Firm Competitive Strategies And The Likelihood Of Survival - The Spanish Case
This paper, based on the ideas of Jovanovic’s theory (1982), analyses the impact of the main strategies determining the competitive behaviour of firms on their survival rate. We consider those strategies related both to product and price differentiation. Among the former ones, one may think of the specific differentiation due to advertisement and patent expenses or the technological differentiation based on R&D expenses or new production processes. Among the strategies of the second group, some are based on capital accumulation, or advantages of fixed costs such as scale economies or absolute cost advantages thanks to production techniques introduced by experience of by process innovations. The use of these strategies in a set of Spanish manufacturing firms (1990-2001) is analyzed. Firstly, several non-parametric tests for equality of survival functions are computed to check the diversity of survival rates across different competitive characteristics of firms. Secondly, a duration model based on a hazard rate model is estimated to study the impact of the main competitive strategies on firm survival. We find that several aspects on the competitive advantage of the firms play an important role in the likelihood of firm survival. Finally, we also conclude that there exists a different competitive strategy having into account two different size groups of firms.
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