Working Paper: CEPR ID: DP1203
Authors: Jose Mata; Pedro Portugal; Paulo Guimaraes
Abstract: This paper examines the longevity of entrants. We find size to be an important determinant of the chances of survival, this being particularly relevant to de novo entrants as compared to entry by established firms. Current size is also found to be a better predictor of failure than initial size. Moreover, our findings indicate that, after controlling for size differences, past growth matters for survival suggesting a partial adjustment process for firm size in the post entry period. Finally, new plants are more likely to live longer if they enter growing industries or industries with little entry activity.
Keywords: entry; survival; duration
JEL Codes: L11; L60
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| current plant size (O41) | lower exit probabilities (C29) |
| past growth (O41) | lower probability of exit (C62) |
| industry growth (L16) | longevity of new plants (C41) |
| high entry rates (L26) | lower survival (J17) |
| time (C41) | survival (C41) |
| type of entry (Y90) | survival outcomes (C41) |
| growth since entry (O41) | lower probability of exit (C62) |
| diversified entrants (L19) | higher exit probabilities (C29) |