Munich Personal RePEc Archive

The relationships between, on the hand, size, growth and age of the firm and, on the other hand, small business survival – a constructive critique and a proposal of a new framework

Guimarães Barbosa, Evaldo (2016): The relationships between, on the hand, size, growth and age of the firm and, on the other hand, small business survival – a constructive critique and a proposal of a new framework.

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Abstract

This article claims that the basic relationships between, on the one side, size, growth and age of the small firm and, on the other side, the small firm’s hazard of exit is, apart from the “honeymoon” and the “liability of senescence” effects, non-linear, either U-shaped or inverted U-shaped. Variations from these patterns are dependent upon choices of different specifications and the presence or absence from the multivariate analysis of the real determinants for which size, growth and age of the firm proxy. The article also claims that the quadratic specification that has traditionally been fitted is rarely the most adequate, since other combinations of different pairs of exponents would certainly better capture nuances of the relationships being regressed. The article conclusively claims that these realizations explain findings in the extant literature that are awkward, unexpected, embarrassing and unacceptable and interpretations that are many times even more inapplicable.

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