persistence of initial debt in the long term employment dynamics of new firms this paper investigates whether a firm s future growth is independent of its initial debt structure the non parametric test consists of determining whether the conditional size distribution for firms surviving through early years of life depends upon debt to asset ratio at birth initially i test for initial size dependence in the growth process by applying pakes and ericson 1998 procedure i then test the hypothesis that initial debt to asset ratios are irrelevant to growth of ten year old manufacturing firms i reject the null of independence and find evidence of a non monotonic relationship between age ten conditional size and the initial debt to asset ratio ce texte examine la question a savoir si la croissance future d une firme depend de la structure initiale de sa dette le test non parametrique consiste a determine si la distribution conditionnelle de la taille des firmes qui survivent au cours des premieres annees depend du ratio dette actif a la naissance l auteur teste d abord l independance de la taille initiale et du processus de croissance a l aide de la procedure de pakes et ericson 1998 et ensuite l hypothese que le ratio initial dette actif n est pas pertinent pour expliquer la croissance de firmes manufacturieres qui ont survecu dix ans l hypothese nulle d independance est rejetee et on trouve trace d une relation non monotone entre la taille conditionnelle a dix ans et le ratio initial de la dette sur l actif

the birth of a new industry entry by start ups and the drivers of firm growth the case of encryption software the paper analyses the birth of the encryption software industry esi a new niche in the software industry using a chandlerian perspective this work reports the main facts about fir entry and growth with a particular focus on start up strategies and actions since scale economies do not play a major role in esi the paper investigates the different sources of fir competitive advantages this work shows that innovation and product differentiation along with investments in co specialised assets are variables strongly correlated to young fir probability to survive and grow in doing so we have collected highly detailed information on product introduction us patents granted worldwide alliances and biographical data of fir founders 2004 elsevier b v all rights reserved jel classificatio m13 l86 o32

submarkets and the evolution of market structure we construct a model of industry evolution in which the central force for change is the creation and destruction of submarkets firms expand when they are able to exploit new opportunities that arrive in the form of submarkets they contract and ultimately exit when the submarkets in which they operate are destroyed this simple framework can transparently explain a wide range of well known regularities about industry dynamics most notably the subtle relationships between size age growth and survival data on the laser industry where submarkets are prominent further illustrate the ability of the model to explain distinctive patterns in the evolution of industries and firms

the impact of endowment framing on market prices an experimental analysis framing effects are well known in individual decision making using experimental markets we investigated whether similar effects could be found in a market environment two series of experiments showed that negative framing can give different market prices than a positively framed endowment we also found that volume may be affected by the framing of the endowment 2000 elsevier science b v all rights reserved

entrepreneurship human capital and labor demand a story of signaling and matching in contrast to employee qualifications there is no clear evidence that entrepreneurs qualifications positively affect their income in this study we propose that entrepreneurs can benefit from using their qualification as a signal during the process of recruiting employees this is assumed to follow a process of matching equals among equals we confirm a matching of qualification levels for highly skilled employees in denmark and an indication of this in germany partial support for matching among medium skilled employees was only found in germany with no consistent evidence of matching for low skilled employees in neither country this suggests that as skill levels of employees decrease their probabilities of working for different founders converge founders qualifications are the most reliable predictor of recruitment choices over time our findings are robust to numerous control variables as well as across industries and firm age

information effects in uniform price multi unit dutch auctions we design a multi unit descending price dutch auction mechanism that has applications for resource allocation and pricing problems we address specific auction design choices by theoretically and experimentally determining optimal information disclosure along two dimensions bidders are either informed of the number of bidders in the auction or know that it is one of two possible sizes they also either know the number of units remaining for sale or are unaware of how many units have been taken by other bidders we find that revealing group size decreases bids and therefore revenue if units remaining are not shown when group size is unknown the price also falls if the number of units remaining is revealed the most efficient and largest revenue outcome occurs when bidders are not provided information on either group size or units remaining these laboratory results conform to some directional predictions from our theory although overbidding is common

the direct employment effects of new businesses in germany revisited an empirical investigation for 1976 2004 based on an improved and extended database the establishment history panel we extend the analysis of fritsch and weyh small business economics 27 2 245 260 2006 by investigating the development of employment in german start up cohorts for the period 1976 to 2004 we confirm the typical pattern found in start up cohorts an initial increasing number of employees that is soon followed by a decreasing number we also provide some of the first evidence for the liability of aging phenomena in germany older firms face a relatively high risk of exit we find that most entries with relatively large initial employment grow substantially in the first two decades however these businesses suffer from a considerable employment decline after 25 years

