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In this study, factors which determine the growth and the survival performance of the firms are
discussed with the sample of Turkish manufacturing industry. According to the studies, firm
survival and growth performance are related to firm, entrepreneur and industry based factors
affecting survival and growth performance of the firms (Hymer & Pashigian, 1962).

In this aspect, firms became aware of that keeping up with continuously changing conditions is
possible only by understanding firm performance, and they aimed for healthy growth (Taticchi et
al). Firm based factors include basic factors about the firms like specifications, employment,
size, age, export experience, financial sources, abilities, operational elements, location of
establishment, production structure and strategies, its strengths and weaknesses, innovation
trends, aims and targets etc. On the other hand, environmental and macro based factors include
macro-economic conditions or market development stages, and additionally external factors
outside the control of the firm. Micro based factors are widely acknowledged that young firms
and fast growing firms have a strong impact on economic growth and employment creation. It is
not only entrepreneurial dynamics associated to entry and exit of new firms, but also the ability
of firms to survive and grow, that is important for economic development. However numbers of
research were conducted on this topic and the results are inconclusive.

Yasuda’s (2005) study on Japanese manufacturing industry, Segarra and Callejon’s (2002) study
on Spanish manufacturing industry, McPherson’s study (1996) on micro firms in South Africa,
Wagner’s (1992) and Almus and Nerlinger’s studies (2000) on German manufacturing industry
all release that there is a negative relationship between firm size and expected growth. The larger
the initial size of a firm, the more likely it is closer to the minimum efficient size which is needed
to operate efficiently in a market, the less will be the cost disadvantage imposed by the size
disadvantage imposed by the size disadvantages.Furthermore,firms which are more efficient than
others expand. Here are some related articles to give an overview of the research that were
conducted throughout the years.


Impact of Knowledge Capital on Performance of Firms: A Case of Firms in Finland

International Ataturk Alatoo University. Eurasian Journal of Business and Economics,
2016, 9 (18), 41-59.

This article approaches knowledge capital from a different perspective by studying public
information in order to measure the financial value added by knowledge capital observed from a
firm15’s financial statement. This information was used to explain the financial performance of a
firm. The results of the study indicate a statistically significant effect between the change in
individual capital and economic performance as well as between organizational capital and
economic performance.


Buhari; Baydar, Vedat. IIB International Refereed Academic Social Sciences Journal;
Istanbul Vol. 5, Iss. 15, (Jul-Sep 2014): 215-228.

In this study, the relationships between firm growth and firm age, size, commercial strategy,
entrepreneur’s human capital and innovation efforts are analyzed by using survey data collected
from firms operating in Isparta, which is the most significant production area in forest products
industry. The negative effects of firm age and size on growth are confirmed in forestry products
firms, too..

The Relationship between Innovation and Firm Performance: An Empirical Evidence from
Turkish Automotive Supplier Industry Volume 75, 3 April 2013, Pages 226-235

The main purpose of this study is to examine the relationships between innovation and firm
performance. Analysis results demonstrated that technological innovation (product and process
innovation) has significant and positive impact on firm performance, but no evidence was found
for a significant and positive relationship between non- technological innovation (organizational
and marketing innovation) and firm performance.

The risk of growing fast: Does fast growth have a negative impact on the survival rates of
firms? Frontiers of Entrepreneurship Research Volume 32 |Issue 9 CHAPTER IX. THE

Fast-growing firms are considered as the central drivers of job creation in the economy. There is
an abundance of literature on the separate subjects of firm growth and firm survival. However,
the relationship between survival and growth is neglected.

Firm growth: regional, industry & strategy effects in a Latin American economy Andrés
Jung1, Cecilia Plottier1, Heber Francia 1 June 2011 2011 ERSA Congress

This paper studies the association of business environmental factors (participation in regional
value chains with global presence and industry productivity gains) and firm level strategies
(innovation and export orientation) with firm growth, in a small and relatively open developing
economy (Uruguay), located in a vast economic area in Latin America (MERCOSUR). We
found that: a) it is relevant for growth of SMEs located in a small developing country (Uruguay),
to integrate in regional value chains with global presence; b) industries that show productivity
growth offer a favorable environment for firm growth; and c) firm innovation and export
oriented strategies seem to foster firm growth.
Mergers, Acquisitions and Firms’ Performance: Experience of Indian Pharmaceutical
Eurasian Journal of Business and Economics 2010, 3 (5), 111-126.

In the context of policy reforms in the 1990s in general and three important amendments made to
the Indian Patent Act (1970) in 1999, 2002 and 2005 in particular, the present paper makes an
attempt to examine the impact of MA on financial performance of Indian pharmaceutical

The relationship between size and growth: the case of Chinese listed companies.(Volume
16, 2009 - Issue 18)

To extend the research on Gibrat's law in transformational countries, this article uses quantity
regression to test whether the Law holds for Chinese listed companies in six industries from
1997 to 2003. Although it was rejected in four out of six industries for the 6-year period, it
received strong support in five industries year by year, which implied that size convergence was
a slow process in China.

