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Firm survival during economic downturns: is selecton based on cleansing or skill accumulation?

Alessandro Arrighetti, F. Landini () and Eleonora Bartoloni

No 2018-EP04, Economics Department Working Papers from Department of Economics, Parma University (Italy)

Abstract: Recessions are complex events that create perturbed and hostile business environments. When faced with such event, firm survival depends only limitedly on production efficiency. Rather, it depends on the ability to cope with such complexity, which is itself a result of the firm’s corporate strategy. In particular, we expect firms adopting a corporate strategy that make relatively large (little) use of skills and capabilities to deal with environmental complexity to be less (more) likely to exit during a downturn than firms that do not. We test these hypotheses on the whole population of Italian manufacturing corporations using an open panel that covers the period 2001-2014. The results provide strong support for our hypotheses. Managerial and policy implications are discussed.

Keywords: firm survival; corporate strategy; efficiency, recession; cleanisng (search for similar items in EconPapers)
JEL-codes: D24 L11 L25 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2018
New Economics Papers: this item is included in nep-bec and nep-sbm
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