Unemployment and Firm Entry and Exit: An Update on a Controversial Relationship

Santarelli, Enrico; Carree, Martin; Verheul, Ingrid

doi:10.1080/00343400801968361

Cited by 83 publications

(71 citation statements)

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“…As for the differences in the labour market, the literature has concentrated on the effects of unemployment. On the one hand, an increase in unemployment may have a negative impact on exit because self-employed individuals face fewer job opportunities and are thus less prone to exit (Carree and Thurik, 1996;Lin et al, 2001;Nyström, 2007aNyström, , 2007bCarree et al, 2008;Santarelli et al, 2009). On the other hand, unemployment is a proxy for the level of activity of the economy and an increase may result in an increase in the number of exits (Buzzelli, 2005;Brixy and Grotz, 2007;Fertala, 2008).…”

Section: Firm Exit In Developed Countriesmentioning

confidence: 99%

The determinants of exit in a developing country: core and peripheral regions

2015

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Section: Firm Exit In Developed Countriesmentioning

confidence: 99%

The determinants of exit in a developing country: core and peripheral regions

2015

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“…In general, locational context is likely to play an important role not only in the rationale for undertaking entrepreneurial activities (Birley and Westhead 1992;Jones-Evans Thompson, and Hill 2008;Santarelli et al 2009;Williams and Williams 2014), but also the nature of the activities undertaken (Frankish, Roberts, and Storey 2010), as well as the hurdles that need to be overcome in order to survive (Rouse and Jayawarna 2006;Williams and Williams 2011). It is clear that weaker locations, with higher unemployment and lower wages may induce entrepreneurship due to necessity driven motives that reduce the likelihood of survival (Bergmann and Sternberg 2007;Santarelli and Vivarelli 2007).…”

Section: Silva and Mccomb 2012)mentioning

confidence: 99%

Entrepreneurship and the determinants of firm survival within regions: human capital, growth motivation and locational conditions

Huggins

Prokop

Thompson

2017

Entrepreneurship & Regional Development

117

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Despite a growing body of research on firm survival, little is known about the factors impacting upon survival rates at a micro-spatial level. This study, therefore, analyses firm survival across local environments in the context of a peripheral region; namely, the case of Wales in the UK. It examines how theories relating to human capital, growth motivation and locational conditions may explain survival within a region. Drawing on data of survival patterns for a cohort of firms, it is found that each of the three theories at least partly explain firm survival, with it being clear that human capital relating to the experience of entrepreneurs, as well as the growth motivation of their firms resulting from the strategic choices they make, impact upon rates of survival. It is also found that the local environment contributes to the likelihood of its survival. In particular, it is found that locational factors have a potential influence on the human capital allocated to enterprise, as well as how this capital is utilised via growth motivation. This suggests that not only do locational factors contribute to differing rates of entrepreneurship, but that such factors also impact on the durability of firms over time. Abstract Despite a growing body of research on firm survival, little is known about the factors impacting upon survival rates at a micro-spatial level. This study, therefore, analyses firm survival across local environments in the context of a peripheral region; namely, the case of Wales in the UK. It examines how theories relating to human capital, growth motivation and locational conditions may explain survival within a region. Drawing on data of survival patterns for a cohort of firms, it is found that each of the three theories at least partly explain firm survival, with it being clear that human capital relating to the experience of entrepreneurs, as well as the growth motivation of their firms resulting from the strategic choices they make, impact upon rates of survival. It is also found that the local environment contributes to the likelihood of its survival. In particular, it is found that locational factors have a potential influence on the human capital allocated to enterprise, as well as how this capital is utilised via growth motivation. This suggests that not only do locational factors contribute to differing rates of entrepreneurship, but that such factors also impact on the durability of firms over time.

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“…Garofoli (1994) argues that rich regions in terms of financial assets measured by bank deposits enjoy the easiness of accessibility to capital to start a firm. Previous empirical studies argue that number of patent application measures technological knowledge accumulation on new firm formation (Santarelli et al, 2009;Shane, 1996). However, Choi and Phan (2006) consider patenting as a fence to control knowledge dispersion which deters new entrepreneurs from using analogous knowledge.…”

Section: Literature Reviewmentioning

confidence: 99%

“…Moreover, unemployment as a supply-side variable encourages people to start their own businesses as the opportunity cost of being self-employed is likely to decrease for unemployed individuals with low prospects of paid employment (Choi & Phan, 2006;Davidsson, Lindmark, & Olofsson, 1994). However, it may also reflect low market demand conditions and unavailability of required capital to be self-employed (Santarelli et al, 2009). The annual number of closed firms in a sector can also be a sign for an inappropriate demand circumstance which deters new entries to the sector (Choi & Phan, 2006).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Wage is the cost of hiring a worker for potential entrepreneurs. Higher wages as a supply variable means a higher opportunity cost and a higher cost of hiring a worker which may be expected to deter potential entrepreneurs from starting up a business (Bosma et al, 2008;Fritsch, 1992;Okamuro & Kobayashi, 2006;Santarelli, Carree, & Verheul, 2009;Wang, 2006). Moreover, unemployment as a supply-side variable encourages people to start their own businesses as the opportunity cost of being self-employed is likely to decrease for unemployed individuals with low prospects of paid employment (Choi & Phan, 2006;Davidsson, Lindmark, & Olofsson, 1994).…”

Section: Literature Reviewmentioning

confidence: 99%

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Regional determinants of the small and medium size manufacturing firm entry in a developing country: evidence from Turkey

Özer¹

2017

Pressacademia

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To cite this document Ozer, M., (2017). Regional determinants of the small and medium size manufacturing firm entry in a developing country: evidence from Turkey. Journal of Economics, Finance and Accounting (JEFA), V. ABSTRACTPurpose-This study investigates regional determinants of the small and medium size firm entry in the manufacturing sector for a developing country, Turkey, in which regional economic development disparities are common. Methodology-Panel data was collected for the period between 2004 and 2009 and analysed by using Feasible GLS estimation technique. Findings-The results show that entrepreneurship culture, the structure of the industry, industry agglomeration overall are the most important factors stimulating the entry rates. However, the number of patent application as a supply-side variable seems to be the main deterrent of new firm entry by working as a fence in front of new firms. The average wage and low skill labor in labor force are the other factors that negatively influence new firm formation in demand and supply side of the economy. Conclusion-Some of these regional variables affecting business formation in developed countries have no influence on the small and medium size firm formation in developing countries. This suggests that the determinants could be country specific. Therefore, policy makers should be careful while using evidence from developed countries to stimulate firm start-ups in developing countries.

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Unemployment and Firm Entry and Exit: An Update on a Controversial Relationship

Cited by 83 publications

References 50 publications

The determinants of exit in a developing country: core and peripheral regions

The determinants of exit in a developing country: core and peripheral regions

Entrepreneurship and the determinants of firm survival within regions: human capital, growth motivation and locational conditions

Regional determinants of the small and medium size manufacturing firm entry in a developing country: evidence from Turkey

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