Firm size,age, industrial networking,and growth: a case of the Korean manufacturing industry

This paper investigates the roles of firm size, age, and industrial networking in determining firm growth. Analyses using the 2-year panel data of 7,889 Korean manufacturing firms between 1994 and 2003 confirm that firm size and age have significant negative effects on firm growth and significant positive impacts on firm survival. R&D and export activities are found to facilitate both firm growth and survival. The primary focus of this study is to examine the effects of industrial networking, such as subcontracting and clustering, on firm growth. The results show that subcontracting does not yield any positive effect for firm growth, but encumbers survival, which may be accounted for by the high subcontracting intensity among small firms. Clustering, on the other hand, is found to promote firm growth and survival. There is, however, little evidence that such a positive effect of clustering is derived from network externalities through cooperation and competition among firms in a cluster per se.     

Networks and Local Environmental Characteristics in the Survival of New Firms

This study seeks firstly to clarify which networks at start-up situation and early in life influence the survival of new firms. Secondly the study examines regional differences in the success of new firms. The subjects were firms which had closed down during their fourth to sixth year of operations, and they were compared with firms continuing in business. The results indicate, firstly, that it is networks internal to firm that create competitive advantage, innovation and efficiency. Secondly, management based on working in groups was emphasized in the firms that continued in business. In a typical family enterprise, ownership, management and family are united in a single entity. In other types of firms networks are seen as participating in the strategic management of the firm. Thirdly, close-downs were often caused by uncontrolled risks. A firm which fails after a successful start-up often tends to grow rapidly in the beginning, leaning on its product idea, but this rate of growth is too high from the viewpoint of the financing and the management of the firm. In firms which closed the growth objectives were too ambitions compared with the resources of the entrepreneur.     

Firm growth during infancy

In this paper, we study the post-entry patterns of survival and growth of firms established in Portuguese manufacturing in 1983. Our data suggest the existence of a highly turbulent economy, with a very large number of small firms being created, but a great proportion of new firms disappearing in the first years subsequent to their birth. Survivors, however, grow quite fast and we found that small firms grow faster than their larger counterparts. Moreover, we found that the growth decision of firms is affected by a firm specific component, which is also correlated with firm size. These two effects are oppositely signed and, therefore, estimates that fail to take this firm specific effect into account are likely to be strongly biased towards zero.     

Is blood always thicker than water? Family firm parents,kinship ties,and the survival of spawns

We theorize that due to their ability to draw upon the distinctive bonding and bridging social capital resources of their family firm parents, family member spawns have longer early survival times than nonfamily member spawns from family firms, which in turn should have longer early survival times than spawns from nonfamily firm parents. We also predict that the survival enhancing effects of family parent bonding and bridging social capital are conditional on the spatial, cognitive and social proximity between the parent and the spawn. Using a population wide sample of 114,837 spawns founded in Sweden between 2000 and 2007, we find that nonfamily member spawns survive longer than spawns from nonfamily firms, and that this survival enhancing effect is contingent on the spatial and social proximity between the spawn and its parent. We also find that spawns founded by family members, on average, do not survive longer than spawns from family firms founded by nonfamily members, and that greater spatial and cognitive distance even hurt the survival of family member spawns. We discuss the contributions of our research to the spawning, family firm, and entrepreneurship literatures.     

Market delimitation,firm survival and growth in service industries

This article focuses on the effect of both firm survival and market delimitation on stochastic growth behaviour in the realm of service industries. Two samples of firms were selected for the study, one of them representing the surviving firm population in the tourism industry and the other one representing the firm total. The activity of firms was used for measuring the influence of market delimitation. Stochastic growth behaviour is found to hold for the sector as a whole, whereas it does not do so for the population of surviving firms. Market delimitation is also observed to influence growth behaviour, but only when combined with firm survival.     

Small Firm Survival and Technological Activity

The paper investigates the post entry performance of small firms competing under different technological environments. Small firm survival is compared over technical and non-technical products and over stages of differing technological activity. The empirical results, in the context of the product life-cycle framework, show that small firms enjoy a higher probability of survival in stages of high technological activity, and in products that are more technical in nature. Technological activity is also seen to affect the shape of the hazard rate function, implying that the relation between technological activity, age and small firm survival may be complex.     

The Cultural Paradigm of the Smaller Firm

This paper presents the findings from an ethnographic study of organizational culture and shared values in four smaller firms, the outcome of which was the identification of the cultural values shared between owner–managers (OMs) and employees in each firm. The research employed Schein's conceptualization of culture as a three-layer phenomenon, consisting of surface artifacts, shared values and beliefs, and basic assumptions. The analytical technique of grounded theory was employed to process the large volume of data gathered during the extended research period. The data reveal a complex array of values in each firm, with only one firm exhibiting a homogenous culture where values are shared by all those working in the organization. In the remaining three firms, five values appear to be shared by all employees; however, this is overlaid by a pattern of subcultures differentiated by distinctive shared values. Interfirm analysis among the four firms found that the values of survival, independence, control, pragmatism, and financial prudence were shared by two or more firms. The research collectively defines these shared values as the cultural paradigm of the smaller firm.     

