Survival of service firms in European emerging economies

ABSTRACT

Using a dataset of 126,591 service firms in 17 European emerging economies, this paper aims to estimate firm survivability in the years 2007–2015 and examine its determinants. We found that 31.3%, or 39,557 firms, failed during the observation period. At the same time, however, the failure risk greatly differed among regions, perhaps due to the remarkable gap in the progress of economic and political reforms. Moreover, the results of survival analysis revealed that large shareholding, labor productivity, and firm age played strong roles in preventing business failure beyond differences in regions and sectors.

KEYWORDS:

• European emerging economies
• service industry
• survival analysis
• cox proportional hazards model

JEL CLASSIFICATION:

• D21
• G00
• G33
• L89
• P34

Acknowledgments

We would like to thank an anonymous reviewer for his/her helpful comments and Eriko Yoshida for her research assistance and Tammy Bicket for her editorial assistance. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Additional information

Funding

This research was financially supported by the Grant Agency of the Czech Republic (Grant No. 19-22488S), the Japan Securities Scholarship Foundation (JSSF), the Nomura Foundation, and the Mitsubishi Foundation