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The effect of industry maturity, turnover and competition on firm survival: evidence from Slovenian firms

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  • Katja Zajc Kejžar
  • Nina Ponikvar

Abstract

A complementary log-log firm survival model using a 10-year panel of firm-level data for the Slovenian manufacturing sector during the late transition period provide evidence that firms have a smaller chance of surviving in less concentrated industries with tougher competition, in mature industries characterised by higher industry average firm age and lower net entry rates, and in industries with high turnover rates, indicating low sunk cost and other entry/exit barriers. Observing the hazard functions of various industry groups further suggests that an industry's entry/exit conditions are even more relevant to firm survival than an industry's life-cycle phase. Moreover, a firm's age seems to be of greater importance for its survival during the early stages of the industry's life cycle than in the industry's maturity. Our findings suggest that economic policy measures aimed at providing support for start-up firms will be more efficient in young industries at the formative stage of the life cycle or in entrepreneurial regime industries, and that entry conditions should be the focus of competition policies.

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  • Katja Zajc Kejžar & Nina Ponikvar, 2014. "The effect of industry maturity, turnover and competition on firm survival: evidence from Slovenian firms," Post-Communist Economies, Taylor & Francis Journals, vol. 26(1), pages 122-136, March.
    • Handle: RePEc:taf:pocoec:v:26:y:2014:i:1:p:122-136
    DOI: 10.1080/14631377.2014.874659
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    References listed on IDEAS

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    1. Rajshree Agarwal & Michael Gort, 2002. "Firm and Product Life Cycles and Firm Survival," American Economic Review, American Economic Association, vol. 92(2), pages 184-190, May.

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