on firm survival, using hazard models and a large‐scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995–2015. We find ample evidence that a lower level of effective marginal tax rate improves firms' survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms' survival probability is found to exhibit a nonlinear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types, and sources of financing.
... There are studies that have examined the implications of diversification on the failure rates of firms and industries. For example, Agarwal (1997) has argued that firm entry decisions and diversification are closely related because when firms decide to diversify, they are entering a new market with a new product or brand. Audretsch (1991) found positive effects of diversification on survival, meaning lower failure rates. ...
This research examines the relationship between geographic, brand, and segment diversification and hotel failure rates based on ownership structure, i.e. franchised and company-operated hotels, in the Texas lodging industry. Literature on diversification strategies is mainly based on financial measures of performance and offers mixed results; only few studies have assessed firm failure rates directly based on distinct diversification strategies at the establishment level. The performance outcomes are significantly heterogeneous not only based on the strategies, but also on the ownership structures, which are yet to be examined. Using data from the Texas Comptroller of Public Accounts from 2000 to 2018, a semi-parametric Cox proportional hazard model is estimated, and the findings reveal that failure rates are not significantly tied to particular types of diversification and ownership structures. This research provides insights on hotel diversification strategies and their relative dominance on hotel failure rates based on franchised and company-operated hotels.
... Finally, in column (4X), we consider one additional sub-sample; only those business units that survive all the way to the end of our observational window. Business units that do not survive are smaller, have fewer number of products and packs, and experience negative growth compared with their surviving counterparts (and these differences are statistically significant), which is similar to findings reported elsewhere in the literature (see for instance Agarwal 1997). Accordingly, we find that the coefficients on products and pack varieties, as well as marginal effects in the short and long run are similar to those reported earlier for large business units. ...
New drug introductions are key to growth for pharmaceutical firms. However, not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm’s business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small- and medium-sized businesses.
... From the analysis of official reports, a third alternative emerges. It deals with remaining active on the market (Audretsch and Mahmood, 1995;Agarwal, 1997;Strotmann, 2007;Hyytinen et al., 2015;Cabrer-Borrás and Belda, 2018), which is generally understood as survival. Scholars and statisticians, in fact, measure how long (in terms of years) firms are operational on the market. ...
... Ancak performans kavramı örgütlerin ölçütlerine göre farklılık göstermektedir. Örgüt içerisindeki performans, örgütün hangi düzeyde olduğunu, belirlenmiş hedeflere hangi düzeyde ulaşıldığını ve mevcut potansiyelin beklenen performans düzeyinde ne kadar etkili olacağının belirleyicisidir (Agarwal, 1997). Bundan dolayı performans teknolojisi, örgütlerin verimliliğini artırmada kapsamlı, sonuç odaklı ve sistemsel sorunların çözümlerinin tasarlanması ile problemleri iyileştirmeye amaçlayan uygulamalı bir alan olarak değer kazanmıştır (Stolovitch ve Keeps, 2006). ...
İnsan performans teknolojisi, iş hayatında insan performansını sistematik bir süreç içerisinde geliştirmeyi hedefleyen ve uygulayıcıların yansıma ve deneyimleri sonucu ortaya çıkan bir uygulama alanıdır. İnsan performans teknolojisi ile birlikte gerekli örgütsel yapının ele alınması amaçlanmaktadır. Bu sürecin dayandığı temel yapı ise insan performans teknolojisi modelidir. Model, sadece bireysel performans ile değil aynı zamanda örgütsel performansın artırılmasında kullanılmaktadır. Bu çalışmada, çalışanların daha iyi performans gösterebilmeleri için yararlanılabileceği insan performans teknolojisi ve örgüt performansının artırılmasındaki bu teknolojini modeli ele alınarak model içerisindeki aşamaların her biri tek tek ele alınmıştır.
