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Small Firms' Actions and their Survival Probabilities

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Author Info
Gavin C Reid

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Abstract

The small firm is viewed as taking a complex of actions to facilitate market place survival. Selection of such actions involves choice about markets, costs, strategy, finance, organisation, human capital and innovation. Probit models of survival over two years are estimated for a random sample of 150 new businesses for which field work evidence on complex actions is available. Although many actions are found to play at least some role in promoting survival of the small firm, a parsimonious empirical model is presented which emphasises just ten actions. this model indicates the pivotal imortance of reward to the entrepreneurial input, allied to a tight control of the overall wage bill, if the small firm is successful to negotiate the early stage of its life cycle.

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File URL: http://www.st-andrews.ac.uk/crieff/papers/dp9721.pdf
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Publisher Info
Paper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 9721.

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Date of creation: Oct 1997
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Handle: RePEc:san:crieff:9721

Contact details of provider:
Postal: School of Economics and Finance, University of St. Andrews, Fife KY16 9AL
Phone: 01334 462420
Web page: http://www.st-and.ac.uk/%7Ewww_crieff/discpaps.html

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Related research
Keywords: small firms; complex actions; probit models; wage bill; entrepreneurial input;

Find related papers by JEL classification:
D21 - Microeconomics - - Production and Organizations - - - Firm Behavior
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
M2 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
P12 - Economic Systems - - Capitalist Systems - - - Capitalist Enterprises

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. Gavin C Reid & Julia A Smith, 1996. "What Makes a New Business Start-Up Successful?," CRIEFF Discussion Papers 9618, Centre for Research into Industry, Enterprise, Finance and the Firm. [Downloadable!]
    Other versions:
  2. Reid, Gavin C., 1991. "Staying in business," International Journal of Industrial Organization, Elsevier, vol. 9(4), pages 545-556, December. [Downloadable!] (restricted)
  3. Karlsson, Charlie & Olsson, Ola, 1998. " Product Innovation in Small and Large Enterprises," Small Business Economics, Springer, vol. 10(1), pages 31-46, February. [Downloadable!] (restricted)
  4. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-74, August. [Downloadable!] (restricted)
    Other versions:
  5. Oi, Walter Y, 1983. "Heterogeneous Firms and the Organization of Production," Economic Inquiry, Oxford University Press, vol. 21(2), pages 147-71, April.
  6. Frank, Murray Z, 1988. "An Intertemporal Model of Industrial Exit," The Quarterly Journal of Economics, MIT Press, vol. 103(2), pages 333-44, May. [Downloadable!] (restricted)
  7. 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)
  8. von Ungern-Sternberg, Thomas, 1990. "The Flexibility to Switch between Different Products," Economica, London School of Economics and Political Science, vol. 57(227), pages 355-69, August. [Downloadable!] (restricted)
  9. Storey, D J, 1994. " New Firm Growth and Bank Financing," Small Business Economics, Springer, vol. 6(2), pages 139-50, April.
  10. Reid, Gavin C, 1996. " Mature Micro-firms and Their Experience of Funding Shortages," Small Business Economics, Springer, vol. 8(1), pages 27-37, February.
  11. Gavin C Reid, 1996. "Capital Structure at Inception and the Short-Run Performance of Micro-Firms," CRIEFF Discussion Papers 9607, Centre for Research into Industry, Enterprise, Finance and the Firm. [Downloadable!]
  12. Dobson, Stephen M & Gerrard, Bill J, 1989. "Growth and Profitability in the Leeds Engineering Sector," Scottish Journal of Political Economy, Scottish Economic Society, vol. 36(4), pages 334-52, November.
  13. Ripsas, Sven, 1998. " Towards an Interdisciplinary Theory of Entrepreneurship," Small Business Economics, Springer, vol. 10(2), pages 103-15, March. [Downloadable!] (restricted)
Full references

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. Igor Filatotchev & Mike Wright & Mufit Arberk, 2006. "Venture Capitalists, Syndication and Governance in Initial Public Offerings," Small Business Economics, Springer, vol. 26(4), pages 337-350, 05. [Downloadable!] (restricted)
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