is success hereditary evidence on the performance of spawned ventures a common phenomenon in entrepreneurship is that employees turn away from employment to found their own businesses prior literature discusses the former employers characteristics that influence the creation of entrepreneurial ventures an investigation of whether these characteristics also affect the success of the spawned ventures is missing so far this paper contributes to the literature by showing that entrepreneurial ventures spawned by well performing firms are financially more successful than ventures stemming from poorly performing firms this suggests that spawned entrepreneurs are able to exploit valuable knowledge from their previous employers which impacts their ventures performance positively the analysis is based on a linked employee employer data set for the netherlands for the period 1999 2004

one or more growth processes evidence from new italian firms the paper proposes a descriptive model of firm growth which assumes that learning processes are conditional on existing competencies of the firm and its founders we suggest the idea that firms who do not grow under all realizations of potentially profitable opportunities can be considered as zero learning in order to explain why some firms are zero learning and how these are different from growing ones we put forward and discuss the hypothesis that both start up size and founders pre entry history affect the firm s ability to adjust to market using a sample of 3 905 italian firms born in 1999 and 2000 we find that individual competencies influence start up size but not directly growth we also find a significant nonlinear relationship between start up size and growth implying that firms which were born smaller than a given size grow significantly less the results support the hypothesis that multiple and heterogeneous growth processes coexist and that the growth process of microfirms below a given organizational threshold may be structurally different in the long run from that of firms starting up above that threshold

small business growth in the short run this paper examines the determinants of short run employment growth in very small firms in the services sector the study shows evidence of non linearities in the growth size relationship and it is argued that these non linearities reflect the short run constraints that small firms face in adjusting to demand shocks the paper also suggests that there are other systematic influences on growth apart from size the paper draws on survey evidence from the northern region of the united kingdom

accounting for endogeneity when assessing strategy performance does entry mode choice affect fdi survival firms choose strategies based on their attributes and industry conditions therefore strategy choice is endogenous and self selected empirical models that do not account for this and regress performance measures on strategy choice variables are potentially misspecified and their conclusions incorrect i highlight how self selection on hard to measure or unobservable characteristics can bias strategy performance estimates and recommend an econometric technique that has been developed to account for this effect although this concern applies to a wide range of strategy questions to demonstrate its effect i empirically examine if entry mode choice acquisition versus greenfield influences foreign direct investment survival in specifications that do not account for self selection i find that greenfield entries have survival advantages compared to acquisitions this confirms previous findings however the significance of this effect disappears once i account for self selection of entry mode in the empirical estimates the results confirm that estimates from models that do not account for self selection of strategy choice can lead to incorrect or misleading conclusions

firm foundations and the role of financing constraints improving the economic conditions for small and medium sized firms as well as start ups is high on the agenda of policy makers in this paper we discuss some policy options for fostering the creation of new enterprises the discussion focuses on measures which aim at helping start ups to overcome liquidity constraints in order to provide the background for this discussion the paper provides some new empirical results on the determinants of firm foundations as well as some stylised facts on the occurence of liquidity constraints in west germany we analyse the regional distribution of start up intensity and offer several hypotheses to explain this distribution to a large extent the regional distribution of start ups can be explained by the existing industry structure regional human capital as well as the regional public traffic infrastructure moreover we show that liquidity constraints occur more often in small and young firms

the role of linkages in firm performance evidence from southern italy abstract this paper estimates the probability of success of post entry performance of new firms using survey data from a group of southern italian small firms several factors involving inter firm linkages contribute to success especially production for order and subcontracting the empirical investigation supports hirschman s idea on the industrialization process and positive assessments of the downsizing phenomenon in italy

what characterizes a fast growing firm this paper seeks to empirically identify factors that influence the probability of being a fast growing firm in eastern and western germany descriptive analyses have shown that most firms experience only small positive or negative employment growth or stagnate over time the job generation mechanism rests with a handful of firms that increase their employment significantly over time the empirical analysis shows that the probability of being a fast growing firm depends on different factors when separating eastern and western germany as well as using different definitions of fast growing firms moreover the analysis shows that technology intensive manufacturing branches and knowledge based business related services do not generate the majority of fast growing firms

firm spin offs in denmark 1981 2000 patterns of entry and exit abstract this paper adds large sample evidence on the extent to which the likelihood of business failure or success is related to relationships between parent firms and their off spring for this purpose we make use of an exhaustive matched employer employee data set covering the entire danish private sector in years 1981 to 2000 to study firm entry and exit special focus is on spin offs a particular group of small entrants which are founded by groups of persons originating from the same former workplace we estimate a multinomial logit model in order to examine which characteristics of the founders and the parent firms increase the probability of spinning off next we carry out a duration analysis of the subsequent transitions of the spin offs and compare their exit risks with those of other entrant firms which have less strong parent progeny relationships in terms of worker flows

