Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival

Rajshree Agarwal and David Audretsch ()

Journal of Industrial Economics, 2001, vol. 49, issue 1, 21-43

Abstract: A wave of empirical studies has recently emerged showing that smaller‐scale entry is confronted with a lower likelihood of survival than their larger counterparts. The purpose of this paper is to examine whether the relationship between size of a firm when entering an industry and the likelihood of survival holds under different technological conditions and across the different stages of the industry life cycle. The empirical evidence suggests that the relationship between firm size and the likelihood of survival is shaped by technology and the stage of the industry life cycle. While the likelihood of survival confronting small entrants is generally less than that confronting their larger counterparts, the relationship does not hold for mature stages of the product life cycle, or in technologically intensive products. In mature industries that are still technologically intensive, entry may be less about radical innovation and possibly more about filling strategic niches, thus negating the impact of entry size on the likelihood of survival.

Date: 2001
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