... While creative destruction-through firm entry and exit-is essential for economic progress, establishing a conducive ecosystem for firm survival is also necessary for sustainable private sector development and socioeconomic cohesion. There is an extensive literature identifying firm-level characteristics (such as size, age, indebtedness, and productivity) as well as macroeconomic conditions and institutional features as key contributing factors to growth and survival probability among firms (Evans, 1987;Hall, 1987;Audretsch, 1991;Audretsch and Mahmood, 1995;Ericson and Pakes, 1995;Agarwal, 1997;Zingales, 1998;Agarwal and Audretsch, 2001;Agarwal and Gort, 2002;Bond and others, 2003;Bunn and Redwood, 2003;Clementi and Hopenhayn, 2006;Bridges and Guariglia, 2008;Musso and Schiavo, 2008;Byrne, Spaliara, and Tsoukas, 2016). To the best of our knowledge, however, there is no paper analyzing the impact of taxation on firms' survival prospects. ...
This paper investigates the impact of taxation on firm survival, using hazard models and a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995-2015. We find ample evidence that a lower level of effective marginal tax rate improves firms' survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms' survival probability is found to exhibit a non-linear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
... (3) Agarwal (1997) 2 Agarwal and Audretsch (2001) 3 Altman (1968); Altman et al. (1997) 4 Audretsch (1991) 5 Audretsch and Mahmood (1995) 6 Dunne et al. (1989) 7 Mahmood (2000 This formula is like the standard perpetual growth model, but with the addition of the constant hazard of failure, q + g * q, to the usual denominator, k -g. The derivation of this equation is given in Morris (2009). ...
Future free cash flow is a crucial element of most business valuation tools, such as the Discounted Cash Flow model, with the quality of the valuation depending heavily on its forecast accuracy. This paper explores the theory on business life cycle (and growth) models in an aim to improve that quality. Life cycle and growth models have been studied in the management and organization literature for decades, but the relevant aspects from a business valuation perspective remain unclear. Reviewing the existing literature, we argue that the five-stage Hanks model (Start-up, Growth, Maturity, Diversification, and Decline) is applicable for valuation purposes. We further argue that life cycle thinking provides useful insights for making grounded assumptions in predicting the future free cash flows and residual value of a company. This paper presents practical valuation approaches and insights for each of the five stages of the Hanks model.
... Dit wordt veroorzaakt door een toename in effi ciëntie in het bedrijf naarmate het bedrijf ouder en groter wordt. Ook de omgeving van het bedrijf heeft een duidelijke invloed op de overlevingskansen (Agarwal, 1997). Dit artikel onderstreept het belang van continuering van de bedrijfsvestigingsplaats voor bedrijfsoverleving, dat positieve eff ecten heeft voor de lokale economie waarin de bedrijven actief zijn. ...
Met het verstrijken van de tijd raken bedrijven ingebed in hun lokale omgeving en investeren daardoor meer in lokale ontwikkelingen, een pand en/of netwerkrelaties. De gebondenheid aan de locatie wordt ook beïnvloed door de vestigingsregio, het type netwerk, innovatief gedrag en de eigendomssituatie van het pand. De verwevenheid met de lokale omgeving is daardoor bij oudere bedrijven sterker dan bij jongere bedrijven. Bij toenemende leeftijd neemt de invloed van de omgeving op het bedrijfsfunctioneren toe. Uitplaatsing van oudere bedrijven uit vaste locaties, zoals de overheid voorstaat, kan tot vermindering van bedrijfsactiviteiten en -prestatie leiden.
... The mechanisms explaining the prior finding include the ability of early entrants to preempt assets (Agarwal & Bayus, 2004) and to grow in a less crowded environment (Boschma & Wenting, 2007). Firms with experience in related industries, spin-offs and experienced entrepreneurs are consistently found to have a lower hazard rate (Agarwal, 1997;Agarwal & Bayus, 2004;Boschma & Wenting, 2007;B. Kim & Park, 2006;Klepper & Simons, 2000). ...
Research Summary
We explore the qualitative differences in entries and exits over time. Using qualitative and quantitative data on 96 firms over 200 years, we study industry evolution from the perspective of individual decision‐making situations. Our historical and statistical analyses reveal the vital role of technology investments in determining firm outcomes, and the technological, institutional and governance dynamics that lead firms to invest or to abstain. Our main theoretical and methodological contribution concerns the importance of the multiplicity of firm‐level rationalities and decisions as fundamentals in theorizing on industry evolution.