start up size and post entry performance the case of tourism services in italy a large and comprehensive longitudinal database is used to identify the start up of new firms in the italian tourist industry and their subsequent post entry performance analysed in particular is the link between the survival of hotels restaurants and catering firms in each italian region and their start up size by using logit estimation it is found that for eighteen out of twenty regions the relationship has the expected sign although only for twelve regions and the country as a whole did it turn out to be statistically significant

selection and firm survival evidence from the shipbuilding industry 1825 1914 several theories of firm performance can explain the well known observation that survival is positively related to age however a more mundane explanation selection bias driven by variations in firm quality may also underlie the phenomenon this paper employs a 90 year plant level panel data set on the u s iron and steel shipbuilding industry of the nineteenth and early twentieth centuries to discriminate between the explanations the shipbuilding industry exhibits the usual joint dependence of survival on age and size but this dependence is eliminated after controlling for heterogeneity by using preentry experience as a proxy for firm quality the evidence points to a dominant role for selection bias in creating the age dependence of survival at the same time preentry experience is found to have a large and extremely persistent effect on survival and this finding is inconsistent with standard explanations for the role of preentry experience on firm performance

employment stability in newly founded firms a matching approach using linked employer employee data from germany using a linked employer employee dataset and taking the perspective of individuals rather than firms this paper analyzes some effects of joining startups we show that entrants in new firms differ from those joining incumbent firms and we use a matching approach to compare a group of employees joining new firms in 1995 1996 with a control group entering incumbent firms our results indicate that individuals employment stability was higher in incumbent than in newly founded firms while their risk of becoming unemployed was lower in particular in eastern germany joining firms that were older than 6 years improved individuals employment prospects

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

inverted u relationship between r d intensity and survival evidence on scale and complementarity effects in uk data existing evidence on the relationship between rd ii rd and iii creative destruction as proxied by median r d intensity in the industry and the premium on business lending have negative effects on firm survival other findings concerning age size productivity relative growth pavitt technology classes and the macroeconomic environment are in line with the existing literature the results are strongly or moderately robust to different samples stepwise estimations and controls for frailty and left truncation

the survival and growth of new establishments in sweden 1987 1995 the aim of the study is to examine the survival of new establishments and to identify factors affecting their survival probability and their employment growth this study uses a unique data set on all new establishments that were created in sweden 1987 and 1988 with the exception of the construction industry the results show among others that i new establishments face a high risk of closing down ii the probability of establishment survival increases with the age and size of the establishment iii variables that are assumed to measure access to resources being a part of a multi unit firm and being new due to merger or dispersal have a positive effect on survival iv the number of employees at the start up year has a negative effect on the employment growth and v demographic and educational factors are important in explaining survival and growth

do newly founded firms pay lower wages first evidence from germany using a linked employer employee data set for germany this paper analyses wage setting in a cohort of newly founded and other establishments from 1997 to 2001 while theory provides alternative explanations for higher or lower wages in newly founded firms we show empirically that start ups tend to pay lower wages ceteris paribus on average wages in newly founded establishments are 8 lower than in similar incumbent firms this negative wage differential is substantially smaller in eastern than in western germany the wage differ ential is shown to decline over time as the newly founded firms become more mature

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

the life history of cohorts of exits from german manufacturing an investigation of the life history of three cohorts of exits based on longitudinal data covering the population of all manufacturing firms in a german federal state reveals three empirical regularities 1 although the probability of exit tends to decline with age ceteris paribus only about a quarter of all exits is from the group of young firms aged five years or less 2 only a minor fraction of exits lived through a period of continous decline of employment for five years or more before closing down 3 the impact effect of job loss due to exits can differ sharply from the long run effect

the post entry performance of new small firms in german manufacturing industries while recent years have witnessed a growing interest in research on market entry by new firms evidence regarding their postentry performance is scarce this paper uses longitudinal data for small firms that entered german manufacturing industries between 1979 and 1982 and monitors their performance until 1990 entrants face a high risk of failure hazard rates tend to increase during the first years and to decrease afterwards decline of employment in a cohort due to exits and shrinking firms is compensated by growing survivors no clear cut nexus between start up size and probability of survival shows up copyright 1994 by blackwell publishing ltd

does gibrat s law hold evidence from canadian retail and manufacturing firms this paper investigates the validity of gibrat s law holding for firms in manufacturing and retail trade sectors the object is to expand our knowledge of gibrat s law to include non manufacturing firms a unique longitudinal firm level database which contains information on canadian incorporated establishments enables the inter industry comparison the findings of the analysis are that gibrat s law is violated in both manufacturing and retail sectors violations of gibrat s law for both sectors include i growth rates that depend on firm size ii growth variability that depends on firm size and iii a negative persistence of firm growth finally age effects or selection effects are not the causes of these violations