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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.

Suggested Citation

  • Stefan Bojnec & Ana Xavier, 2004. "Entry and exit in transition economies: the Slovenian manufacturing sector," Post-Communist Economies, Taylor & Francis Journals, vol. 16(2), pages 191-214.
  • Handle: RePEc:taf:pocoec:v:16:y:2004:i:2:p:191-214
    DOI: 10.1080/1463137042000223886
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    References listed on IDEAS

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    Cited by:

    1. Martin Labaj & Karol Morvay & Peter Silanic & Christoph Weiss & Biliana Yontcheva, 2016. "Market Structure and Competition in Transition:Results from a Spatial Analysis," Department of Economics Working Papers wuwp218, Vienna University of Economics and Business, Department of Economics.
    2. Iwasaki, Ichiro, 2014. "Global financial crisis, corporate governance, and firm survival:," Journal of Comparative Economics, Elsevier, vol. 42(1), pages 178-211.
    3. Doan, Quang Hung & Vu, Hoang Nam & Dao, Ngoc Tien, 2013. "Sub-National Institutions and Firm Survival in Vietnam," MPRA Paper 63653, University Library of Munich, Germany.
    4. Martin Lábaj & Karol Morvay & Peter Silaniè & Christoph Weiss, 2014. "Market Structure in Transition: Entry and Competition in Slovakia," Department of Economic Policy Working Paper Series 005, Department of Economic Policy, Faculty of National Economy, University of Economics in Bratislava.
    5. Canfei He & Rudai Yang, 2016. "Determinants of Firm Failure: Empirical Evidence from China," Growth and Change, Wiley Blackwell, vol. 47(1), pages 72-92, March.
    6. 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.
    7. 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.
    8. 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.

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