New-firm startups,technology, and macroeconomic fluctuations

New-firm startup activity is examined within a framework pooling a cross-section of 117 industries over six time periods between 1976 and 1986. A model is introduced relating startup activity both to elements of the business cycle, in particular the macroeconomic growth rate, the cost of capital, and the unemployment rate, and to industry-specific characteristics, especially the technological conditions underlying the industry. The pooled cross-section regression results suggest that macroeconomic fluctuations as well as industry-specific elements contribute to startup activity. While new-firm startups respond positively to macroeconomic growth, they are promoted by a low cost of capital and high unemployment rate. A somewhat surprising result is that new-firm startups are not apparently deterred in capital intensive industries and where R&D expenditures play an important role. The empirical results suggest that new firms may be able to overcome their inherent size and experience disadvantages in such markets through exploiting university research and pursuing innovative activity.     

A reconciliation of the unemployment — New firm startup paradox

The purpose of this paper is to reconcile the seeming paradox emerging in the literature relating unemployment to new-firm startup activity and the decision to enter into self-employment. On the one hand time series studies have generally found that entrepreneurship is promoted by high levels of unemployment. On the other hand, cross-sectional studies have generally found that startup activity tends to be depressed where unemployment is high. We present a model derived from Knight's theory of individual choice in order to reconcile this apparent paradox. Assuming presence of an economy-wide demand shock and industry-specific shocks, the model indeed predicts the relations between new firm startup and unemployment which are found in empirical analysis. Hence, instead of blaming specification errors or unobserved policy changes, the seeming paradox can be reconciled by solid economic theory.     

Establishment exits in Germany: the role of size and age

Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various “liabilities” of establishment survival identified in the literature, we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than 5 years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15–18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways.     

Small business in German manufacturing

The study provides empirical evidence about the determints of the size distribution and the importance of small business in German manufacturing industries. The adopted empirical model distinguishes short-rum from longrun effects and estimates the rate of adjustment when a departure from long-run equilibrium occurs. The results show a significant impact of industry-specific factors on the presence of small plants and the size distribution of plants. Foremost, technological factors, like scale economies, limit the prosperity of small business. In addition, industries with a high intensity of investments in advertising and R&D, and large domestic and foreign output volumes are dominated by large business. The dynamic analysis revealed that departures from long-run equilibrium are only of a very short duration.I would like to express my gratitude to Stefan Csutor and Sabine Hetebrüg for their assistance in collecting the data. I am also grateful to Zoltan Acs, David Audretsch, Ricardo Revelli, and the participants of the Small Business Economics Conference, November 17–18, 1988 in Berlin for their very valuable comments.     

Testing Gibrat’s Law: Empirical Evidence from a Panel of Portuguese Manufacturing Firms

The purpose of this paper is to use Dynamic Panel Data (DPD) models with serial correlation in the error term to see if Gibrat’s law holds and to analyse the empirical determinants of firm growth. This paper makes significant contributions to the empirical literature on the dynamics of firm growth, since it updates the work carried out by previous researchers in this field using micro panel data, dynamic firm growth models with serial correlation in the error term, panel unit root tests and GMM‐system estimator. To conduct this study we used an unbalanced panel of Portuguese manufacturing firms over the period from 1990 to 2001. The main implication of our findings is that firm growth is not quite random since there are some determinants which exert influence on firm growth.     

Technological Regimes and Firm Survival: Evidence Across Sectors and Over Time

In addition to the usual variables representing firm- and industry-specific features that impact the firm’s survival, this paper uses three R&D related variables to reflect two Schumpeterian technological regimes: creative destruction (the entrepreneurial regime) and creative accumulation (the routinized regime). After controlling for age, size, entry barriers, capital intensity, the profit margin, the concentration ratio, the profit-cost ratio and entry rates, the empirical results confirm the theoretical relationship between technological regimes and the survival rate of new firms: new firms are more likely to survive under the entrepreneurial regime. Moreover, this effect is larger within the younger cohorts of firms than within the older ones.      

Survival of New Plants in Different Industry Environments in Norwegian Manufacturing: AS Semi-Proportional Cox Model Approach

Using a rich plant level data set from Norwegian manufacturing we analyse possible determinants of survival for ten plant cohorts during the period 1977–92. By specifying a semi-proportional hazards model of plant exit, we are able to accommodate for structural differences between entrepreneurial entrants and new plants of existing firms. Industry heterogeneity in terms of plant size, capital intensity and productivity is also accounted for in the model. According to our estimated models, there are significant structural differences between new small firms and new plants of existing firms. For example, the size of the plant relative to the industry average had less influence on the survival probability for entrepreneurial entrants. Hence, the empirical results suggest that the two types of entrants establish themselves in different market niches with distinct technological characteristics. The results underscore the necessity of adjusting for the dissimilar environments facing plants which enter different industries.     