Learning Orientation and Performance Satisfaction as Predictors of Small Firm Innovation: The Moderating Role of Gender

Research on innovation in the context of small entrepreneurial firms is limited. Limited available studies on innovation in small firms are devoted mostly to firms operating in knowledge-intensive or technology industries and ignore the vast majority of small firms operating in traditional and less knowledge-intensive sectors of the economy. The rapid pace of technological change and the intensifying environmental turbulence in our economy influence all firms, including the majority of small firms that are perishing at a faster rate. Innovation is a key competitive tool for survival in a turbulent environment. Thus, it is important to understand factors influencing innovation in small firms. In this paper, we explore how learning orientation, a small-firm owner’s satisfaction with firm performance, and the firm owner’s gender influence innovation in small firms. We test the proposed model on a sample of small firms located in the United States of America.     

Age and firm growth: evidence from three European countries

This article provides new insights into the dependence of firm growth on age along the entire distribution of growth rates, and conditional on survival. Using data from the European firms in a global economy survey, and adopting a quantile regression approach, we uncover evidence for a sample of French, Italian and Spanish manufacturing firms with more than ten employees in the period from 2001 to 2008. We find that: (1) young firms grow faster than old firms, especially in the highest growth quantiles; (2) young firms face the same probability of declining as their older counterparts; (3) results are robust to the inclusion of other firms’ characteristics such as labor productivity, capital intensity and the financial structure; (4) high growth is associated with younger chief executive officers and other attributes that capture the attitude of the firm toward growth and change. The effect of age on firm growth is rather similar across countries.     

Who Benefits from Longer Lending Relationships? An Analysis on European SMEs

This paper empirically investigates the impact of lending relationships duration on SMEs financial stability. Our research hypothesis is that the balance between benefits and costs of longer bank‐firm ties may be different depending on the degree of firms' financial health. Using a large sample of European manufacturing SMEs that excludes firms that have defaulted and those with less than ten employees, we find that the overall positive effect of enduring lending relationships tends to progressively increase for more stable firms, being greater when the main bank operates nearby the firm. Our findings, yet, are conditional on firm survival and may not be generalized to the smallest of firms.     

The effect of credit on growth and convergence of firm size in Kenyan manufacturing

Few studies test for the effect of credit and convergence on firm growth in the context of a developing economy. The use of bank credit can affect firm growth in two opposite ways. The effect may be positive if credit allows a firm to address its liquidity constraint and increase investment and profitability. However, if macroeconomic shocks such as unexpected increases in interest rates make firm debts unsustainable, as experienced in Kenya in the 1990s, indebted firms may shrink or even collapse. Using microeconomic data on the Kenyan manufacturing sector, this study finds that conditional on survival, the firms that use credit grow faster than those not using it. There is also evidence that small firms grow faster than large ones, confirming the convergence hypothesis. These results are robust to alternative estimation procedures controlling for both endogeneity and selection bias.     

Initial submarket positioning and firm survival: evidence from the British automobile industry, 1895–1970

A firm’s initial choice of its submarket may have a long-lasting influence on its subsequent performance. By examining the duration of firm survival in the British automobile industry between 1895 and 1970, we find that a firm’s initial submarket positioning (defined by the quality level of its first-launched model) influenced its subsequent survival. Additionally, we find that the initial positioning also helped firms to survive a major shakeout, and argue that innovation and path-dependence were two possible channels through which the benefits of initial positioning were felt.     

A theory of serial entrepreneurship

The contribution of serial entrepreneurs to entrepreneurial activity is significant: in Europe, 18–30% of entrepreneurs are serial; in the US, their contribution is about one-eighth. Yet, theories of entrepreneurship and industry dynamics presume that all firms are launched by novice entrepreneurs and firm failure is synonymous with exit from entrepreneurship. We propose a theory of serial entrepreneurship in which an entrepreneur has three occupational choices: maintain his business in operation, shut it down to enter the labor market to earn an exogenous wage, or shut it down to launch a new venture while incurring a serial startup cost. In equilibrium, a high-skill entrepreneur shuts down a business of low quality to become a serial entrepreneur, launching and subsequently closing firms until a high quality business is found; a low-skill entrepreneur shuts down a business of low quality to enter the labor market, never to become a serial entrepreneur. A decrease in the wage or serial startup cost, or an increase in the startup capital, enhances the contribution of serial entrepreneurs to entrepreneurial activity and promotes new firm formation (by increasing entrepreneurship and the number of new firms that survive), but its effect on the exit rate of new firms is ambiguous. We show the model is consistent with evidence relating to the impact of an entrepreneur’s characteristics and prior experience in entrepreneurship on the survival of his firm and his entry into and survival in entrepreneurship.     

