Ekonomiska institutionen Studier i företagsekonomi Umeå universitet
FÖRETAG I STRUKTUROMVANDLINGEN
Del V S U M M A R Y
I n g å r i en s e r i e på f e m p u b l i k a t i o n e r
del I A n s a t s och m e t o d e r
del II E t a b l é r i n g s - och n e d l ä g g n i n g s b e t e e n d e n i n å g r a s v e n s k a i n d u s t r i f ö r e t a g del III U t v e c k l i n g s f ö r l o p p e t i n å g r a s v e n s k a
i n d u s t r i f ö r e t a g
del IV E f f e k t e r på i n d u s t r i s y s s e l s ä t t n i n g e n av s t r u k t u r e l l a f ö r ä n d r i n g a r i ett fö r e t a g s b e s t å n d
del V S u m m a r y
Göran C a r s t e d t
B i r g i t t a I s a k s s o n P é r e z
U m e å f e b r u a r i 1974
C e n t r a l t r y c k e r i e t i U m e å AB - B r ö d L a r s s o n - 1974
C O N T E N T S
P R E F A C E
1. O U T L I N E AND A IN OF THE S T U D Y 7
2. P O I N T S OF D E P A R T U R E 10
3. T H E O R E T I C A L F R A N E OF R E F E R E N C E 11 4. C O N C E P T S AND N E T H O D S OF N E A S U R E N E N T 13
5. F I N D I N G S 15
P R E F A C E
The p r e s e n t w o r k g i v e s an a c c o u n t of a r e s e a r c h p r o j e c t c a r r i e d out by P h D s G ö r a n C a r s t e d t and B i r g i t t a I s a k s s o n P é r e z at the D e p a r t m e n t of B u s i n e s s A d m i n i s t r a t i o n , U n i v e r s i t y of Umeå. The s t u d y is par t of a w i d e r r e s e a r c h p r o j e c t " V a r i a t i o n s in t i m e of s t r u c t u r e and b e h a v i o u r of f i r m s ” and is c o n n e c t e d w i t h p r e s e n t and p a s t s t u d i e s of the p r o b l e m s and p o s s i b i l i t i e s of s m a l l and m e d i u m - s i z e d f irms. Even if the s t u d y has bee n d i s c u s s e d w i t h s e v e r a l p e r s o n s w i t h i n the g r o u p , the a u t h o r s have ful l r e s p o n s a - b i l i t y f o r the r e s u l t s , o p i n i o n s and e v a l u a t i o n s p r e s e n t e d h e r e .
The r e s e a r c h p r o j e c t has b e e n f i n a n c e d by g r a n t s f r o m the S w e d i s h C o u n c i l f o r S o c i a l S c i e n c e R e s e a r c h and f r o m N o r r l a n d s s t i f t e l s e n .
Umeå, F e b r u a r y 1974
D i c k R a m s t r ö m ,
P r o f e s s o r
7
1. O U T L I N E AND AIN GF THE S T U D Y
T he s t r u c t u r a l c h a n g e s of i n d u s t r i a l f i r m s in m o s t d e v e l o p e d c o u n t r i e s are the b a c k g r o u n d to the r e s e a r c h p r o j e c t " F ö r e tag i s t r u k t u r o m v a n d l i n g e n ” . In thi s s tudy, c e r t a i n s t r u c t u r a l c h a n g e s t a k i n g p l a c e in a p o p u l a t i o n of S w e d i s h i n d u s t r i a l f i r m s d u r i n g the y e a r s 1 S 4 4 - 1 9 7 0 , are a n a l y s e d . The t y p e s of c h a n g e s d e a l t w i t h are: f o r m a t i o n , d i s c o n t i n u a ti o n and d e v e l o p m e n t of fir m s . The e f f e c t s on e m p l o y m e n t of such e v e n t s are c o n s i d e r e d as c e n t r a l a s p e c t s of s t r u c t u r a l c h a n g e s in the e c o n o m y . T h e s e e v e n t s are i n t e r p r e t e d in r e l a t i o n to the l o c a t i o n , type of o p e r a t i o n , s ize and age of the firms.
The r e s u l t s her e o b t a i n e d a i m at m e e t i n g an o b s e r v e d need f o r k n o w l e d g e in t his s u b j e c t and m a y t h e r e b y s e r v e as a p l a t f o r m for e c o n o m i c and i n d u s t r i a l d e c i s i o n s in this area.
