The Micro and Macro Approach to the Exit of Iranian Industrial Firms

Document Type : Research Paper

Authors

1 Assistant Professor of Economics, Yazd University

2 Ph.D. Candidate in Economics, Yazd University

3 Associate Professor of Economics, Yazd University

Abstract

The micro and macro approach to the exit firms of Iranian industries
The purpose of this study was to investigate the effect of factors affecting the exit firms at three levels of firm, industry, and environments (macro) using the logite panel model for the period of 1975-1393. The results of this study have shown that at the firm level, productivity has a significant effect on the exit of the firm, in other words, with the increase in productivity, the probability of exit from the firm decreases. At the industry level, the rate of entry and the index of concentration have a significant effect on exit, and the increase in the rate of entry will result in an increase in the probability that the exit firm will from the industry. so the structure of the market moves into competition, the probability that a firm will leave the industry will increase. At macro level, economic growth, inflation, concessional facilities and population size had a significant effect on exit. Increasing economic growth, giving more bank loans to the manufacturing sector and increasing the population will reduce the probability of exit, but rising in inflation will help increase exit probability.

Keywords

Main Subjects

References

  1. Adizes, I. (1990). Corporate lifecycles: How and why corporations
  2. Agarwal, R. (1998). "Small firm survival and technological activity. Small Business Economics 11(3): 215-224.
  3. Arcuri, G., sten, M., & cresde, F. (2019). Spatial patterns and determinants of firm exit: an empirical analysis on France. The Annals of Regional Science 62(1): 99-118.
  4. Austin, J., & Rosenbaum, D. (1990). The determinants of entry and exit rates into US manufacturing industries. Review of Industrial Organization 5(2): 211-223.
  5. Baggs, J. (2005). Firm survival and exit in response to trade liberalization. Canadian Journal of Economics/Revue canadienne d'économique 38(4): 1364-1383.
  6. Bain, J. (1956). Barriers to new competition: their character and consequences in manufacturing industries, Harvard University Press Cambridge, MA.
  7. 7.      Baltagi, B. (2008). Econometric analysis of panel data, John Wiley & Sons.
  8. Barbot, C. (2001). Industrial determinants of entry and survival: the case of Ave, Faculdade de Economia, Universidade do Porto.
  9. Basile, R., Rsand, L., & Mins, A. (2017). Do agglomeration externalities affect firm survival? Regional Studies 51(4): 548-562.
  10. Beheshti, m., Senaobar, N., & Farzaneh, H. (2009). Investigating the factors affecting the net entry and exit of firms in industry iran. Iranian Economic Research 38 (13). (In Persian)
  11. Bernard, A., & Jensen, B. (2002). The deaths of manufacturing plants, National bureau of economic research.
  12. Bernard, A., & Jensen, B. (2007). "Firm structure, multinationals, and manufacturing plant deaths." The Review of Economics and Statistics 89(2): 193-204.
  13. Box, M. (2008). "The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden." Small Business Economics 31(4): 379-393.
  14. Che, Y., Lu, Y., & Tao, Z. (2017). Institutional quality and new firm survival. Economics of Transition 25(3): 495-525.
  15. 15.  Dickinson, V. (2006). Future profitability and growth, and the roles of firm life cycle and barriers-to-entry, The University of Wisconsin-Madison.
  16. Disney, R., Haskel, J., & Heden, Y. (2003). Entry, exit and establishment survival in UK manufacturing. The Journal of Industrial Economics 51(1): 91-112.
  17. Doi, N. (1999). The determinants of firm exit in Japanese manufacturing industries. Small Business Economics 13(4): 331-337.
  18. Evans, L., & Siegfried, J. (1992). Entry and exit in United States manufacturing industries from 1977 to 1982. Empirical Studies in Industrial Organization, Springer: 253-273.
  19. Farzinvash, A., & Fatemeh, L. (2014). The Influence Uncertainty and Value Added Growth of the Industry Sector. Macroeconomic Research 9 (18) (In Persian).
  20. Ferragina, A., & Mazzotta, F. (2014). Agglomeration economies in Italy: Impact on heterogeneous firms' survival.
  21. Feyzpour, m., & Abbas, R. (202). The level of technology and the likelihood of exit new firms with koags models. Economic Research 12(2): 107-132 (In Persian).
  22. Feyzpour, m., & Mohsen, A. (2014).” Industry Growth and Exit: A Neural Network Model Approach”. Economic Research 14(4): 57-78 (In Persian)