Entry,growth and survival of manufacturing firms

This paper examines the interactions between entry size, growth rate, and probability of survival of firm. Standard microeconomics states that firm growth stems from relative efficiency differentials and that growth positively affects the likelihood of survival. Therefore, the selection hypothesis is unable to explain how a wide number of small newly born firms can survive at length even without growth and how an even larger set of firms with a higher than average growth rate exits the market in the first few years after the foundation. It is shown that one way out of these apparent paradoxes is to relax the hypothesis of a one-to-one link between initial relative efficiency and survival, and then develop a model based on different entry modes and growth patterns of the newly born firms.     

Characterising Euro Area Multinationals

This study uses firm‐level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms’ productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over‐proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. Finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number.     

Multinational Enterprises and Foreign Direct Investment: Introduction

This study uses firm‐level data on a large sample of European manufacturing firms to investigate the links between opening up foreign affiliates and firms’ productivity. The analysis is guided by recent theoretical models of international trade with firm heterogeneity. The paper finds that while only a small share of euro area firms locate affiliates abroad, these firms account for over‐proportionally large shares of output, employment and profits in their home countries. They have higher survival rates and their productivity growth is also higher. The strongest contribution is by productivity growth of existing firms with a multinational status rather than entry into the multinational status. finally, there are performance premia for multinationals with a large number of affiliates abroad relative to those with a small number.     

TMT Departures and Post‐IPO Outside Director Additions: Implications for Young IPO Firms’ Survival and Performance

We draw on resource‐based logic to argue that relatively stable TMTs and boards are beneficial for young IPO firms because of the need to maintain and develop valuable firm‐specific capabilities and psychological attachment of pre‐IPO TMTs. Using panel data from 272 young IPO firms, we find that pre‐IPO TMT member exits negatively affect young IPO firms’ survival and performance. This negative effect is greater when more post‐IPO outside directors are added. We also find that the above interaction is positively and negatively associated with survival and performance when TMT ownership declines substantially and when firms have a founder CEO, respectively.     

An Explanation of the Life Span of New French Firms

In contrast to previous studies on firm survival which tend to focus on features related to the structure of the firms and their area of activity, our aim here is to widen the perspective usually adopted in the field, taking into account a larger and more qualitative set of variables. Among these variables, features related to the individual characteristics of the entrepreneur, to the context of entrepreneurship and to the insertion in entrepreneurial networks are significant to explain the life span of new firms. The empirical material is drawn from two surveys, which provide detailed data about a group of new firms created in France in 1994 and closed down before 1997 or still running in 1997. Our empirical approach on qualitative data is based on data analysis methods (linear discriminant analysis, barycentric discriminant analysis, analysis of variance). According to the characteristics of the entrepreneur, the main explanatory factors for the survival of new firms are the fact that they are entrepreneurs who have taken over firms, that they have acquired during their previous occupational activity an experience in the same branch of activity and that they experience a successful integration into the entrepreneurial networks. These three factors show that the survival of young firms is indirectly conditioned by the existence of an initial custom, by the mastery of a job and by the know-how in the entrepreneurial function.     

Employment change in independent owner-managed high-technology firms in Great Britain

There is a growing volume of literature that points to the potential for small technology-based firms to achieve substantial employment growth. As a direct consequence of such work this sector of any economy has attracted increasing attention from national and local Governments concerned with finding ways of revitalising economically deprived localities and creating employment opportunities. This paper provides up-to-date empirical evidence surrounding the ability of small high-technology firms to create additional jobs in Great Britain. In addition, key founder and business characteristics are isolated which are significantly associated with employment change in growing high-technology firms over the 1986 to 1992 period. With respect to factors influencing these high levels of employment growth, a high firm size (in 1986) was found to act positively on employment growth, as was a graduate level education for the key founder. On the finance side firms which had access to and used a multiplicity of sources of start-up finance tended to grow faster. Futher, on the basis of our results we would suggest (and recommend) a Government policy which at the firm level actively encourages high-technology firm start-ups (who record higher rates of survival than firms in more conventional sectors) as well as providing support for existing high-technology firms who have already demonstrated the inclination and ability to grow in employment size.     

Entrepreneurship and Economic Development in Less Developed Countries

This essay seeks to uncover the distinguishingfeatures of small firms in Victorian Britain, and looks at the role of the family in the creation and survival of firms in what was a dangerously volatile business world characterised by low business morality. Based on a series of case studies, it suggests that although second and third generation firms were uncommon, the family played a critical if often informal role in maintaining stability and generating an environment of trust, and in those situations where family partnerships and inter-generational succession did exist, the characteristics of ownership and succession at the level of the smaller firm appear to have stimulated rather than prevented innovation and growth. Different types of family firm and family contribution are examined, and the latter part of the essay looks at family firm networks and entrepreneurial strategies such as market internalisation within a family network.