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Survival Chances of Start-Ups - do Regional Conditions Matter?

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  • Oliver Falck

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Abstract

This paper analyses the effect of industry, regional and firm level characteristics on the post entry performance of newly founded businesses by means of an econometric survival time model. First preference is given to an accelerated failure time model assuming a log-logistic distribution. The dataset involves a representative sample of establishments in the private sector provided by the Institute for Employment Research (IAB). The data relates to West German states during 1993-2002 period. A start-upÂ’s The likelihood of failure tends to be relatively high in industries characterized by a high minimum efficient size and high numbers of entries. The regional dimension has a considerable impact upon improvements of estimation results. On the firm level, the size of the firm seems to be the best predictor for the likelihood of failure.

Suggested Citation

  • Oliver Falck, 2005. "Survival Chances of Start-Ups - do Regional Conditions Matter?," ERSA conference papers ersa05p49, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa05p49
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa05/papers/49.pdf
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    References listed on IDEAS

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    1. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-245, September.
    2. David Audretsch & Patrick Houweling & A. Thurik, 2000. "Firm Survival in the Netherlands," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(1), pages 1-11, February.
    3. Mata, Jose & Portugal, Pedro & Guimaraes, Paulo, 1995. "The survival of new plants: Start-up conditions and post-entry evolution," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 459-481, December.
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    8. Michael Fritsch & Udo Brixy & Oliver Falck, 2006. "The Effect of Industry, Region, and Time on New Business Survival – A Multi-Dimensional Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(3), pages 285-306, May.
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    13. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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    15. Andrew B. Bernard & Fredrik Sjoholm, 2003. "Foreign Owners and Plant Survival," NBER Working Papers 10039, National Bureau of Economic Research, Inc.
    16. Dimara, Efthalia & Tzelepis, Dimitris & Skuras, Dimitris, 2000. "Regional Development Incentives And Firm Survival: A Case Study Of The Greek Food Sector," ERSA conference papers ersa00p209, European Regional Science Association.
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    Cited by:

    1. Li Yu & Peter F. Orazem & Robert W. Jolly, 2010. "Why Do Rural Firms Live Longer?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 93(3), pages 669-688.

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