Firm interrelationships: the role of firm size

Daragh O’Leary ()
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Daragh O’Leary: University of Galway

Letters in Spatial and Resource Sciences, 2024, vol. 17, issue 1, No 17, 13 pages

Abstract: Abstract This paper put’s forward a working conceptualisation for how the size of firms which die influences firm interrelationships where firm deaths influence future firm births. Two conceptual arguments are developed to explain the role of firm size in influencing future firm births; the resource argument and the consumer demand argument. This relationship is also empirically tested using a multilevel model to examine the relationship between the death of differently-sized firms and future firm births in European NUTS 3 regions. Findings suggest that only the deaths of larger firms appears to increase future firm births. The resource-based argument is used to explain this finding whereas the consumer demand-based argument is used to explain why the death of smaller firms seems to reduce future firm births. The dataset used in this paper’s estimation captures a large amount of activity across 14 countries and 502 NUTS 3 regions from 2008 to 2019.

Keywords: Firm births; Firm deaths; Competition effect; Multiplier effect; Firm interrelationships (search for similar items in EconPapers)
JEL-codes: D22 L25 L26 M21 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12076-024-00380-0

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