Performance Measurement of Turkish and Chinese Manufacturing Firms: A Comparative

Analysis…Eurasian Journal of Business and Economics 2008, 1 (2), 71-83

The aim of this paper is to compare the relative efficiencies of manufacturing companies of
China, one of the BRIC countries (BRIC: Brazil, Russia, India, China) that are expected to
dominate the world economy in 2050s, and Turkey, that is an attractive emerging market
(Morgan Stanley Index 2006) with great potential.

The Determinants of Firm Growth in Small and Micro Firms - Evidence on Relationship
Lending Effects 24 Pages Posted: 16 Jan 2006

This paper examines the impact of firm level variables on the growth of small and micro firms
operating in Finland. The results of our primary regressions show that close lending relationships
enhance growth for all firms, but that only the larger firms in our sample benefit from more
competitive banking markets.

The Determinants of Survival of Spanish Manufacturing Firms (November 2004, Volume

25, Issue 3, pp 251–273)

This paper analyses the factors determining Spanish manufacturing firms’ survival–and exit. Our
results suggest that the probability of exit is higher for small firms and also for young and mature
firms. Furthermore, exporting firms and firms performing R&D activities enjoy better survival
Small Business Economics
December 2002, Volume 19, Issue 4, pp 291–306 | Cite as
The Determinants of Growth for Small and Medium Sized Firms. The Role of the
Availability of External Finance

We present an empirical analysis of the determinants of growth for a sample of Italian small and
medium sized firms.Our results suggest that the hypothesis of independence of firm growth from
the initial size and other factors (usually referred to as Gibrat's law in the literature) is not
rejected for large firms, while it does not hold for small and medium sized firms under financial
constraints in a "bank-oriented" financial system in which access to external finance is difficult.

Almus, M., & Nerlinger, E.A. (2000). Testing “Gibrat’s Law” for Young firms –
Results for West Germany. Small Business Economics, 15, 1-12.

Using data from the ZEW-Foundation Panel (West), "Gibrat's law" is rejected for the group of
young firms belonging to technology intensive branches as well as for those operating in non-
technology intensive branches in all periods examined but no significant differences between
both firm groups can be observed.

Dimensions of Internationalization of Manufacturing Firms in the Apparel

Industry . Chetty, S.K. (1999). European Journal of Marketing, 33(1/2), 121-142

Studies that dimensions of internationalization of manufacturing firms. Five case studies of

small to medium‐sized manufacturing firms provide an overview of the dimensions of
internationalization and propose that a firm can be more internationalized in some dimensions
than in others.

Negative results from the research.

Yasuda’s (2005) study on Japanese manufacturing industry, Firm Growth, Size, Age and
Behavior in Japanese Manufacturing

This paper investigates the relationship between firm growth and firm size, firm age and firm
behavior, such as R&D activity and subcontracting, based on the data of nearly 14,000 Japanese
manufacturing firms. “The stylized facts” that firm size and age have a negative effect on firm
growth are confirmed in the case of Japanese manufacturing firms. Although subcontracting to
only one company has no significant effect on firm growth, it has a significant positive effect on
a firm’s survivability.
Segarra and Callejon’s (2002) study on Spanish manufacturing industry, New Firms'
Survival and Market Turbulence: New Evidence from Spain

The availability of longitudinal data for individual firms has allowed the improvement of the
existing knowledge on market structure dynamics. The behavior of new firms seems to fit the
learning model. The estimation of a hazard function demonstrates that the main regularities
affecting the likelihood of survival of young firms are quite similar in different types of

McPherson’s study (1996) on micro firms in South Africa:Growth of micro and small
enterprises in southern Africa

As policy-makers and members of the donor community have recognized the importance of
micro and small enterprises in developing countries, the paucity of information regarding the
ways in which MSEs grow and change over time has become glaring. The results also indicate
an inverse relationship between firm growth and both firm age and firm size.

Wagner’s (1992) and Almus and Nerlinger’s studies (2000) on German manufacturing
industry all release that there is a negative relationship between firm size and expected

Within the context of the econometric analyses conducted in the present study, firms are
subdivided into young firms belonging to technology intensive and non-technology intensive
branches as well as in different size classes. Using data from the ZEW-Foundation Panel (West),
"Gibrat's law" is rejected for the group of young firms belonging to technology intensive
branches as well as for those operating in non-technology intensive branches in all periods
examined but no significant differences between both firm groups can be observed.

Gap in knowledge/ research and discussion:

Moreover, after going through some article it is quite obvious that the majority of firms with a
stable or growing employment development, says that there are however, no clear indications of
any relationship between employment growth rate and exit rate. From a policy perspective, we
thus found no evidence that policies stimulating fast-growing firms may result in more firm
deaths. This study should be seen as a first exploration of the relationship between firm’s
growth and firm’s survival. Further research is required to dive deeper into this relationship and
explore the size of the impact of employment growth on the probability to exit due to firm death.
The models presented in this research can be elaborated in various ways. However, some notice
able findings are that the model can be estimated for separate sectors of industry, second option
is to estimate duration models rather than multinomial log it models, and research on this topic
should be conducted on the developing countries like Bangladesh and other countries too.

