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Firm interrelationships: the role of firm size

Author

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  • Daragh O’Leary

    (University of Galway)

Abstract

This paper put’s forward a working conceptualisation for how the size of firms which die influences firm interrelationships where firm deaths influence future firm births. Two conceptual arguments are developed to explain the role of firm size in influencing future firm births; the resource argument and the consumer demand argument. This relationship is also empirically tested using a multilevel model to examine the relationship between the death of differently-sized firms and future firm births in European NUTS 3 regions. Findings suggest that only the deaths of larger firms appears to increase future firm births. The resource-based argument is used to explain this finding whereas the consumer demand-based argument is used to explain why the death of smaller firms seems to reduce future firm births. The dataset used in this paper’s estimation captures a large amount of activity across 14 countries and 502 NUTS 3 regions from 2008 to 2019.

Suggested Citation

  • Daragh O’Leary, 2024. "Firm interrelationships: the role of firm size," Letters in Spatial and Resource Sciences, Springer, vol. 17(1), pages 1-13, December.
    • Handle: RePEc:spr:lsprsc:v:17:y:2024:i:1:d:10.1007_s12076-024-00380-0
    DOI: 10.1007/s12076-024-00380-0
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    More about this item

    Keywords

    Firm births; Firm deaths; Competition effect; Multiplier effect; Firm interrelationships;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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