Purpose – The purpose of this paper is to examine the factors that affect the discontinuance of business of start-up contractors and property companies in Japan. It will help managers of start-up contractors and property companies to effectively manage their companies. Furthermore, it will be useful for stakeholders with links to start-up companies to analyse the credit risks associated with these businesses. Design/methodology/approach – This study uses data from the Japan Finance Corporation Business Startup Panel Survey to empirically examine the factors that affect the discontinuance of business of start-up companies. A binary logit model is used as the statistical method. Utilising the resource-based view theory, this study explores the relationships between resources and company capabilities at both start-up and discontinuance of business. Findings – Start-up contractors tend to discontinue their business, as managers grow older and when a sufficient workforce cannot be found at start-up. On the other hand, start-up property companies tend to discontinue business when securing of orderers is not sufficient at start-up. Originality/value – This study analyses start-up contractors and property companies and finds that factors that affect the discontinuance of business differ across construction and property industries, with each industry facing important, sector-specific issues.

This study summarises the independent competitive bid entry qualifications examination of public works in Japan. Contractors who wish to undertake public works must be scored by a nationwide standardised objective examination called Keiei Jikou Sinsa or Keisin in Japanese. They must be graded on the basis of the score of not only the objective examination but also an independent assessment by the orderers. This study explains the calculation of Keisin using a virtual contractor. This study also discusses the effectiveness of Keisin and the efficiency of the grading system. Keisin is used not only for bid entry qualifications in public works, but also to evaluate construction companies by the orderers of private works and financial institutions. Additionally, the Ministry of Land, Infrastructure, Transport and Tourism uses Keisin to promote subscription to social insurance and thus contribute to improve workers' lifelong protection. The Japanese grading system in public bids underpins competitive bidding among firms of similar scale and capability, while providing opportunities for SMEs in every industry class to obtain construction contracts as prime contractors.

Purpose – The purpose of this study is to examine what factors affect the exit of small and medium-sized enterprises (SMEs) from tendering for public works in the Japanese construction industry using the Keiei Jikou Sinsa or Keisin (the database for evaluation of construction companies in Japan). Design/methodology/approach – This study empirically analyzes SMEs’ exit using the binary logit model. For the empirical analysis, it uses the scores as well as financial and non-financial performance indicators of Keisin data. Findings – The Keisin scores (the total score and W score), financial performance indicators (cash flow from operations and capital) and non-financial performance indicators (having unemployment insurance and operating years) significantly affect SME exits. Although the Keisin data are used for bid entry qualifications of public works, they can be applied to a factor analysis of the exit of SMEs in the construction industry. Originality/value – As there exists little empirical analysis of the exit of SMEs globally, this study contributes to the research on this phenomenon.

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