F u r t h e r m o r e it is h o p e d t hat it can be used in f u t u r e r e s e a r c h in f i r m and f i r m p o p u lation d e v e l o p m e n t .
T h r e e t y p e s of p r o b l e m s are t r e a t e d here:
- e n t r y and exi t of f i r m s
- c o u r s e of d e v e l o p m e n t in i n d i v i d u a l f i r m s
- e f f e c t s on e m p l o y m e n t o f f i r m s w h i c h are e n t e r i n g , d i s c o n t i n u i n g and e x i s t i n g in an i n d u s t r y .
The s t u d y is p r e s e n t e d in fiv e d i f f e r e n t p u b l i c a t i o n s : P art I : A p p r o a c h and m e t h o d s
Part II : F o r m a t i o n and d i s c o n t i n u a t i o n of s ome S w e d i s h i n d u s t r i a l f i r m s
P ar t III : The c o u r s e of d e v e l o p m e n t in some S w e d i s h i n d u s t r i a l f i r m s
Part IV : E f f e c t s on e m p l o y m e n t of s t r u c t u r a l c h a n g e s in a p o p u l a t i o n of i n d u s t r i a l f i r m s
P a r t V : S u m m a r y
An o u t l i n e of the c o n t e n t and s t r u c t u r e of t h e s e p u b l i c a t i ons, is s h o w n on p age 3.
The d a t a and the m e t h o d o l o g i c a l and t h e o r e t i c a l f r a m e of
r e f e r e n c e are the same in all f o u r p u b l i c a t i o n s . Par t I
- The R e p o r t on M e t h o d s - d e a l s w i t h t he c o m m o n m e t h o d o l o
g i c a l and t h e o r e t i c a l f r a m e of r e f e r e n c e and s u b s e q u e n t l y
the c h a r a c t e r i s t i c s of the s t u d i e d p o p u l a t i o n of f i r m s are
a c c o u n t e d for. In the s ame p u b l i c a t i o n some light is t h r o w n
on the g e n e r a l m e t h o d o l o g i c a l d i f f i c u l t i e s e n c o u n t e r e d w h e n
s t u d y i n g e c o n o m i c s t r u c t u r e s , e s p e c i a l l y the s t r u c t u r e of
i n d u s t r i a l firms.
StudiedFormationofnew firms* Courseofdevelopment“ ^ Discontinuation offirmsChangesinemployment phenomena
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2. P O I N T S OF D E P A R T U R E
In this s t u d y , c h a n g e s o v e r t i m e hav e b e e n o b s e r v e d both f o r i n d i v i d u a l f i r m s and f o r a g g r e g a t e d data. S t r u c t u r a l s t u d i e s are o f t e n b a s e d on a c r o s s - s e c t i o n a l m e t h o d in w h i c h f i r m s c h a r a c t e r i z e d by d i f f e r e n t c o n d i t i o n s and s t a g e s of d e v e l o p m e n t are c o m p a r e d w i t h eac h o t h e r at a c e r t a i n p o i n t in time. C o n c l u s i o n s on w h a t t y p e s of s t r u c t u r a l c h a n g e s that tak e p l a c e o v e r time, w h e n c o n d i t i o n s are c h a n g i n g f o r each s p e c i f i c fir m , are then d r a w n . It is h o w e v e r in no way a s s e r t e d t h a t an u n d e r s t a n d i n g of and a p r e d i c t i o n on the d e v e l o p m e n t of f i r m s can be a r r i v e d at, w i t h t he m e t h o d of c o m p a r a t i v e s t a t i c s . A b a s i c i dea in this w o r k is that, wit h an e m p i r i c a p p r o a c h , a d e e p e r u n d e r s t a n d i n g of the d e v e l o p m e n t of f i r m s can be r e a c h e d o n l y by s t u d y i n g i n d i v i d u a l f i r m s o v e r time, i.e. by m e a n s of
l o n g i t u d i n a l a n a l y s e s .
In o r d e r to t h r o w some light on e v e n t s at the i n d i v i d u a l
and at the a g g r e g a t e level of f i r m s and the r e l a t i o n b e t w e e n
t h e s e two levels, a large p o p u l a t i o n of f i r m s has been
chosen. S e c o n d a r y o f f i c i a l i n d u s t r i a l s t a t i s t i c s have to a
large e x t e n t been used. C a u s a l a n a l y s e s of the b e h a v i o u r of
i n d i v i d u a l f i r m s are not p r e s e n t e d here. T he t h e o r e t i c a l
d i s c u s s i o n c o n d u c t e d in t h e s e p a g e s can be s e e n as a c o m p l e
m e n t to the e m p i ri ca 1 p a r t . F u r t h e r m o r e it s e r v e d as a
g u i d a n c e w h e n c h o o s i n g the d e t e r m i n a n t f a c t o r s f o r f i r m d e v e
l o p m e n t .
