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Survival of New Firms in the Brazilian Franchising Segment: An Empirical Study

Author

Listed:
  • Luis Otávio Facanha
  • Marcelo Resende
  • Vicente Cardoso
  • Bruno H. Schröder

Abstract

The paper investigates survival patterns of Brazilian franchising firms during the 1994-1999 period. First, at a more descriptive level one considered the (percentage) survival of newly created franchisors in the following years. The evidence indicated a drastic decay in survival after only a few years and contrasts with the higher survival of firms in the franchising firms in more developed economies. Survival functions were obtained by means of the Kaplan-Meier estimator for the selected sectors and indicated sharp declines in survival rates over time but with differential patterns across sectors. Finally, an econometric analysis based on Cox’s proportional hazard model was considered by exploring explanatory variables pertaining size, age and support regarding legal aspects, location choice and training. The evidence indicates that those supports provided by the franchisor have a positive impact on the probability of survival of new firms whereas there is partial evidence favoring a positive role for firm size on survival.

Suggested Citation

  • Luis Otávio Facanha & Marcelo Resende & Vicente Cardoso & Bruno H. Schröder, 2011. "Survival of New Firms in the Brazilian Franchising Segment: An Empirical Study," CESifo Working Paper Series 3388, CESifo.
    • Handle: RePEc:ces:ceswps:_3388
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    References listed on IDEAS

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    1. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
    2. Scott Shane & Maw-Der Foo, 1999. "New Firm Survival: Institutional Explanations for New Franchisor Mortality," Management Science, INFORMS, vol. 45(2), pages 142-159, February.
    3. Jan W. Rivkin & Nicolaj Siggelkow, 2003. "Balancing Search and Stability: Interdependencies Among Elements of Organizational Design," Management Science, INFORMS, vol. 49(3), pages 290-311, March.
    4. Renáta Kosová & Francine Lafontaine, 2010. "Survival And Growth In Retail And Service Industries: Evidence From Franchised Chains," Journal of Industrial Economics, Wiley Blackwell, vol. 58(3), pages 542-578, September.
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    Cited by:

    1. Marcelo Resende & Vicente Cardoso & Luis Otávio Façanha, 2016. "Determinants of survival of newly created SMEs in the Brazilian manufacturing industry: an econometric study," Empirical Economics, Springer, vol. 50(4), pages 1255-1274, June.
    2. Luis Otávio Facanha & Marcelo Resende & Vicente Cardoso, 2012. "Determinants of Survival of Newly Created SMEs in the Brazilian Manufacturing: An Econometric Study," CESifo Working Paper Series 3735, CESifo.
    3. Víctor Manuel Bellido‐Jiménez & Domingo Martín‐Martín & Isidoro Romero, 2021. "The survival of new businesses in Andalusia (Spain): Impact of urbanization, education, and gender," Regional Science Policy & Practice, Wiley Blackwell, vol. 13(1), pages 25-41, February.
    4. Marcelo Resende & Vicente Cardoso, 2013. "Gibrat´s law in Brazilian franchising: an empirical note," Economics Bulletin, AccessEcon, vol. 33(1), pages 247-256.

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    More about this item

    Keywords

    franchising; survival;

    JEL classification:

    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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