Financial determinants of systematic risk in real estate investment trusts

Financial theory and empirical evidence suggest that a firm's systematic, or market related, risk is related to its financial conditions. This study empirically investigates the financial determinants of systematic risk for Real Estate Investment Trusts (REITs). The study is an examination of sample of 32 REITs for the period 1976–1978. The results indicate that systematic risk varies directly with financial leverage, business risk, and advisor fee. The explanatory power of the relationship between systematic risk and financial variables exceeds that of previous studies wherein firms were pooled across industry groups. The higher explanatory power observed even with limited data suggests that better estimates of coefficients of financial determinants of systematic risk may be obtained through analysis conducted on an industry by industry basis. Furthermore, such industry-specific analysis provides useful results to practicing financial managers in their financial policy considerations. With the knowledge of how the financial decisions affect the firm's systematic risk, a manager may be able to manipulate those variables so as to reduce the systematic risk for his or her firm and thus increase the market value of the firm's securities.     

Accounting for Net Entry into Greek Manufacturing by Establishments of Varying Size

Adopting the view that size matters in understanding entry (exit) patterns, this research explores the nature and causes of net entry patterns of various size-defined groups of establishments in the case of a less industrialised country – Greece. The hypothesis to be tested is that the determinants of entry are not independent of firm size. Throughout this paper the analysis has had to confront difficulties arising from the use of net entry rates defined at the size class level. The degree of size disaggregation used in this paper is considerably finer than used before. Five employment-defined size classes have been used instead of sliding cut-off points discriminating between small and large firms. Unlike other research using pooled models to explain variation in entry (exit) rates across industries, the data used here are characterised by the absence of significant industry-specific systematic variation. Overall, the results obtained in this paper indicate that there is a gradation in the responses of different size classes to stimuli defined at the industry level. Evidence is offered that small firms are different in that they manage to overcome entry barriers, perhaps adopting different survival strategies, and that large firms are well aware of market conditions and are in an advantageous position to overcome many of the problems imposed by entry barriers. Size classes in the middle of the size class distribution offer a rather mixed result due to size-related advantages and disadvantages.     

The birth of new firms—Does unemployment matter? A review of the evidence

The purpose of this paper is to review the most significant recent literature identifying the determinants of new-firm births and the role that unemployment plays. In doing so, the paper draws upon two distinct strands in the economics literature. The first strand of literature is from the field of industrial organization, where the role of entry has been examined within the structure-conduct-performance paradigm. The second strand comes from the literature on entreprepreneurship. Whereas the first approach tends to focus on the industry as the unit of analysis and is concerned primarily with inter-industry comparisons, the second strand of literature is more oriented towards the firm as a unit of analysis and the impact exerted by the macro-economic environment. It is concluded that the most important development for future research is at the interface of these two approaches.I would like to thank Martin Robson, Steve Batstone, Steve Johnson and participants at the WZB conference for comments received on an earlier version of the paper. Remaining errors are my responsibility.     

Possible Applications of Survival Analysis in Franchising Research

Time is an important variable for retailers. The concepts of survival and duration, linked to this time variable, can be very interesting in franchising research. For instance, what are the determinants of the survival of a network or a store? Which elements decrease the period before franchising or internationalising a network? There is a well adapted but little-exploited methodology in this research area: survival analysis. Consequently, this methodological paper presents in detail survival analysis methodology before giving relevant examples of applications in the franchising field. Managerial implications of these kinds of research are given before the conclusion.     

Determinants of Firm Start-Up Size: An Application of Quantile Regression for Ireland

In this paper we provide empirical evidence on the determinants of firm start-up size using data for the manufacturing sector in Ireland, and compare our results with recent findings for Portuguese manufacturing industries (Mata and Machado, 1996). To allow for firm heterogeneity between firm entrants we use quantile regression techniques for our empirical estimation. We find that the determinants of start-up size differ in their importance for small and large-scale entrants. In particular, industry size and industry growth seem to affect large-scale entrants only.     

Determinants of Perceived Health and Safety Risks of Selected Hazardous Products and Activities

Based on an empirical analysis, this paper presents models of the determinants of consumers' perceptions of health and safety risks of eight frequently used products. Using eight variables that have been postulated by researchers to be determinants of perceived risk, multiple linear regression models were developed for each product. These models indicate that different products have different determinants of perceived risk.     

Relative price volatility under Sudden Stops: The relevance of balance sheet effects

Sudden Stops are associated with increased volatility in relative prices. We introduce a model based on information acquisition to rationalize this increased volatility. An empirical analysis of the conditional variance of the wholesale price to consumer price ratio using panel ARCH techniques confirms the relevance of Sudden Stops and potential balance sheet effects as key determinants of relative price volatility, where balance sheet effects are captured by the interaction of a proxy for potential changes in the real exchange rate (linked to the degree of external leverage of the absorption of tradable goods) and a measure of domestic liability dollarization.     