3. T H E O R E T I C A L F R A M E OF R E F E R E N C E
The c a u s e s of s t r u c t u r a l c h a n g e s in f i rms and p o p u l a t i o n of firms can be s o u g h t at d i f f e r e n t lev e l s of d e s c r i p t i o n , f r o m e n t r e p r e n e u r i a l c h a r a c t e r i s t i c s i n v o l v e d in s t a r t i n g and r u n n i n g a f i r m to m a r k e t f o r m s and s t r u c t u r a l c h a n g e s in the e c o n o m y as a w hole. The a p p r o a c h of this s t u d y is c h a r a c t e r i z e d by the i n v e s t i g a t i o n of a lar g e n u m b e r of fir m s d u r i n g a r e l a t i v e l y long p e r i o d of time. T h a t has l i m i t e d the p o s s i b i l i t y of a d e t a i l e d s t u d y of the d e v e l o p m e n t and the c h a r a c t e r i s t i c s of f i rms and t h e i r e n v i r o n m e n t . The c o u r s e of d e v e l o p m e n t has b e e n o b s e r v e d f o r the t e c h n i c a l - e c o n o m i c unit ( e s t a b l i s h m e n t ) w h i c h i m p l i e s tha t d e v e l o p m e n t d e t e r m i n a n t s of e c o n o m i c - o r g a n i z a t i o n a l n a t u r e h a v e not b e e n e x a m i n e d . The c h o i c e of v a r i a b l e s w a s c o n d u c t e d b e a r i n g in m i n d the c o n d i t i o n s d e s c r i b e d above and the l i m i t s set by the s o u r c e of d a t a used, i.e. the r e g i s t e r of e s t a b l i s h m e n t at the C e n t r a l B u r e a u of S t a t i s t i c s .
F irms w i t h d i f f e r e n t lines of o p e r a t i o n are c o n d i t i o n e d by d i f f e r e n t m a r k e t s and d i f f e r e n t s t a g e s of s t r u c t u r a l cha n g e s . E n t r y b a r r i e r s d e f i n e d by s t r u c t u r e s of cost, f i n a n c i n g p o s s i b i l i t i e s , n a t u r e of c o m p e t i t i o n etc d i f f e r g r e a t l y b e t w e e n i n d u s t r i e s . I n s t i t u t i o n a l c o n d i t i o n s i n f l u e n c i n g e n t r i e s and e x i t s are in the s a m e w a y r e l e v a n t e.g. l e g i s l a t u r e , a d m i n i s t r a t i v e p e r m i t s and s t a t e s u p p o r t s .
D e v e l o p m e n t of i n d u s t r i e s can be d e s c r i b e d as a c y c l e w i t h
a f i r s t p h a s e c h a r a c t e r i z e d by a r a p i d i n c r e a s e in d e m a n d
c a u s e d by i n n o v a t i o n s in n e w p r o d u c t s and m e t h o d s . It is
f o l l o w e d , in a s e c o n d p hase, by s t a g n a t i o n to e v o l v e , a f t e r
a c e r t a i n time, t o w a r d s a p h a s e of c o n t r a c t i o n . The c o n d i
t i o n s of d e v e l o p m e n t of fir m s in a y o u n g and e x p a n d i n g
12
i n d u s t r y d i f f e r f r o m t h o s e in an old i n d u s t r y in a c o n t r a c tion phase. It is h o w e v e r u n c e r t a i n w h e t h e r or not all firms in an i n d u s t r y d e v e l o p in the same way. F o r e x a m p l e , firms b e l o n g i n g to the s a m e i n d u s t r y , but d i f f e r i n g in age can be m o r e o r less s e n s i t i v e to i d e n t i c a l c o n d i t i o n s .
