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Survival dynamics in Portugal, a regional perspective

  • Elsa Morais Sarmento

    ()

  • Alcina Nunes

We address the post-entry performance of new Portuguese firms by investigating the structural characteristics survival, using both non-parametric methods and semi-parametric methods, for the seven regions of Portugal (NUT II). We also provide a disaggregated analysis by sector and size class, for the period 1985-2007. In order to approach the prevalence of some stylized facts and determinants of new firm survival, a new entrepreneurship database was produced, using the administrative data of Quadros de Pessoal, a linked employed-employee micro-dataset, following the Eurostat/OECD´s (2007) internationally comparable business demography methodology “Manual of Business Demography Statistics”. This has the advantage of international comparability, in line with the “Entrepreneurship Indicators Programme” (OECD/Eurostat 2008 and 2009). We thus obtained a specific subsample, consisting only of the population of active enterprises with at least one paid employee, the so-called employer enterprise population. In the non parametric estimation, we use Kaplan-Meier survival functions and the Nelson-Aalen hazard rates. The semi-parametric estimation (log-log complementary model and Cox proportional model) relates the survival capacity with seven explanatory variables and sector and year dummies. The explanatory variable are: firms´ start-up size, the number of employees reported at the year of measurement, firm’s entry rate, degree of concentration, growth, Entry Rate times Growth and Turbulence. The use of the proportional Cox Model allows us to observe an increase in the risk in the evolution of firm survival over time, when compared to the non-parametric estimation of Kaplan-Meier. By correcting heterogeneity with a different specification model, we obtain stronger magnitudes of the hazard ratios found previously. The main contribution of this work is the application of a recent internationally comparable methodology for entrepreneurship to provide a multidimensional regional overview of firm and survival dynamics for all NUT II regions, over an extended period of time, while guaranteeing regional, national and international comparability. To our knowledge, there is not such a study that contemplates all this aspects and grants international comparability, over such a long time frame, made for any country.

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File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa10/ERSA2010finalpaper1313.pdf
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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p1313.

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Date of creation: Sep 2011
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Handle: RePEc:wiw:wiwrsa:ersa10p1313
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  1. Eric Bartelsman & Stefano Scarpetta & Fabiano Schivardi, 2005. "Comparative analysis of firm demographics and survival: evidence from micro-level sources in OECD countries," Industrial and Corporate Change, Oxford University Press, vol. 14(3), pages 365-391, June.
  2. Brito, Paulo & Mello, Antonio S., 1995. "Financial constraints and firm post-entry performance," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 543-565, December.
  3. Cabral, Luís M B & Mata, José, 2001. "On the Evolution of the Firm Size Distribution: Facts and Theory," CEPR Discussion Papers 3045, C.E.P.R. Discussion Papers.
  4. Zoltan Acs & Sameeksha Desai & Leora Klapper, 2008. "What does “entrepreneurship” data really show?," Small Business Economics, Springer, vol. 31(3), pages 265-281, October.
  5. Arnab Bhattacharjee, 2005. "Models of Firm Dynamics and the Hazard Rate of Exits: Reconciling Theory and Evidence using Hazard Regression Models," CRIEFF Discussion Papers 0502, Centre for Research into Industry, Enterprise, Finance and the Firm.
  6. Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
  7. Mata, Jose & Machado, Jose A. F., 1996. "Firm start-up size: A conditional quantile approach," European Economic Review, Elsevier, vol. 40(6), pages 1305-1323, June.
  8. P.A. Geroski & José Mata & Pedro Portugal, 2007. "Founding Conditions and the Survival of New Firms," DRUID Working Papers 07-11, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  9. Mata, Jose, 1993. "Entry and type of entrant : Evidence from Portugal," International Journal of Industrial Organization, Elsevier, vol. 11(1), pages 101-122, March.
  10. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
  11. Dunne, Timothy & Roberts, Mark J & Samuelson, Larry, 1989. "The Growth and Failure of U.S. Manufacturing Plants," The Quarterly Journal of Economics, MIT Press, vol. 104(4), pages 671-98, November.
  12. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October.
  13. Alcina Nunes & Elsa Sarmento, 2010. "Business Demography Dynamics in Portugal: a Semi-parametric Survival Analysis," GEE Papers 0023, Gabinete de Estratégia e Estudos, Ministério da Economia e da Inovação, revised Sep 2010.
  14. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
  15. 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.
  16. Rui Baptista & Vítor Escária & Paulo Madruga, 2008. "Entrepreneurship, regional development and job creation: the case of Portugal," Small Business Economics, Springer, vol. 30(1), pages 49-58, January.
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