TY - JOUR

T1 - Establishment exits in Germany

T2 - The role of size and age

AU - Fackler, Daniel

AU - Schnabel, Claus

AU - Wagner, Joachim

PY - 2013/10

Y1 - 2013/10

N2 - Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various “liabilities” of establishment survival identified in the literature, we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than 5 years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15–18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways.

AB - Using comprehensive data for West Germany, this paper investigates the determinants of establishment exit. We find that between 1975 and 2006 the average exit rate has risen considerably. In order to test various “liabilities” of establishment survival identified in the literature, we analyzed the impact of establishment size and put a special focus on differences between young and mature establishments. Our empirical analysis shows that the mortality risk falls with establishment size, which confirms the liability of smallness. The probability of exit is substantially higher for young establishments which are not more than 5 years old, thus confirming the liability of newness. There also exists a liability of aging since exit rates first decline over time, reaching a minimum at ages 15–18, and then rise again somewhat. The determinants of exit differ substantially between young and mature establishments, suggesting that young establishments are more vulnerable in a number of ways.

KW - Economics

KW - Firm age

KW - Firm exits

KW - Firm size

KW - Germany

UR - http://www.scopus.com/inward/record.url?scp=84884535323&partnerID=8YFLogxK

U2 - 10.1007/s11187-012-9450-z

DO - 10.1007/s11187-012-9450-z

M3 - Journal articles

VL - 41

SP - 683

EP - 700

JO - Small Business Economics

JF - Small Business Economics

SN - 0921-898X

IS - 3

ER -