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Entry and exit in transition economies: the Slovenian manufacturing sector

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  • Stefan Bojnec
  • Ana Xavier

Abstract

This article investigates entry and exit in Slovenian manufacturing for the period 1994-2000 using OLS and panel data fixed and random-effects estimations. Private ownership is associated with higher rates of firm exit, suggesting that this ownership structure is related to a higher risk of bankruptcy so that the least efficient firms are replaced by more efficient ones. However, and although most entrants are private, it is negatively related to entry (in lagged terms), potentially indicating that sectors with a higher proportion of private firms are also highly populated, closer to break-even point and thus less appealing. Export orientation is associated with lower exit, confirming the theory that exporting firms outperformed domestically focused firms, and with lower entry, perhaps suggesting that exporting involves more complex ways of doing business that deter the typically small new entrants. Higher profitability reduces exit rates. Labour-intensive sectors witness higher entry rates, indicating that labour is relatively cheaper than capital for new entering firms. Finally, there may be important technological barriers to exit (sunk costs) in Slovenia, but not to entry.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Post-Communist Economies.

Volume (Year): 16 (2004)
Issue (Month): 2 ()
Pages: 191-214

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Handle: RePEc:taf:pocoec:v:16:y:2004:i:2:p:191-214

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  1. Bilsen, Valentijn & Konings, Jozef, 1998. "Job Creation, Job Destruction, and Growth of Newly Established, Privatized, and State-Owned Enterprises in Transition Economies: Survey Evidence from Bulgaria, Hungary, and Romania," Journal of Comparative Economics, Elsevier, vol. 26(3), pages 429-445, September.
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Citations

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Cited by:
  1. Peter Friedl & Roberto Biloslavo, 2009. "Association of Management Tools with the Financial Performance of Companies: The Example of the Slovenian Construction Sector," Managing Global Transitions, University of Primorska, Faculty of Management Koper, vol. 7(4), pages 383-402.
  2. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 178-211.
  3. Martin Lábaj & Peter Silaniè & Christoph Weiss, 2013. "Entry and Competition in a Transition Economy: The Case of Slovakia," Department of Economic Policy Working Paper Series 003, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
  4. Iwasaki, Ichiro, 2013. "Global Financial Crisis, Corporate Governance, and Firm Survival: The Russian Experience," RRC Working Paper Series 37, Russian Research Center, Institute of Economic Research, Hitotsubashi University.

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