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Entry and exit from manufacturing industries: symmetry, turbulence and simultaneity - some empirical evidence from Greek manufacturing industries, 1982-1988

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  • Georgios Fotopoulos
  • Nigel Spence

Abstract

The interdependence between entry and exit of firms into manufacturing industries is the focus of this research. When both entry and exit equations are estimated separately the results support the existence of strong symmetry in their determinants. When, however, entry and exit are estimated within a simultaneous equation framework, the empirical evidence does not offer sufficient grounds to support the notion that entry and exit are simultaneously linked. Instead it seems that they are two contemporaneously related processes which respond in like fashion to the structural characteristics found in particular industries. Their linked response is also extended to factors unaccounted for by the individual entry and exit formulations, and this expresses itself in significant contemporaneous correlation between the entry and exit equation residuals. The change in the identities of firms operating, implied by the positive correlation between entry and exit, may then be attributed to industry turbulent conditions, which in turn appear perhaps to be conditioned in the shorter run by time-invariant inter-industry differences in technological factors and sunk costs.

Suggested Citation

  • Georgios Fotopoulos & Nigel Spence, 1998. "Entry and exit from manufacturing industries: symmetry, turbulence and simultaneity - some empirical evidence from Greek manufacturing industries, 1982-1988," Applied Economics, Taylor & Francis Journals, vol. 30(2), pages 245-262, February.
    • Handle: RePEc:taf:applec:v:30:y:1998:i:2:p:245-262
    DOI: 10.1080/000368498326047
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    References listed on IDEAS

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    1. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, December.
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    Cited by:

    1. Livanis, Grigorios & Lamin, Anna, 2016. "Knowledge, Proximity and R&D Exodus," Research Policy, Elsevier, vol. 45(1), pages 8-26.
    2. Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 193-212.
    3. Josep-Maria Arauzo-Carod & Agustí Segarra-Blasco, 2005. "The Determinants of Entry are not Independent of Start-up Size: Some Evidence from Spanish Manufacturing," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 27(2), pages 147-165, September.
    4. Jason P. Brown & Dayton M. Lambert & Raymond J. G. M. Florax, 2013. "The Birth, Death, and Persistence of Firms: Creative Destruction and the Spatial Distribution of U.S. Manufacturing Establishments, 2000–2006," Economic Geography, Clark University, vol. 89(3), pages 203-226, July.
    5. Hans Lööf & Pardis Nabavi, 2014. "Survival, productivity and growth of new ventures across locations," Small Business Economics, Springer, vol. 43(2), pages 477-491, August.
    6. Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2012. "The determinants of firm exit in the French food industries," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 93(2), pages 193-212.
    7. Andrew Burke, & Holger Görg, & Aoife Hanley, 2007. "The Impact of Foreign Direct Investment On New Firm Survival in the UK: Evidence For Static v. Dynamic Industries," Discussion Papers 07/09, University of Nottingham, GEP.
    8. Werner Hölzl & Sögner Leopold, 2004. "Entry and Exit Dynamics in Austrian Manufacturing," Working Papers geewp36, Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
    9. Pierre Blanchard & Jean-Pierre Huiban & Claude Mathieu, 2014. "The shadow of death model revisited with an application to French firms," Applied Economics, Taylor & Francis Journals, vol. 46(16), pages 1883-1893, June.
    10. Jean-Pierre Huiban, 2011. "The spatial demography of new plants: urban creation and rural survival," Small Business Economics, Springer, vol. 37(1), pages 73-86, July.
    11. Gémar, Germán & Moniche, Laura & Morales, Antonio J., 2016. "Survival analysis of the Spanish hotel industry," Tourism Management, Elsevier, vol. 54(C), pages 428-438.
    12. Manjon, M.C., 2004. "Firm Size and Short-Term Dynamics in Aggregate Entry and Exit," Discussion Paper 2004-2, Tilburg University, Center for Economic Research.
    13. Manjon, M.C., 2004. "Firm Size and Short-Term Dynamics in Aggregate Entry and Exit," Other publications TiSEM 2e3efce2-87b3-4b7a-aa83-7, Tilburg University, School of Economics and Management.
    14. Taylor, Margaret & Taylor, Andrew, 2012. "The technology life cycle: Conceptualization and managerial implications," International Journal of Production Economics, Elsevier, vol. 140(1), pages 541-553.
    15. Werner Holzl, 2005. "Tangible and intangible sunk costs and the entry and exit of firms in a small open economy: the case of Austria," Applied Economics, Taylor & Francis Journals, vol. 37(21), pages 2429-2443.
    16. Manjón-Antolín, Miguel C., 2010. "Firm size and short-term dynamics in aggregate entry and exit," International Journal of Industrial Organization, Elsevier, vol. 28(5), pages 464-476, September.
    17. Podivinsky, Jan M. & Stewart, Geoff, 2007. "Why is labour-managed firm entry so rare?: An analysis of UK manufacturing data," Journal of Economic Behavior & Organization, Elsevier, vol. 63(1), pages 177-192, May.
    18. Blanchard, Pierre & Huiban, Jean-Pierre & Mathieu, Claude, 2011. "Productivity, sunk costs and firm exit in the French food industry," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114526, European Association of Agricultural Economists.

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