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Entrepreneurial Survival

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Author Info
Harald Strotmann ()

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Abstract

This paper gives an empirical analysis of determinants of new-firm survival in the manufacturing sector of Baden-Wuerttemberg (Germany) from 1981 to 1994. The analysis focuses on firm- and industry-specific determinants of new-firm survival. A possible effect of regional agglomeration and of the business cycle is also tested, albeit in a very general manner. From a methodical point of view parametric and semiparametric duration models are used. Grouped duration models are estimated taking into account the problem of ties. Moreover, the problem of unobserved heterogeneity is considered which has so far been neglected in numerous studies. The empirical analyses show with respect to industry-specific effects that the risk of new-firm failure is the larger the larger an industry’ s minimum efficient scale is, the worse the sectoral demand-conditions are, the more narrow the market is, the higher dynamics of foundation within an industry are. The liability of smallness-hypothesis is confirmed for German manufacturing while with respect to firm age the results favour the liability of adolescence-hypothesis instead of a pure liability of newness. Copyright Springer 2007

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Publisher Info
Article provided by Springer in its journal Small Business Economics.

Volume (Year): 28 (2007)
Issue (Month): 1 (January)
Pages: 87-104
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Handle: RePEc:kap:sbusec:v:28:y:2007:i:1:p:87-104

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Related research
Keywords: hazard rate; new-firm survival; exit; entry; duration analysis; entrepreneurship; D21; L1; L6;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Blackwell Publishing, vol. 42(3), pages 227-45, September. [Downloadable!] (restricted)
  2. Winter, Sidney G., 1984. "Schumpeterian competition in alternative technological regimes," Journal of Economic Behavior & Organization, Elsevier, vol. 5(3-4), pages 287-320. [Downloadable!] (restricted)
  3. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November. [Downloadable!] (restricted)
    Other versions:
  4. Boeri, Tito & Bellmann, Lutz, 1995. "Post-entry behaviour and the cycle: Evidence from Germany," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 483-500, December. [Downloadable!] (restricted)
  5. Roberto G. Gutierrez & Shana Carter & David M. Drukker, 2001. "On boundary-value likelihood-ratio tests," Stata Technical Bulletin, StataCorp LP, vol. 10(60). [Downloadable!]
  6. Honjo, Yuji, 2000. "Business failure of new firms: an empirical analysis using a multiplicative hazards model," International Journal of Industrial Organization, Elsevier, vol. 18(4), pages 557-574, May. [Downloadable!] (restricted)
  7. Enrico Santarelli, 2002. "Is subsidizing entry an optimal policy?," Industrial and Corporate Change, Oxford University Press, vol. 11(1), pages 39-52, February.
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  8. Rafik Abdesselam & Jean Bonnet & Nicolas Le Pape, 2004. "An Explanation of the Life Span of New French Firms," Small Business Economics, Springer, vol. 23(3), pages 237-254, October. [Downloadable!]
  9. Georgios Fotopoulos & Helen Louri, 2000. "Determinants of Hazard Confronting New Entry: Does Financial Structure Matter?," Review of Industrial Organization, Springer, vol. 17(3), pages 285-300, November. [Downloadable!] (restricted)
  10. Audretsch, David & Vivarelli, Marco, 1995. "New-firm formation in Italy: A first report," Economics Letters, Elsevier, vol. 48(1), pages 77-81, April. [Downloadable!] (restricted)
  11. Baden-Fuller, Charles W F, 1989. "Exit from Declining Industries and the Case of Steel Castings," Economic Journal, Royal Economic Society, vol. 99(398), pages 949-61, December. [Downloadable!] (restricted)
  12. Agarwal, Rajshree, 1998. "Evolutionary trends of industry variables," International Journal of Industrial Organization, Elsevier, vol. 16(4), pages 511-525, July. [Downloadable!] (restricted)
  13. Marco Vivarelli, 2004. "Are All the Potential Entrepreneurs So Good?," Small Business Economics, Springer, vol. 23(1), pages 41-49, 08. [Downloadable!]
  14. Agarwal, Rajshree & Audretsch, David B., 1999. "The two views of small firms in industry dynamics: a reconciliation," Economics Letters, Elsevier, vol. 62(2), pages 245-251, February. [Downloadable!] (restricted)
  15. Santarelli, Enrico, 1998. "Start-Up Size and Post-entry Performance: The Case of Tourism Services in Italy," Applied Economics, Taylor and Francis Journals, vol. 30(2), pages 157-63, February. [Downloadable!] (restricted)
  16. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November. [Downloadable!] (restricted)
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  18. Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December. [Downloadable!] (restricted)
    Other versions:
  19. D.B. Audretsch & Luuk Klomp & A.R. Thurik, 1998. "Do Services differ from Manufacturing? The Post-Entry Performance of Firms in Dutch Services," Tinbergen Institute Discussion Papers 98-012/3, Tinbergen Institute. [Downloadable!]
    Other versions:
  20. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter. [Downloadable!] (restricted)
    Other versions:
  21. Caves, Richard E & Khalilzadeh-Shirazi, J & Porter, M E, 1975. "Scale Economies in Statistical Analyses of Market Power," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 133-40, May. [Downloadable!] (restricted)
  22. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August. [Downloadable!] (restricted)
  23. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September. [Downloadable!] (restricted)
  24. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  25. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October. [Downloadable!] (restricted)
  26. Karlsson, Charlie & Nystrom, Kristina, 2003. " Exit and Entry over the Product Life Cycle: Evidence from the Swedish Manufacturing Industry," Small Business Economics, Springer, vol. 21(2), pages 135-44, September. [Downloadable!] (restricted)
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  27. Cabral, Luís M B, 1997. "Entry Mistakes," CEPR Discussion Papers 1729, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  28. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn. [Downloadable!] (restricted)
  29. David B. Audretsch & Patrick Houweling & A. Roy Thurik, 1997. "New Firm Survival: Industry versus Firm Effects," Tinbergen Institute Discussion Papers 97-063/3, Tinbergen Institute. [Downloadable!]
  30. Jeffrey R. Campbell, 1997. "Entry, Exit, Embodied Technology, and Business Cycles," NBER Working Papers 5955, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  31. Nucci, Alfred R, 1999. " The Demography of Business Closings," Small Business Economics, Springer, vol. 12(1), pages 25-39, February. [Downloadable!] (restricted)
  32. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December. [Downloadable!] (restricted)
  33. Tveteras, Ragnar & Eide, Geir Egil, 2000. " Survival of New Plants in Different Industry Environments in Norwegian Manufacturing: A Semi-proportional Cox Model Approach," Small Business Economics, Springer, vol. 14(1), pages 65-82, February. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Michael Schwartz, 2008. "Incubator Age and Incubation Time: Determinants of Firm Survival after Graduation?," IWH Discussion Papers 14-08, Halle Institute for Economic Research. [Downloadable!]
  2. Michael Schwartz, 2009. "Beyond incubation: an analysis of firm survival and exit dynamics in the post-graduation period," The Journal of Technology Transfer, Springer, vol. 34(4), pages 403-421, August. [Downloadable!] (restricted)
  3. Stephan Goetz & Anil Rupasingha, 2009. "Determinants of growth in non-farm proprietor densities in the US, 1990–2000," Small Business Economics, Springer, vol. 32(4), pages 425-438, April. [Downloadable!] (restricted)
  4. Miguel Manjón-Antolín & Josep-Maria Arauzo-Carod, 2008. "Firm survival: methods and evidence," Empirica, Springer, vol. 35(1), pages 1-24, March. [Downloadable!] (restricted)
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