Review of Industrial Organization 25: 251–273, 2004.
© 2004 Kluwer Academic Publishers. Printed in the Netherlands.
The Determinants of Survival of Spanish
SILVIANO ESTEVE P
, AMPARO SANCHIS LLOPIS and
JUAN ALBERTO SANCHIS LLOPIS
Universidad de Valencia
Abstract. This paper analyses the factors determining Spanish manufacturing ﬁrms’
survival – and exit. The data are drawn from the survey Encuesta sobre Estrategias
Empresariales for the period 1990–1999. The methodology includes both non-parametric
techniques and the estimation of a Cox proportional hazards model (CPHM). Our results
suggest that the probability of exit is higher for small ﬁrms and also for young and
mature ﬁrms. Furthermore, exporting ﬁrms and ﬁrms performing R&D activities enjoy
better survival prospects.
Key words: Exit, survival analysis.
Firms’ entry into and exit from a market are important processes shaping
toughness of competition and the evolution of industries. Both phenomena
have important implications on resource allocation, productivity improve-
ments and the rate of innovation and renewal of industries. An increasing
number of papers within the literature of industrial organization have been
devoting attention to the analysis of ﬁrms’ entry and their survival (see
Sutton, 1997; Caves, 1998; and the special issue of the International Jour-
nal of Industrial Organization on Post Entry Performance of Firms, 1995).
However, less attention has been devoted to the study of the determinants
of the risk of exit (or, alternatively survival), despite the important eco-
nomic and social effects of ﬁrms’ exit.
Author for correspondence: Facultad de Econom
ıa. Departamento de Econom
cada II, Ediﬁcio Departamental Oriental, Avenida de los Naranjos, s/n, 46022 Valencia,
Spain. Tel: 00-34-963828852; Fax: 00-34-963928354; E-mail: firstname.lastname@example.org
See also Baldwin (1995), Evans (1987), Hall (1987) and Dunne et al. (1988), among