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Determinants of small business survival: The impacts of capital intensity and the collateral value of fixed assets

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  • Guimarães Barbosa, Evaldo

Abstract

The major claim of this article is twofold, that is, that fixed assets in small manufacturing enterprises in developing countries have to be seen with respect to two roles. The first is capital intensity. The second is the collateral value of these assets. The former is associated with the small manufacturing firms’ hazard of exit in a U-shaped fashion. The latter takes up a wave-shaped relationship. Failure in the extant empirical literature to fit a binomial specification for capital intensity results in either a negative or a positive relationship, or even, lack of statistical significance. All these three outcomes are the results of a misguided attempt to fit an “artificial” monotonic specification to an actual U-shaped relationship. The trinomial specification for the collateral value of the small manufacturing enterprises’ fixed assets has never been attempted. Thus, the present article proposes a new framework for the study of the impact of the small manufacturing enterprises’ fixed assets investment strategy upon their hazard of exit.

Suggested Citation

  • Guimarães Barbosa, Evaldo, 2017. "Determinants of small business survival: The impacts of capital intensity and the collateral value of fixed assets," MPRA Paper 76434, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:76434
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    File URL: https://mpra.ub.uni-muenchen.de/76434/1/MPRA_paper_76434.pdf
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    References listed on IDEAS

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    1. Guimarães Barbosa, Evaldo, 2016. "Determinants of Small Business Survival: The Case of Very Small Enterprises of the Traditional Manufacturing Sectors in Brazil," MPRA Paper 72304, University Library of Munich, Germany.
    2. Nguyen Minh Ha, 2012. "The Effect Of Growth On Firm Survival In Vietnam," Working Papers 18, Development and Policies Research Center (DEPOCEN), Vietnam.
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    More about this item

    Keywords

    Small firms; Business survival determinants; Capital intensity; collateral value of fixed assets; Cox regression;
    All these keywords.

    JEL classification:

    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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