Managerial Summary
What determines firm outcomes in terms of acquisition, dissolution, and survival? This article answers this crucial question of strategy and elaborates on the extent to which the outcome is under top management control. Our findings highlight the importance of technology investments and we identify factors that make such investments possible and profitable. Our results emphasize that firms weighing options must assess the economic meaningfulness of generational technology investments which result in narrowing profit margins and intensifying competition. Another insight concerns the management of political risks. Long‐term fluctuations in regulation and foreign trade policy make it hazardous to optimize to the contemporary political regime. Skillful strategists invest in geographical and technological complexity, which in combination increase the chances of survival in rapidly changing political regimes.
... While creative destruction-through firm entry and exit-is essential for economic progress, establishing a conducive ecosystem for firm survival is also necessary for sustainable private sector development and socioeconomic cohesion. There is an extensive literature identifying firm-level characteristics (such as size, age, indebtedness, and productivity) as well as macroeconomic conditions and institutional features as key contributing factors to growth and survival probability among firms (Evans, 1987;Hall, 1987;Audretsch, 1991;Audretsch and Mahmood, 1995;Ericson and Pakes, 1995;Agarwal, 1997;Zingales, 1998;Agarwal and Audretsch, 2001;Agarwal and Gort, 2002;Bond and others, 2003;Bunn and Redwood, 2003;Clementi and Hopenhayn, 2006;Bridges and Guariglia, 2008;Musso and Schiavo, 2008;Byrne, Spaliara, and Tsoukas, 2016). To the best of our knowledge, however, there is no paper analyzing the impact of taxation on firms' survival prospects. ...
This paper investigates the impact of taxation on firm survival, using hazard models and a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995–2015. We find ample evidence that a lower level of effective marginal tax rate improves firms’ survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms’ survival probability is found to exhibit a non-linear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
... While creative destruction-through firm entry and exit-is essential for economic progress, establishing a conducive ecosystem for firm survival is also necessary for sustainable private sector development and socioeconomic cohesion. There is an extensive literature identifying firm-level characteristics (such as size, age, indebtedness, and productivity) as well as macroeconomic conditions and institutional features as key contributing factors to growth and survival probability among firms (Evans, 1987;Hall, 1987;Audretsch, 1991;Audretsch and Mahmood, 1995;Ericson and Pakes, 1995;Agarwal, 1997;Zingales, 1998;Agarwal and Audretsch, 2001;Agarwal and Gort, 2002;Bond and others, 2003;Bunn and Redwood, 2003;Clementi and Hopenhayn, 2006;Bridges and Guariglia, 2008;Musso and Schiavo, 2008;Byrne, Spaliara, and Tsoukas, 2016). To the best of our knowledge, however, there is no paper analyzing the impact of taxation on firms' survival prospects. ...
This paper investigates the impact of taxation on firm survival, using hazard models and a large-scale panel dataset on over 4 million nonfinancial firms from 21 countries over the period 1995-2015. We find ample evidence that a lower level of effective marginal tax rate improves firms' survival chances. This result is not only statistically but also economically important and remains robust when we partition the sample into country subgroups. The effect of taxation on firms' survival probability is found to exhibit a non-linear pattern and be stronger in developing countries than advanced economies. These findings have important policy implications for the design of corporate tax systems. The challenge is not simply reducing the statutory tax rate, but to level the playing field for all firms by rationalizing differentiated tax treatments across sectors, asset types and sources of financing.
... Following Agarwal (1996Agarwal ( , 1997Agarwal ( , 1998, Aldrich and Martinez (2001), Audretsch (1991), and Evans (1987a, b), the proposed FLC further expands on the Etemad's (2014b) five-stage theoretical framework but avoids the seven and more stage suggested by others. We will be referring to these five stages as (i) initial conception, inception, and formation; (ii) birth (or start-up) and infancy; (iii) early life and rising growth; (iii) adolescence and slowing growth towards maturity; (iv) steady-state or stagnation; and (v) revival (re-birth) or death. ...
