Survival of New Plants in Different Industry Environments in Norwegian Manufacturing: A Semi-Proportional Cox Model Approach

• Published in: Small business economics Vol. 14; no. 1; pp. 65 - 82
• Main Authors: Tveterås, Ragnar, Eide, Geir Egil
• Format: Journal Article
• Language: English
• Published: Dordrecht Kluwer Academic Publishers 01.02.2000; Springer Nature B.V
• Subjects: Business conditions; Business structures; Capital investments; Capital productivity; Cohort analysis; Competition; Datasets; Econometrics; Economic models; Economic theory; Employment; Entrepreneurs; Entrepreneurship; Estimation; Evolution; Industrial economics; Industrial market; Industrial plants; Industrial productivity; Job creation; Manufacturing; Manufacturing industries; Market penetration; Modelling; Norway; Plants; Profitability; Recessions; Self employment; Size of enterprise; Small and medium sized enterprises; Small business; Studies; Norway
• ISSN: 0921-898X; 1573-0913
• DOI: 10.1023/a:1008189411442

Using a rich plant level data set from Norwegian manufacturing we analyse possible determinants of survival for ten plant cohorts during the period 1977-92. By specifying a semi-proportional hazards model of plant exit, we are able to accommodate for structural differences between entrepreneurial entrants and new plants of existing firms. Industry heterogeneity in terms of plant size, capital intensity and productivity is also accounted for in the model. According to our estimated models, there are significant structural differences between new small firms and new plants of existing firms. For example, the size of the plant relative to the industry average had less influence on the survival probability for entrepreneurial entrants. Hence, the empirical results suggest that the two types of entrants establish themselves in different market niches with distinct technological characteristics. The results underscore the necessity of adjusting for the dissimilar environments facing plants which enter different industries.