Business Survival and the Decision to Exit

Abstract

The decision to exit is examined for a cohort of over 12,000 plants established in 1976. Using a longitudinal data base, the performance of the establishments is analysed over the subsequent 10 years. The empirical evidence suggests that start-up size, ownership status, and the industry environment affect the likelihood of a start -up subsequently exiting. Plants with more employees during the start -up year are found to have a lower likelihood of exit than do smaller plants. Similarly, establishnwnts which are independent are found to have a lower likelihood of exit within the following years than do newly created establishments belonging to a multi-plant firm. However, the determinants of exit apparently vary along with the age of the establishment. Innovative activity is found to raise the likelihood of establishment exit in the short run but lower it in the longer run.

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