... such as the characteristics of the market (Audretsch and Mahmood, 1995;Mata et al., 1995;Agarwal and Gort, 2002), the industry life cycle (Agarwal, 1997), the sector's technological intensity (Schumpeter, 1942;Audretsch, 1995;Mata et al., 1995;Aghion et al., 2001), the size and age of the firm (Evans, 1987;Geroski, 1995;Sutton, 1997;Cefis and Marsili, 2005), its profitability and financial constraints (Headd, 2003;Bellone et al., 2008), its innovation activity (Hall, 1987;Ericson and Pakes, 1995;Esteve-Pérez et al., 2004;Cefis and Marsili, 2005), its pre-entry experience (Boeker, 1988;Klepper, 2002;Thomson, 2005), as well as the founder's personal features (Vivarelli and Audretsch, 1998;Arrighetti and Vivarelli, 1999;Headd, 2003;Persson, 2004;Colombo and Grilli, 2005;Arribas and Vila, 2007;Saridakis et al., 2008). 2 Factors like size, age or profitability of the firm have received prominent attention by empirical studies on survival, but the interest in innovation has increased recently. ...
... Smyth & Nandha (2001) report non-existence of relationship between stock market performance & exchange rate in Asian countries especially India in long term. ISSN 2162-3082 2017 The performance of Indian stock market has been analysis in reference to FII by many scholars like Agarwal (1997), Chakrabarti (2001) and Trivedi & Nair (2003). They observe exchange rate affects stock for short-term in India. ...
In this research work, macro level analysis has been conducted to assess impact of foreign direct investment (FDI) capital inflow in Indian economy. This study is focused on causality relationship between FDI inflow, stock market performance and foreign exchange rate. This framework is used for policy implications of relationship between three variables. These macro-economic variables are linked with different policies. Causality tests performed on these variables are further used for policy implications. Impact of change in exchange rate on changes in FDI inflow is the least significant followed by impact of changes in FDI inflow on changes in sensitivity index of stock exchange (SENSEX). The third least significant relationship is observed between changes in FDI inflow on change in exchange rate. These relationships are implied to ‘Impossible Trinity’ framework to assess preference for monetary, fiscal and foreign exchange rate policies. It is observed that improving performance of stock market (SENSEX) should be on priority followed by exchange rate. These finding have implications on fiscal policy, monetary policy and exchange rate. The increase in return of stock market and favourable exchange rate will help in increasing FDI inflow in Indian economy. Stock market performance depends on daily transactions by investors and they are regulated only, not controlled. Supply of foreign currency in India is controlled by the Reserve Bank of India (RBI), who assesses the supply conditions of the market and attempts to manage exchange rate in favour of Indian economy. In other words, the exchange rate can be controlled by having control on supply of foreign currency in domestic market. Hence, there is possibility of having fixed exchange rate and target band of exchange rate.
... Dunne et al. (1989) and Geroski (1995) found that the larger the firm's initial size, the higher the probability of their survival. Agarwal and Gort (1996) and Agarwal (1997Agarwal ( , 1998 also stress the positive relationship between firm's size and probability of survival, especially in industries which are in their earlier development stages. Additionally, the larger the new firm is, the less time is needed to reach the minimum efficient scale of production. ...
High business dynamics and turbulence of a particular sector manifested through frequent firm entrances and exits actualizes the question of their survival and the stability of the environment in which they operate. As it takes time before the effect of new firm entry influences economic growth and boosts self- employment and employment in the economy overall, it is important to track their post- entry performance and their survival. It seems that young firms never had poorer chances of survival than its established rivals. Small and medium-sized enterprises are particularly vulnerable. The aim of the paper is to empirically investigate the impact of certain variables on firm survival rate in the information and technology sector. IT sector is often characterized as strategic in most of the European economies but is, due to its service nature, continuous innovations and improvements, often considered as highly turbulent. The empirical model used in the paper consists of panel method where EU10 countries represent cross-sectional component, while the time component covers the period of economic crisis from 2008-2012, which is the last available data within the Eurostat database. Additionally, traditional methods of descriptive statistics are used to emphasize the business dynamics of IT sector and to present information about the newly born enterprises and their ability to survive up to four years after their creation.
Previous studies on the impact of firm growth on survival have paid little attention to agglomeration externalities. This study theoretically analyses how different agglomeration externalities affect the relationship between growth and survival. Using data from China’s manufacturing start-ups, we confirm a U-shaped relationship between the growth and survival risks of start-ups. Moreover, we find that different agglomeration externalities have heterogeneous moderating effects on this U-shaped relationship. Specifically, specialization and diversification externalities have significantly negative and positive moderating effects, respectively. The positive moderating effect of diversification externalities comes from the moderating effect of related variety externalities, whereas unrelated variety externalities have no significant moderating effect. The robustness test results support the above conclusions and suggest that the moderating effect of specialization externalities is heterogeneous in terms of firms’ resources.
