Firm Entry, Survival, and Exit

Abstract

This paper presents a brief literature survey on firm entry, survival, and exit. What happens to new firms subsequent to entry? How are they able to survive? What determines entry, exit, and survival? Is there any effect of industry-, firm-, or country-related factors on these issues? How does technological development affect survival? Why are new firms’ exit rates so high? Why some firms die, while others survive? These are the basic questions that many economists concern? Decisions of the firms on entry and exit from the market are dependent on a variety of market properties such as competition level, demand, barriers to entry, scale economies, and productivity. There may be positive correlation between entry and exit rates. Firm size, firm age, technological capability, and capital-intensity are some of very important factors on exit, entry, or survival of a firm. Empirical and theoretical studies, although their number is small, investigate various aspects of these topics. Especially new firms’ entry and exit process, firms’ survival conditions, determinants of entry and exit are a few major research topics. This paper presents the findings of studies conducted by researchers in various countries.

DOI: 10.5901/ajis.2013.v2n9p160