The Impact of Foreign Technology and Embodied R&D on Productivity in Internationally Oriented and High-Technology Industries in Egypt, 2006–2009

This paper investigates the domestic productivity and spillover effects of foreign technology and embodied R&D on Egyptian manufacturing industries, 2006 to 2009. It also analyses the heterogeneous sectoral effects of technology transfer by focusing specifically on the productivity effects on highly internationalized and technology-intensive industries. These are expected to have greater absorptive capacity with respect to foreign technology and therefore larger productivity effects because of their greater exposure to foreign competition and greater technological capacity respectively. This study is the first to analyse the efficiency effects of foreign technology by classifying industries in this manner. It finds that foreign technology and embodied R&D have positive and significant industry-specific effects on domestic productivity and TFP in technology-intensive industries but that these are weaker in internationally oriented industries. The study suggests that only technological-intensive industries in Egypt have sufficient absorptive capacity to assimilate foreign technology effectively. The paper’s findings highlight the key role of foreign technology in domestic productivity growth, subject to the absorptive capacity of the domestic labour force, and the need for improved policies to promote the domestic benefits of technology transfer through the accumulation of local technological competences.

     

Corporate Social and Financial Performance Re-Examined: Industry Effects in a Linear Mixed Model Analysis

In this research, we shed new light on the empirical link between corporate social performance (CSP) and corporate financial performance (CFP) via the application of empirical models and methods new to the CSP?CCFP literature. Applying advanced financial models to a uniquely constructed panel dataset, we demonstrate that a significant overall CSP?CCFP relationship exists and that this relationship is, in part, conditioned on firms?? industry-specific context. To accommodate the estimation of time-invariant industry and industry-interaction effects, we estimate linear mixed models in our test of the CSP?CCFP relationship. Our results show both a significant overall CSP effect as well as significant industry effects between CSP and CFP. In conflict with expectations, the unweighted average effect of CSP on CFP is negative. Our industry analysis, however, shows that in over 17% of the industries in our sample, the effect of CSP on CFP for socially responsible firms is positive. We also examine the multidimensional nature of the CSP construct in an industry context by exploring the CSP dimension?Cindustry nexus and identify dimensions of social performance that are associated with either better or worse financial performance. Our results confirm the existence of disparate CSP dimension?Cindustry effects on CFP, thus our results provide important and actionable information to decision makers considering whether and how to commit corporate resources to social performance.     

The Resource-Based Theory of the Firm and Firm Survival

This paper examines the determinants of firm survival. We use hazard models to test a number of hypotheses mainly drawn from the Resource-Based Theory of the Firm. According to the Resource-Based View the ability of a firm to develop distinct capabilities enhances its ability to adapt to the changing competitive environment and improves its survival prospects. The results confirm that firms that develop firm-specific assets through advertising and making R&D (independently of the technological intensity of the industry) enjoy better survival prospects. Furthermore, failure risk increases up to about 20 years of trading, and then decreases to later rise in line with liability of “adolescence” and “senescence.”      

Cross-Industrial User Channel Preferences on the Path to Online Purchase: Homogeneous,Heterogeneous, or Mixed?

Though research literature addresses a broad range of advertising impact models, studies on the channel preferences of online purchasers have received little attention, regarding both multichannel settings and channel interplay in click sequences. To provide advertisers a method for better evaluating customer channel preference, this study investigates the path to purchase by building on four multichannel clickstream data sets from three industries, recorded with cookie-tracking technologies. Applying a Cox model and clustering techniques supports delineation of empirical generalizations and industry-specific findings on channel exposure, including their antecedents and distinct channel click sequences. Across data sets, online users show idiosyncratic channel preferences for a limited set of one or two channels rather than multiple online vehicles. Both channel homogeneous click sequences and combinations of two channels (including branded contacts) are effective as purchase predictors. Our study also presents industry-specific results regarding the influence of click sequences on purchase intent, thereby providing insights for advertising research, particularly as are suited to optimization of online advertising activities.     

网络嵌入对大型复杂产品制造业供应链绩效的影响研究

网络嵌入已经成为影响大型复杂产品制造业供应链绩效的主要因素之一。本文以我国航空制造业供应链为例,在分析网络结构嵌入和关系嵌入维度的基础上,提出供应链网络嵌入与供应链绩效之间关系的研究假设,并构建相应理论模型,通过实证分析来探究供应链网络嵌入对供应链绩效的影响机理。研究结果显示,供应链网络结构嵌入（节点度和中介中心度）和关系嵌入（信任、信息共享和共同解决问题）对大型复杂产品制造业供应链绩效具有显著影响,并且结构嵌入与关系嵌入之间存在理论上的结构关系。     

Liability of Foreignness in Fast-Expanding Markets: Evidence from Ghana

In this study, we sought to establish if the idea of liability of foreignness (LOF) also persists in the fast-expanding markets (FEMs) and whether there are certain firm characteristics that can mitigate or accentuate this effect. We utilize data from the World Bank enterprise surveys conducted in Ghana in 2007 and 2013. We operationalize liability as the probability that a firm suffered from a crime in the year under study. We also specify empirical probit and instrumental probit models with controls to answer the above research question. We find that there is LOF in fast-expanding markets, and this effect is robust to different specifications. Given that our liability is crime, we moderate the LOF effect with data on security expenditure. The results still show that even if firms increased their security expenditure, the LOF effect still persisted. The study makes a contribution to the international business literature by testing the LOF effect in a new unit of analysis and is also one of the earliest to operationalize a firm's liability in the form of crime it suffers in its operating environment. © 2015 Wiley Periodicals, Inc.