Dijitalleşmenin artması ile birlikte tüketicilerin de boş zamanlarında yaptıkları aktivitelerde değişiklikler olmuştur. Özellikle video oyunlar tüketicilerin kendi benliklerini şekillendirdiği boş zaman aktivitelerinin başında gelmektedir. Günümüzde 159 milyar dolarlık pazar hacmi ile video oyun sektörü, eğlence sektörlerinin en büyüklerinden biri olarak yer almaktadır. Bu çalışmanın amacı teknolojinin gelişmesi ile günümüz dünyasının en büyük eğlence sektörlerinden biri haline gelen video oyun sektöründe yer almış olan Nintendo ve Sega firmalarının 1980 ve 2000 yılları arasında uyguladığı pazarlama faaliyetlerini marka yaşam döngüsü kapsamında tarihsel bir bakış açısı ile incelenmesidir. Bu doğrultuda firmaların kuruluşları ve sektöre girişleri araştırıldıktan sonra firmaların uyguladığı pazarlama faaliyetleri, video oyun sektörünün gelişmesinde etkili olan faktörler tespit edilmiştir. Araştırma sonucunda Sega’nın pazara başarılı girişi hem uyguladığı başarılı pazarlama stratejileri hem de Nintendo’nun rakibini küçümsemesi ile ilişkilendirilmiştir. Buradan hareketle rekabet sürecinde yer alan markaların karşılıklı stratejilerinin nasıl sonuçlar doğurduğu anlaşılmaya çalışılmıştır. Araştırma sonuçlarının teknoloji firmalarının pazarlama eylemlerinin ve video oyun sektöründeki güncel gelişmelerin anlaşılmasında araştırmacı ve uygulayıcılara tarihsel bir içgörü sağlaması beklenmektedir.
Existing literature has shown that research-based spin-off firms usually exhibit lower death risks than other start-ups. However, few studies have focused on the survival determinants of these particular firms. From a matched employer-employee data set this paper fills in this gap by providing evidence using a sample of RBSOs created in Portugal from 1979 until 2007 and observed until 2012. Specifically, we use duration analysis – both accelerated failure time models and proportional hazard models - to investigate if firm characteristics and location characteristics play a role on these firms’ survival. Results from the Weibull model show a positive impact of variables such as firm size and age on these firms’ survival probability as well as the location of spin-offs in municipalities with high entry rates and low exit rates.
Technological discontinuities create new submarkets in existing industries, which may favor incumbents or provide opportunities to new entrants. Complementing prior research on the emergence of integrative submarkets that leave the industry’s customer base unchanged, we introduce the notion of additive submarkets, which are characterized by enlarging the focal industry’s customer base and its heterogeneity. Our empirical analysis focuses on how the emergence of an additive submarket after a competence-destroying technological discontinuity affected entry and firm survival in the historical German farm tractor industry. Using propensity score-weighted hazard models to control for the endogeneity of entry timing, we find that diversifying entrants from customer-related industries were more likely to enter and survive after the submarket emerged. We develop a conceptual framework to structure the implications for entry and survival of various types of entrants when technological discontinuities create new integrative or additive submarkets.
Purpose
This paper aims to respond to calls in academia for an update of the product lifecycle (PLC). Through a systematic literature review, the authors provide an updated agenda, which aims to advance the PLC concept in research, teaching and practice.
Design/methodology/approach
The authors started by surveying 101 marketing academics globally to ascertain whether a PLC update was viewed necessary and beneficial in the marketing community and thereafter conducted citation analysis of marketing research papers and textbooks to ascertain PLC usage. The subsequent literature review methodology was split into two sections. First, 97 empirical articles were reviewed based on an evaluative framework. Second, research pertaining to the PLC determinants were assessed and discussed.
Findings
From the results of this review and primary data from marketing academics, the authors find that the method of predicting the PLC based on past sales has been largely unsuccessful and perceived as somewhat outdated. However, a new stream of PLC literature is emerging, which takes a consumer-centric perspective to the PLC and has seen more success at modeling lifecycles in various industries.