The age of fir m s has b e e n c o n s i d e r e d as a c e n t r a l v a r i a b l e f o r the u n d e r s t a n d i n g of f i r m d e v e l o p m e n t . On the b a s i s of a n a l o g i e s w i t h b i o l o g y , it has s o m e t i m e s b e e n a r g u e d tha t fir m s u n d e r g o a p r o c e s s s i m i l a r to t h a t of o r g a n i s m s i.e.
a r a p i d e x p a n s i o n f o r i n f a n t firms, s t a g n a t i o n f o r m a t u r e fir m s and exit in a l a t e r per i o d . In t h e s e t y p e s of t h e o r i e s , age and s i z e of fir m s are c o n s i d e r e d to be i n t e r d e p e n d a n t .
It is o f t e n a r g u e d t h a t the s i z e of a f i r m is of c r u c i a l i m p o r t a n c e to its d e v e l o p m e n t . T h e o r i e s on e c o n o m i e s of scale, i.e. the a s s u m p t i o n t h a t the e f f i c i e n c y of a f i r m s y s t e m a t i c a l l y c o - v a r i a t e s w i t h its size, has b een p o i n t e d out in this resp e c t . The e x i s t e n c e of a d v a n t a g e s in s m a l l s c a l e as w e l l as large s c a l e of o p e r a t i o n can be a s s umed.
S i n c e e c o n o m i e s of s c a l e a f f e c t the s i z e and n u m b e r s of firms, and c o n s e q u e n t l y the f o r m of and the b e h a v i o u r in c o m p e t i t i o n , the i n d u s t r i a l and the s i z e v a r i a b l e s can be a s s u m e d to be i n t e r r e l a t e d .
R e g i o n a l v a r i a t i o n s in the s u p p l y of f a c t o r s of p r o d u c t i o n ,
in a g g l o m e r a t i o n , in e c o n o m i c and p o l i t i c a l i n t e r v e n t i o n , in
human f a c t o r s e t c . , s u p p o r t t he v i e w t h a t r e g i o n a l v a r i a t i o n
in entry, e x i t and d e v e l o p m e n t b e h a v i o r can be e x p e c t e d .
B e c a u s e c e r t a i n i n d u s t r i e s are s t r o n g l y d e t e r m i n e d by
r e g i o n a l f a c t o r s , the l o c a t i o n of fir m s is r e l a t e d to
i n d u s t r i a l c l a s s i f i c a t i o n v a r i a b l e s .
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4. C O N C E P T S A ND M E T H O D S OF M E A S U R E M E N T
The p o p u l a t i o n of firms w h i c h has b een u sed is a s e g m e n t of a b o u t 500 f i rms o b t a i n e d f r o m the r e g i s t e r of e s t a b l i s h m e n t s at the C e n t r a l B u r e a u of S t a t i s t i c s . The s e g m e n t was a r r i v e d at by t o t a l s e l e c t i o n in two i n d u s t r i e s and two r e g i o n s u n d e r the y e a r s 1 9 4 4 - 1 9 7 0 , the l o n g e s t p e r i o d u n d e r w h i c h c h a n g e s in s i z e f o r i n d i v i d u a l f i r m s can be i d e n t i f i e d in the a b o v e m e n t i o n e d r e g i s t e r . S m a l l f irms are in a
m a j o r i t y ; the siz e of the m e d i a n e lies a r o u n d 10-15 e m p l o y e e s . The l a r g e s t e s t a b l i s h m e n t s in the p o p u l a t i o n h a v e a r o u n d 20 0 0 e m p l o y e e s .
The firms b e l o n g to c e r t a i n b r a n c h e s of i n d u s t r y w i t h i n the e n g i n e e r i n g and w o o d p r o d u c t s i n d u s t r i e s fn the p r o v i n c e of S t o c k h o l m and V ä s t e r b o t t e n . T he c h o s e n i n d u s t r i e s and
r e g i o n s r e p r e s e n t d i f f e r e n t c o n d i t i o n s f o r d e v e l o p m e n t . The e n g i n e e r i n g i n d u s t r y can be d e s c r i b e d as e x p a n d i n g and the w o o d p r o d u c t s i n d u s t r y as s t a g n a t i n g . The p r o v i n c e of S t o c k h o l m r e p r e s e n t s an urban region. The p r o v i n c e of V ä s t e r b o t t e n r e p r e s e n t s a rur a l r e g i o n w i t h a low d e g r e e of i n d u s t r i a l i z a t i o n . The c h o s e n b r a n c h e s of i n d u s t r i e s r e p r e s e n t 20 % of the t o t a l n u m b e r of e s t a b l i s h m e n t s in S w e d i s h i n d u s t r y .
