Geographical factors and business failure: An empirical study from the Madrid metropolitan area

Mariluz Maté-Sánchez-Val, Fernando López-Hernandez and Christian Camilo Rodriguez Fuentes

Economic Modelling, 2018, vol. 74, issue C, 275-283

Abstract: Geography has been considered a decisive factor in different fields of business-related research. This paper provides some evidence concerning the role of geography on business failure in urban environments. The paper use spatial econometric methodology to evaluate the impact of the geographical location of external economic agents on the probability of business failure. In addition, it is shown that probabilities of business failure for geographically close firms are correlated. A firm-level empirical application based on 3125 industrial small and medium firms (SMEs) located on the Madrid metropolitan area (Spain) confirms that the geographical proximity between firms, external economic agents and transport facilities has a determinant impact on business failure among these companies. This study contributes to gaining a greater understanding of the factors that determine SMEs business failure, highlighting the importance of geographical factors.

Keywords: Business failure; Spatial probit; Geographical proximity; External economic agents; Transport facilities (search for similar items in EconPapers)
JEL-codes: G30 M21 R12 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S026499931731372X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:74:y:2018:i:c:p:275-283

DOI: 10.1016/j.econmod.2018.05.022

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().