Research limitations/implications
First, the study outlines the most contemporary and successful methodological approaches to modeling the PLC. Namely, the use of artificial intelligence, big data, demand modeling and consumer psychological mechanisms. Second, it provides several future research avenues using modern market trends such as sustainability, globalization, digitization and Covid-19 to push the PLC into the 21st century.
Originality/value
The PLC has shown to be resolutely popular in management application and education. However, without a continued effort in academic PLC research to update the knowledge around the concept, its use as a productive management tool will likely become outdated. This study provides a necessary and comprehensive literature update resulting in actionable future research and teaching agendas intended to advance the PLC concept into the modern market context.
Purpose
This article investigates the distinctive characteristics and the performance of academic spin-offs within young innovative companies (YICs) supported by public regional agencies. Considering that academic spin-offs are characterized by high intensity in innovation and technology transfer, we raise the issue of their performance relative to other YICs.
Design/methodology/approach
The authors focus on YICs which receive support from public or semi-public institutions at the early stage of their development as a reward for their innovative business ideas. The study is performed in two steps. First, the authors estimate the growth of the academic spin-offs within a set of YICs supported for fewer than 5 years. This estimation is based on data gathered in 2014. Second, the authors investigate the survival of these supported YICs with the Cox proportional hazards model, 5 years later, at the end of 2019.
Findings
Results reveal that academic spin-offs are more able to capture resources in the early stages: These firms have more patents, more external funding and higher increases in the number of employees. The authors also demonstrate that academic spin-offs have the highest survival rates.
Research limitations/implications
The drawback of the studies on ASOs is the limited sample. The main issue is related to survival analysis. Limitation of the sample sizes precludes from in-depth survival analyses, which may highlight fundamental differences in the development patterns of the firm.
Practical implications
The study’s results provide evidence on how the identity of academic spin-offs based on technology transfer act as a positive signal to obtain legitimacy. It is of particular interest for entrepreneurs who can rely on trust provided by their parent institution to engage in negotiations with different stakeholders. Moreover, results give insights to policymakers on the usefulness to invest on academic spin-offs because of its outperforming results.
Originality/value
The results provide important insights for designing, conducting and monitoring policies that favor innovation. Moreover, it demonstrates to universities, research institutions and entrepreneurs engaged in technology transfer the economic and social usefulness of their approach.
Does the first entrant in a new market have a difficult time surviving or do first-mover advantages provide protection from outright failure? This empirical study of 264 new industrial product-markets yields insights into this controversial research topic. The key data analysis insights arise through a comparison of survival risks in markets that were started with a really new product and in those that were started with an incremental innovation. When a pioneer starts a new market with a really new product, it can be a major challenge just to survive. In contrast, in markets started by an incremental innovation, market pioneer survival risks are much lower. Notably, early followers have the same survival risk across both types of markets. Overall, these results indicate that in markets started by a really new product, the first to market is often the first to fail. In contrast, in markets started by an incremental innovation, it appears that first-mover advantages protect the pioneer from outright failure.
Topics:
1. The perpetual growth rate and firm mortality
2. The relationship between capital expenditures and depreciation
3. The appropriate treatment of amortization
4. Projections, normalization, and steady state growth
5. The trend toward using lower long-term growth rates
6. The relevance of multiples for terminal value
This presentation examines several factors that impact
terminal value and how to address them: (i) the final year of the projection, (ii) the trend toward using lower long-term growth rates, (iii) the “perpetual” growth rate and firm mortality, (iv) the use of multiples for terminal value, (v) the relationship between capital expenditures and depreciation, and (vi) the appropriate treatment of amortization
Este articulo documenta los factores que inciden en la perdurabilidad empresarial. Corresponde a un estudio exploratorio con un enfoque cualitativo en el procesamiento de la información. Resultados: Se encontró que las condiciones que contribuyen a la perdurabilidad de las empresas estudiadas son, la gente, como factor en el logro de los objetivos; el cambio como motor de adaptación; y la innovación en la búsqueda de oportunidades de negocio.
Topics:
1. The perpetual growth rate and firm mortality
2. The relationship between capital expenditures and depreciation
3. The appropriate treatment of amortization
4. Projections, normalization, and steady state growth
5. The trend toward using lower long-term growth rates
6. The relevance of multiples for terminal value
The fields of entrepreneurship, innovation and regional development are inextricably linked, with people, organisations, and the environment or their location, forming the main building blocks in an integrated model of value creation.. This second edition of a key textbook draws on the diversity of approaches in these areas to produce a unified understanding of this important subject and its sub-sets.
