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Firm survival during economic downturns: is selecton based on cleansing or skill accumulation?

Author

Listed:
  • A. Arrighetti

    ()

  • F. Landini

    ()

  • E. Bartoloni

    ()

Abstract

Recessions are complex events that create perturbed and hostile business environments. When faced with such event, firm survival depends only limitedly on production efficiency. Rather, it depends on the ability to cope with such complexity, which is itself a result of the firm’s corporate strategy. In particular, we expect firms adopting a corporate strategy that make relatively large (little) use of skills and capabilities to deal with environmental complexity to be less (more) likely to exit during a downturn than firms that do not. We test these hypotheses on the whole population of Italian manufacturing corporations using an open panel that covers the period 2001-2014. The results provide strong support for our hypotheses. Managerial and policy implications are discussed.

Suggested Citation

  • A. Arrighetti & F. Landini & E. Bartoloni, 2018. "Firm survival during economic downturns: is selecton based on cleansing or skill accumulation?," Economics Department Working Papers 2018-EP04, Department of Economics, Parma University (Italy).
  • Handle: RePEc:par:dipeco:2018-ep04
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    More about this item

    Keywords

    firm survival; corporate strategy; efficiency; recession; cleanisng;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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