Finally, this paper examines that the performance and characteristics of the firms in
manufacturing industry .This means the overall research was done on how the firms are entering
the industry and how are they surviving in the industry. What are their plans, how are they
contributing in the economy, and the other entire macro-economic factor. Moreover, from a
business point of view, fast employment growth is generally related to high sales revenue. From
a macro-economic perspective, fast growing firms are considered as central drivers of job
creation. Growing fast may, however, also be disadvantageous in the sense that firms may not be
able to respond immediately to high employment growth in terms of making necessary changes
to their organization and management structure. This may put the firm in the risk of exiting due
to firm death. Both from a theoretical and a policy perspective it is interesting to investigate the
impact of a recent period of fast employment growth on the survival of the firm. So far, little
attention has been paid to

the possibility of the effect that employment growth rates may have on firm survival rates. There
is, however, an abundance of literature on the separate subjects of firm growth and firm survival.
In this section, we review some classical theories and discussions on firm growth and firm
survival, and their main determinants including firm size and firm age. Some stylized facts are
generated to suggest that firm growth may indeed affect firm survival or growth performance.

Both firm survival and firm growth performance are important characteristics of firm dynamics.
Firm survival, or rather its opposite firm exit, has two opposite economic effects. On the one
hand, firm exit has various negative effects, including financial costs (such as unpaid bills and
wages), unemployment and the depreciation of (firm-specific) human capital. On the other hand,
firm exit is a necessary aspect of creative destruction (Schumpeter, 1934), where under-
performing firms are replaced by new and innovative firms. Firm growth is important for
generating jobs (Carree and Klomp, 1996). In particular fast growing firms are considered as the
central drivers of job creation in the economy (Birch, Haggerty and Parsons, 1995; Henreksen
and Johansson, 2008). The entry of such firms, their growth and decline, and their exit is at the
core of economic dynamics (Coad and Hölzl, 2010).

Two main stylized facts emerge from the existing literature: firm size is negatively related to
firm growth and positively related to firm survival. This suggests a negative relationship between
growth performance rate and survival rate: the population of small firms will show higher
average growth rate and lower survival rate than populations of larger firms. This negative
relationship does not imply a causal effect of firm growth on firm survival, but merely reflects
that firm growth and firm survival have an opposite relationship with firm size. Note that this
negative relationship only applies at the aggregated level of size classes, but not at the level of
individual firms. Nevertheless, research on such topic has no conclusion as the technology, ideas
are not same as old days people are changing so as the business methods.

Reference and reference link

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Journal of Industrial Economics 42(2), 115-140.

Ahmad, N. (2006), A Proposed Framework For business Demography Statistics, OECD Statistics
Working Papers 2006/03, OECD Publishing

Almus, M. and E. Nerlinger (2000), Testing ‘Gibrat’s law’ for young firms-empirical results for

West Germany, Small Business Economics 15, 1-12.

Geroski, P.A. (1995), Market Structure, Corporate Performance, and Innovative Activity, Oxford
University Press Geroski, P. A. and K. Gugler (2004), Corporate growth convergence in Europe,
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Goddard, J., J. Wilson and P. Blandon (2002), Panel tests of Gibrat’s law for Japanese
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Greiner, L.E. (1972), Evolution and revolution as organizations grow, Harvard Business Review
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Haveman H.A. (1995), The Demographic Metabolism of Organizations: Industry Dynamics,

Turnover, and Tenure Distributions, Administrative Science Quarterly 40, 586-618.

Henreksen, M. and D. Johansson (2008), Gazelles as Job Creators - A Survey and Interpretation of
the Evidence, IFN Working Paper, 733.

Liu, J., M. Tsou and J. Hammitt (1999), Do small plants grow faster? Evidence from the Taiwan
electronics industry, Economics Letters 65(1), 121-129.

Mata, J. and P. Portugal (1994), Life Duration of New Firms, Journal of Industrial Economics 42,
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Agarwal, R. and D.B. Audretsch (2001), Does Entry Size Matter?, Journal of Industrial Economics
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The Determinants of Firm Growth in Small and Micro Firms - Evidence on Relationship Lending
Effects by Mervi Niskanen, Jyrki Niskanen :: SSRN

Artz, K.W. Norman, P.M. and Hatfield, D.E., 2003. “Firm performance: A longitudinal study of R&D,
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Bokpin, G.A., 2009. “Macroeconomic development and capital structure decisions of firms: Evidence
from emerging market economies”, Studies in Economics and Finance, 26(2), pp. 129-142.

Chen, J.J., 2004. “Determinants of capital structure of Chinese-listed companies”, Journal of Business
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Ehie, I.C., Olibe, K., 2010. “The effect of R&D investment on firm value: an examination of US
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