The author connects theory and practice using references to academic studies as well as industry sources. The importance of technology is highlighted throughout to demonstrate the value of new technology-based ventures and the role of technology for innovation in both organizational and spatial contexts., The economic and social contexts of entrepreneurship are covered in dedicated chapters offering an appreciation of multiple perspectives on key themes of growth and development.
Drawing on insights and concepts from a wide range of disciplines such as business, sociology, economics, geography and management, this unique textbook introduces entrepreneurship to students from different backgrounds and varied interests. With a range of new case studies and coverage of emerging themes such as smart cities, ecosystems, female entrepreneurship and social and human capital, the book provides an expert exposition of the elaborate empire of entrepreneurship.
What type of operational response did the U.S. stock market value during the 2008 Great Recession? Based on the contingency theory as an overarching framework, contingent on high-tech or low–medium technology (LMT) industry, we propose the role of survival (improving production efficiency or operational hedging) and adaptation (investing in new operational assets) related operational responses in firm performance. In a sample of 749 publicly traded U.S. manufacturing firms from 2003 to 2012 and using 2008 as the recession year, we find that for LMT firms, while the newness of operational assets or operational hedging has no effect on the market value (Tobin's Q), increasing the production efficiency limits the decline in the market value. Conversely, for high-tech firms, the newness of operational assets has a negative influence, increasing the production efficiency has a positive influence, and operational hedging has no influence on the market value. The findings provide a much-needed understanding of the value of operational response during the 2008 recession. IEEE
This study provides new evidence that the performance of issuing firms varies by issue type, based on survival analysis methods. Our non-parametric results show that firms raising capital through rights issues, and notably through cash offers, experience a greater risk of delisting following issuance, as compared to those issuing convertible bonds. Our Cox model analyses demonstrate that plain equity issues, in contrast to convertible issues, are subject to different degrees of regulatory discipline, obligations and incentives in shaping survival trajectory. Further, high ownership concentration, agency issues intrinsic to equity offerings, weak shareholders’ protection, and corporate ownership and governance and corporate control development at the time of an offer markedly influence post-issue survival. Plain equity issues, notably cash offers, are strongly linked with the agency costs of free cash flows. A large and truly independent board, allied to a separation of CEO and chairman powers, acts as a primary restraint on managers’ self-interested behaviour. Such a cohesive governance mechanism can restrain rent-seeking in the firm's fundraising initiative. These observations hold when we take into account information available before an issue, at the time of an issue, and after an issue, demonstrating the robustness of our findings.
We investigate under which circumstances early employment growth translates into greater long-run survival. Drawing on Penrose's growth theory, we suggest that the relationship between early employment growth and long-run survival is conditional on employee turnover. We argue that higher employee turnover reduces joint experience in the firm and disrupts the development and eventual exploitation of the firm's productive opportunity set, thereby reducing long-term utilization of early employment expansion. These arguments suggest that the firm's ability to realize long-term benefits of early employment growth is contingent upon low employee turnover following this initial expansion. Using the Danish Integrated Database for Labor Market Research, we show that only when employee turnover is low, will early employment growth lead to higher survival in the long run.
This article analyzes the influence of the initial size of a microenterprise in its survival. For this purpose we used the database of the companies classified as microenterprises, taking into account the value of assets, established in 2009 in the Department of Magdalena. By fitting a logistic model we estimated the importance of the size of a microenterprise in the probability of survival at the end of 2012. The adjusted model shows a positive and statistically significant relationship between initial assets and the probability of survival in the period of study.
The scope of th epaper is to explain how firm and sectoral level characteristics such as size, age, financial profile, capital intensity, technical efficiency, market concentration, foreign penetration etc. affect the probability of exit using data from the Greek manufacturing industry in 1997-2003. Specifically we focus on the role that technical efficiency and foreign spillover effects have on survival. We employ a CES translog production function to estimate technical efficiency and then we use the hazard function corresponding to the Exponential and Weibull distributions as well as a simple Cox model to estimate the effect that firm and sectoral variables have on the survival probabilities of Greek manufacturing firms.
