Factors Affecting the Survival of SMEs: A Study of Biotechnology Firms in South Korea

Kwangsoo Shin, Gunno Park, Jae Young Choi and Minkyung Choy
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Kwangsoo Shin: Graduate School of Health Science Business Convergence, College of Medicine, Chungbuk National University, 1 Chungdae-ro, Seowin-gu, Cheongju-si 28644, Korea
Gunno Park: Technology Strategy and Planning Team, Samsung SDS, SDS West Campus 22F, 125, Olympic-ro 35, Songpa-gu, Seoul 05510, Korea
Jae Young Choi: Graduate School of Technology & Innovation Management, Hanyang University, 222 Wangsimni-ro, Seongdong-gu, Seoul 133-791, Korea
Minkyung Choy: Management Research Center, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea

Sustainability, 2017, vol. 9, issue 1, 1-18

Abstract: Past studies examining survival factors of biotechnology firms have focused on pioneer countries, such as the USA, the UK and Germany. However, as the biotechnology industry in Asia is reaching the take-off stage and showing a high growth rate, the research on survival factors in the context of Asian latecomers is needed. The present research investigates internal and external factors affecting the survival of SMEs (Small and Medium-sized Enterprises) in the biotechnology industry in South Korea. The Cox hazard model was employed to perform a robust estimation in survival analysis. The analysis of internal factors showed that the origin of a firm (i.e., having prior experience or spin-offs) and the business sub-sector (i.e., platform-based) affect the hazard rates of biotechnology firms. In terms of external factors, unlike strategic alliances, government R&D funding lowered hazard rates for the firm’s survival. Additionally, considering that the reasons of firm exit can be divided into bankruptcy and M&A (Mergers and Acquisitions), the different effects of origins from other firms and strategic alliance for firm survival are confirmed. The results suggest that prior experience, platform-based and constant government R&D funding contribute to the sustainable development of SMEs in the biotechnology industry.

Keywords: firm survival; firm origin; platform-based firm; government R&D funding; strategic alliance; SMEs; biotechnology industry (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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