The Post-Entry Performance of New Small Firms in German Manufacturing Industries

Abstract

While recent years have witnessed a growing interest in research on market entry by new firms, evidence regarding their post-entry performance is scarce. This paper uses longitudinal data for small firms that entered German manufacturing industries between 1979 and 1982 and monitors their performance until 1990. Entrants face a high risk of failure, hazard rates tend to increase during the first years and to decrease afterwards. Decline of employment in a cohort due to exits and shrinking firms is compensated by growing survivors. No clear-cut nexus between start-up size and probability of survival shows up.