We study the effect of sovereign stress on SMEs’ capital structure using restricted-access data from the European Central Bank. We find that during the sovereign debt crisis, and controlling for borrowers’ quality, firms in stressed countries became more likely to be denied credit, to be credit rationed, and to face higher loan rates. Less creditworthy firms were not more likely to become credit constrained, suggesting no flight to quality in lending. We also find that in order to make up for the decline in bank credit firms in stressed countries began relying considerably more on retained earnings and government subsidies.
Purpose
The purpose of this paper is to explore product/service innovation and discontinuation using the firm as a unit of analysis. A key objective of the paper is to compare the results between manufacturing and service firms.
Design/methodology/approach
A two-step production function approach is employed to examine first, a firm’s decision to innovate and second, a firm’s decision to discontinue products/services.
Findings
The results indicate that the factors affecting product innovation and discontinuation are similar for manufacturing and service firms, where innovation was significant for product/service discontinuation and process innovation was found to be important for innovations. Similarly, monopoly power was important for innovation in both industry types. However, there were also some underlying differences, particularly in relation to firm age and economic geography effects.
Practical implications
The conclusion of the paper is that it is not appropriate to assume that the process of product innovation and discontinuation will be identical across industry types.
Originality/value
This study is the first study in the literature that examines product/service discontinuation at the firm level and the relationship between innovation and product/service discontinuation using the firm as a unit of analysis. This study further adds to the under-researched (relative to manufacturing studies) area of service innovation.
This paper contributes to fill the gap between the literature on the determinants of firm survival and the empirical works on the industry life cycle (ILC). Using a representative sample of Spanish firms with 10 or more employees over the period 1993–2009, the role played by firm age and productivity in firm survival is empirically analysed across three stages of the life cycle of forty-seven 3-digit manufacturing sectors. In the ‘early’ stage of the ILC, firm age is negatively correlated with hazard rates while firm productivity is not. Firm productivity is associated with lower hazard in the ‘mature’ stage of the ILC, when competition is primarily efficiency-driven, while firm age does not play a significant role for firm survival. In the ‘intermediate’ stage, both age and productivity play a role in reducing firms’ hazard rates.
It is widely accepted that neoclassical economics has largely neglected the role of entrepreneurial activity and the process of new firm formation. Similar shortcomings are not found in evolutionary economics, which views economic activity in ways closely resembling the observed reality of the entrepreneurial process. This paper explores the development of evolutionary economic theory and its relevance to entrepreneurship and new ventures. Current evolutionary economic theory tends to describe a process of economic development that parallels the process of natural evolution, but generates change in a different manner. This is based on the assumption that the diffusion of successful innovation through the population of firms and other institutions results in economic change, as opposed to the process found in nature, whereby the characteristics upon which evolution acts are inherited at birth. New evidence is brought to bear which shows that the process on new firm formation appears to closely resemble the Darwinian evolutionary process found in nature. It shows firms have a high reproductive capacity which combined with a somewhat random process of innovation allows a process of survival of the fittest to play a major role in economic change.
Continuous change is driven by a complex interaction of various forces, among them the endogenous evolution of industries. The entry and exit patterns of firms, the emergence of new technologies, and the application of competitive strategies create a complex picture with multilayered dynamics of change. In order to develop successful strategies coping with this type of change, it is necessary to fully analyze and understand the evolution of industries. This chapter seeks to provide a broad and solid academic perspective on industrial dynamics in the sense of industry life cycles—both in empirical and in theoretical terms. It puts a particular focus on research following the footsteps of Steven Klepper; two of his most seminal papers are examined in detail, and five related theories explaining a shakeout during the course of an industry’s evolution are discussed. The chapter then presents a new line of reasoning taking into account that certain industries emerge through a combination of distinct know-how components from other industries and as a mixture of products and services. Such industries are particularly attractive for specific groups of market entrants, especially diversifying firms.
This paper examines the patterns of postentry employment growth and failure for over 200,000 plants that entered the U. S.
manufacturing sector in the 1967–1977 period. The postentry patterns of growth and failure vary significantly with observable
employer characteristics. Plant failure rates decline with size and age as do the growth rates of nonfailing plants. The expected
growth rate of a plant, which depends on the net effect of these two forces, declines with size for plants owned by single-plant
firms but increases with size for plants owned by multiplant firms.