The d e v e l o p m e n t of the n u m b e r of e s t a b l i s h m e n t s in the e x a m i n e d p o p u l a t i o n , e s p e c i a l l y in the e n g i n e e r i n g i n d u s t r y , has b e e n s o m e w h a t m ore e x p a n s i v e than s i m i l a r d e v e l o p m e n t f o r b r a n c h e s of i n d u s t r i e s f o r the w h o l e c ountry. Thi s s h o u l d be b orn in m i n d w h e n a t t e m p t s are mad e at a p p l y i n g the
r e s u l t s of this s t u d y on r e g i o n s o t h e r than t h o s e s t u d i e d
in t h e s e p u b l i c a t i o n s .
14
In the s tudy, the n u m b e r of e m p l o y e e s has been used as a m e a s u r e of the size of the firm. The age of the f i r m has been d e f i n e d as the n u m b e r of y e a r s that hav e e l a p s e d s i n c e its entry. An e n t r y is s aid to have o c c u r e d w hen a new e s t a b l i s h m e n t has a p p e a r e d . In this sense, n e w b r a n c h e s are i n c l u d e d in the c o n c e p t "new e s t a b l i s h m e n t " . In the s a m e way, an exi t is s a i d to hav e o c c u r e d whe n o p e r a t i o n in an e s t a b l i s h m e n t has ceased.
The d e s c r i p t i o n of the c o u r s e of d e v e l o p m e n t of f irms can be don e a l o n g s e v e r a l q u a n t i t a t i v e as w e l l as q u a l i t a t i v e d i m e n s i o n s . The d e s c r i p t i v e m e t h o d a p p l i e d here is a r e g i s t rat i o n of c h a n g e s in s i z e f o r i n d i v i d u a l firms. The c o u r s e of d e v e l o p m e n t has b een c l a s s i f i e d in ten d i f f e r e n t p a t t e r n s d e p e n d i n g upon the d i r e c t i o n , the rate and the o s c i l l a t i o n of c h a n g e s in size. In o r d e r to a c h i e v e this c l a s s i f i c a t i o n , a q u a n t i t a t i v e m e a s u r e of the c o u r s e of d e v e l o p m e n t has been d efined.
B e c a u s e of a low level of r e l i a b i l i t y and v a r i a t i o n s in the
d e f i n i t i o n s of e n t r y and exit, the b a s i c d a t a has been
s u p p l e m e n t e d with d a t a f r o m o t h e r s o u r c e s . Whe n p o s s i b l e ,
d i r e c t c o n t a c t wit h firms was taken, in o r d e r to c o n f i r m
the date of ent r y and exit. As a r e sult, high r e l i a b i l i t y
was a c h i e v e d . An e v a l u a t i o n of the e x t e n t of e n t r i e s and
e xi t s f o r the b e g i n n i n g and the end of the p e r i o d has
p r o v e d to be p r o b l e m a t i c , due to the fact t h a t f i r m s w i t h
less than fiv e e m p l o y e e s are not r e g i s t e r e d as i n d u s t r i a l
firms. E n t r i e s of firms d u r i n g the last y e a r s of the p e r i o d
have t h e r e f o r e b een e v a l u a t e d . This was done to t ake into
a c c o u n t the fact t h a t some i n f a n t firms born d u r i n g that
time had not yet gro w n to the s t i p u l a t e d level of five
e m p l o y e e s by the end of the p e riod. This e v a l u a t i o n was
done t h r o u g h s i m u l a t i o n , b a s e d on the a s s u m p t i o n that such
e n t r i e s of v e r y s m a l l firms had a s i m i l a r m a g n i t u d e to that
e s t a b l i s h e d f o r e a r l i e r y e a r s in the period.
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5. F I N D I N G S
The s t u d y s h o w s t hat the s t a g n a t i o n in the i n c r e a s e in the n u m b e r of i n d u s t r i a l e s t a b l i s h m e n t s in S w e d e n , w h i c h has b een d o m i n a n t s i n c e the b e g i n n i n g of the 1950's (and w h i c h d u r i n g the l a t e r y e a r s of the 1 96C's has even d e c r e a s e d ) is p r o b a b l y m o r e a r e s u l t of d e c r e a s e d e n t r i e s than a r e s u l t of i n c r e a s e d e x i t s of firms. In the p o p u l a t i o n of f i rms e x a m i n e d here, - e n g i n e e r i n g and w o o d p r o d u c t s i n d u s t r i e s -, e n t r i e s s t r o n g l y d e c r e a s e d d u r i n g the l a t e r p a r t of the 1 9 4 0 ’s, f r o m a level w h i c h by t he end of the s e c o n d w o r l d w a r was e x c e p t i o n a l l y high. T h e r e a f t e r , t he rat e of e n t r y has o n l y s h o w n s m a l l v a r i a t i o n s a r o u n d a low level. The rate of exit, w h i c h s l o w l y d e c r e a s e d in the 1950's, has t h e r e a f t e r i n c r e a s e d again and by the end of the 1 9 6 0 ’s it lay at a b o u t the s a m e level as that r e a c h e d at the b e g i n n i n g of the 1950's. The last two d e c a d e s are c h a r a c t e r i z e d , in the two types of i n d u s t r i e s e x a m i n e d , by a r e l a t i v e l y high s t a b i l i t y , f r o m the p o i n t of v i e w of both e n t r y and exit.
