You are on page 1of 6

Introduction

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.
Some empirical studies have dealt with firm 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. Macro based factors are also relatedIt is 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. Furthermore, firms which are more efficient than others expand.

Article :

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
prospects

Mergers, Acquisitions and Firms’ Performance: Experience of Indian Pharmaceutical Industry


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
companies.

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.

The Relationship between Innovation and Firm Performance: An Empirical Evidence from
Turkish Automotive Supplier Industry
Innovation is widely regarded as one of the most important sources of sustainable competitive
advantage in an increasingly changing environment, because it leads to product and process
improvements, makes continuous advances that helps firms to survive, allows firms to grow
more quickly, be more efficient, and ultimately be more profitable than non-innovators.(Volume
75, 3 April 2013, Pages 226-235)

Impact of Knowledge Capital on Performance of Firms: A Case of Firms in Finland (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
firm’s financial statement.
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.
The results imply that a firm looking for short - term growth should invest in organizational
capital whereas a firm looking for long - term growth should invest in individual capital.
According to article knowledge capital has become a major factor in a firm’s success.
Gap in knowledge/ research and discussion:
The majority of firms with a stable or growing employment development, there are however no clear
indications of any relationship between employment growth rate and exit rate. We therefore conclude
that there is no empirical support for our assumption that high growth rates have a negative impact on
the survival rates of firms. From a policy perspective, we thus find 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 here can be elaborated in various ways. First of all, the model can
be estimated for separate sectors of industry. A second option is to estimate duration models rather than
multinomial log it models. Finally, research on this topic should be conducted on the developing
countries like Bangladesh and so on.

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 rates and survival rates: the population of small firms will show higher average growth
rates and lower survival rates 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.

Conclusion:

This paper examines 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).

Reference and reference link

https://www.econstor.eu/handle/10419/120302

https://www.sciencedirect.com/science/journal/18770428

http://www.ejbe.org/EJBE2016Vol09No18p041LEHTIMAKI-LEHTIMAKI.pdf

Dunne, P. and A. Hughes (1994), Age, size, growth and survival: UK companies in the 1980s, 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, Oxford Economics
Papers 56, 597-620.
Goddard, J., J. Wilson and P. Blandon (2002), Panel tests of Gibrat’s law for Japanese manufacturing,
International Journal of Industrial Organization 20(3), 415-433.

Greiner, L.E. (1972), Evolution and revolution as organizations grow, Harvard Business Review 50(4).
Jovanovic, B. (1982), Selection and the evolution of industry. Econometrica 50(3), 649-670.

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, 227-246.
McDougall, P.P., R.B.

Agarwal, R. and D.B. Audretsch (2001), Does Entry Size Matter?, Journal of Industrial Economics 49(1),
21-43.

https://scholar.google.com/scholar?
start=10&q=related:XolAxVfIcuEJ:scholar.google.com/&hl=en&as_sdt=0,5&as_vis=1

https://www.econstor.eu/handle/10419/120302

The Determinants of Firm Growth in Small and Micro Firms - Evidence on Relationship Lending Effects by
Mervi Niskanen, Jyrki Niskanen :: SSRN

https://digitalknowledge.babson.edu/cgi/viewcontent.cgi?
referer=https://scholar.google.com/&httpsredir=1&article=2478&context=fer

http://dergipark.gov.tr/auiibfd/issue/32336/359313

https://scholar.google.com/scholar?q=related:0PAt9bZao-
UJ:scholar.google.com/&hl=en&as_sdt=0,5&as_vis=1

https://www.researchgate.net/profile/Andres_Jung/publication/241768987_Firm_growth_in_a_regional_tra
de_integration_context/links/56d0adbc08aeb52500cd827c/Firm-growth-in-a-regional-trade-integration-
context.pdf

https://link.springer.com/article/10.1023/a:1019678429111

https://www.google.com/url?
sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&ved=0ahUKEwjwlqyRhpHaAhXKLY8KHbNb
A3UQFggpMAA&url=https%3A%2F%2Fwww.sciencedirect.com%2Fscience%2Farticle%2Fpii
%2FS1877042813005624&usg=AOvVaw1wvvf2zyxKvp28hRtHn1Ia

https://link.springer.com/article/10.1023/A:1026512005921
Artz, K.W. Norman, P.M. and Hatfield, D.E., 2003. “Firm performance: A longitudinal study of R&D, patents,
and product innovation,” presented at the Acad. Manag. Meeting, Seattle, WA, 2003, TIM, B1-6.

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
Research, Vol. 57, pp. 1341-51.

Cohen W, Klepper S. A., 1996. “Reprise of size and R&D”. Economic Journal, 106, pp.925–51.

Ehie, I.C., Olibe, K., 2010. “The effect of R&D investment on firm value: an examination of US
manufacturing and service industries”. International Journal of Production Economics 128 (1), pp.127–135.