  23. Feyzpour, m., & Saiedeh, K. (2016). Shadow of Death in Iranian Manufacturing Industries Case Study of Selected Industries in Yazd and Isfahan Provinces.10th Congress of Progress (In Persian).
  24. Fotopoulos, G., & Louri, H. (2000). Location and survival of new entry. Small Business Economics 14(4): 311-321.
  25. Frazer, G. (2004). Which firms die? A look at exit from manufacturing in Ghana. Unpublished manuscript, Rotman School of Management, University of Toronto.
  26. Fung, L. (2008). Large real exchange rate movements, firm dynamics, and productivity growth. Canadian Journal of Economics/Revue canadienne d'économique 41(2): 391-424.
  27. Gu, W., Sawchuk, G., & Whewell, L. (2003). The effect of tariff reductions on firm size and firm turnover in Canadian manufacturing. Review of World Economics 139(3): 440-459.
  28. Halim, A., Marzuki, A., & Nurazira, S.(2008). Macroeconomic determinants of corporate failures in Malaysia .International Journal of Business and Management 3(3): 3-10.
  29. Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica: Journal of the Econometric Society: 649-670.
  30. Kaya, S., & Ucdogruk, Y. (2002). The dynamics of entry and exit in Turkish manufacturing industry. Middle East Technical University, Ankara, ERC working papers in Economics 2(02).
  31. Kim, D. (2003). Business failure in United States manufacturing during the nineteenth century. Los Angeles: University of California, Los Angeles.
  32. Korani, A., & mohamadnadi, Sh. (2017). Entering and exiting the firm and assessing the severity of entry barriers in the industry. Economic Research and Policy 82(25): 79-100 (In Persian).
  33. Krugman, P. (1998). Space: the final frontier. Journal of Economic perspectives 12(2): 161-174.
  34. Lieberman, M. (1990). Exit from declining industries: shakeout" or" stakeout"?" The RAND Journal of Economics: 538-554.
  35. Manjón-Antolín, M. (2010). Firm size and short-term dynamics in aggregate entry and exit. International Journal of Industrial Organization 28(5): 464-476.
  36. Mata, J., Portuga, P., & Guimarães, P. (1995). The survival of new plants: Start-up conditions and post-entry evolution. International Journal of Industrial Organization 13(4): 459-481.
  37. Nyström, K. (2007). An industry disaggregated analysis of the determinants of regional entry and exit. The Annals of Regional Science 41(4): 877-896.
  38. Ozturk, S., & Kilic, C. (2012). Patterns and determinants of entry and exit in Turkish manufacturing industries. International Journal of Arts and Commerce 1(5): 107-118.
  39. Piri, P., Imani-Barandagh, M., & Allahverdizad, S. (2012). The Impact of Different Life Cycle Periods on Business Profitability and Growth. Empirical Accounting Research 14 (4):74-110 (In Persian)
  40. Porter, M., & Caves, R. (1976). Barriers to exit. Cambridge, MA: Ballinger Publishing Company
  41. Resende, M., Ribeiro, E., & Zeidan, R. (2015). Dynamic entry and exit linkages in the Brazilian manufacturing industry: An econometric investigation. International Journal of the Economics of Business 22(3): 379-392.
  42. 42.  Rizov, M., & Mathijs, E. (2001). Survival and growth of individual farm enterprises in transition economies: empirical evidence from Hungary, LICOS Discussion Paper.
  43. Rosenbaum, D. (1993). Profit, entry and changes in concentration. International Journal of Industrial Organization 11(2): 185-203.
  44. Salman, A., Von Friedrichs, Y., &  Shukur, G. (2012). The determinants of failure of small manufacturing firms: Assessing the macroeconomic factors." Electronic Business 11(7).
  45. Sarkar, M., Echambadi, R., Agarwal, R., & Sen, B. (2006). The effect of the innovative environment on exit of entrepreneurial firms. Strategic Management Journal 27(6): 519-539.
  46. Segarra, A., & Callejón, M. (2002). New firms' survival and market turbulence: New evidence from Spain. Review of Industrial Organization 20(1): 1-14.
  47. Totzek, A. (2010). Firms' heterogeneity, endogenous entry, and exit decisions. Leibniz-InformationszentrumWirtschaftLeibniz Information Centrefor Economics: No. G2-V1
  48. Tsionas, E., & Papadogonas, T. (2006). Firm exit and technical inefficiency. Empirical Economics 31(2): 535-548.
  49. Valencia, V. (2016). Small firm survival: an Australian perspective. Advances in Management and Applied Economics 6(5): 1.
  50. Van Herck, G. (1984). Entry, exit and profitability. Managerial and Decision Economics 5(1): 25-31.
Quarterly Journal of Applied Theories of Economics
Volume 6, Issue 4 - Serial Number 23
February 2020
Pages 53-84

Files

Share

How to cite

Statistics