The o f f i c i a l i n d u s t r i a l s t a t i s t i c s used in the s t u d y s h o w a d e c r e a s e in the rate of e n t r y f o r the s e c o n d h a l f of the 1 9 6 0 ’s. H o w e v e r , that is p r o b a b l y mor e an e x p r e s s i o n of i n c o m p l e t e n e s s r a t h e r than f a c t u a l e v i d e n c e . When the d a t a is a d j u s t e d to c o n s i d e r a b l e lags in the o f f i c i a l i n d u s t r i a l s t a t i s t i c s f o r e n t r i e s , it a p p e a r s t h a t the f o r m a t i o n of new fir m s d u r i n g the late 1 9 60's s e e m s to hav e s o m e w h a t i n c r e a s e d .
The a b o v e m e n t i o n e d s t a b i l i t y is also o b s e r v a b l e f o r s h o r t
p e r i o d s , i.e. in the e x a m i n e d i n d u s t r i e s no c o r r e l a t i o n
can be e s t a b l i s h e d b e t w e e n b u s i n e s s c y c l e s and e n t r y and
e xi t of firms.
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The r e l a t i v e l y high s t a b i l i t y in e x i t and e n t r y f o r both of the e x a m i n e d i n d u s t r i e s d u r i n g the 195 0 ' s and 1 9 6 0 ’s does not mea n t h a t s u b s t a n t i a l d i f f e r e n c e s in t u r n - o v e r of firms do not e x i s t f r o m i n d u s t r y to i n d u s t r y . F o r e x a m p l e , the rate of e n t r y in the e n g i n e e r i n g i n d u s t r y is t h r e e
times h i g h e r than the rate of e n t r y in the w o o d p r o d u c t s in d u s t r y , w h i l e the rate of e xit is a b o u t the same. An e x p l a n a t i o n of the f a v o r a b l e p o s i t i o n of the e n g i n e e r i n g i n d u s t r y , as f a r as e n t r i e s is c o n c e r n e d , c o u l d be the h i g h e r rate of e x p a n s i o n and t e c h n o l o g y of tha t i n d u s t r y
( p o t e n t i a l f o r i n t e n s i v e r e n e w a l of p r o d u c t s and i n n o v a t o r y a c t i v i t i e s ).
Type of o p e r a t i o n is as a w h o l e of g r e a t e r i m p o r t a n c e in the e x p l a n a t i o n of t u r n - o v e r than l o c a t i o n a l asp e c t s . In the e x a m i n e d r e g i o n s - S t o c k h o l m and V ä s t e r b o t t e n - t u r n o v e r s e e m s to be m o r e a r e s u l t of d i f f e r e n t i n d u s t r i a l s t r u c t u r e s than a r e s u l t of r e g i o n a l c o n d i t i o n s such as d e g r e e of a g g l o m e r a t i o n , cos t s of t r a n s p o r t etc.
The d e v e l o p m e n t of f i r m s f r o m b i r t h to d i s c o n t i n u a n c e does
not seem, at least in the i n d u s t r i e s s t u d i e d here, to be
s p e c i f i c f o r each i n d u s t r y . T h e age of a f i r m a p p e a r s
i n s t e a d to be a v a r i a b l e w h i c h s t r o n g l y d i s c r i m i n a t e s
b e t w e e n fir m s w i t h d i f f e r e n t r a t e s of e x p a n s i o n . Thus, the
rate of g r o w t h is e s s e n t i a l l y h i g h e r d u r i n g the fir s t f o u r
or five y e a r s of o p e r a t i o n than d u r i n g the l a t e r y e a r s of
the l i f e - c y c l e of the firm. F u r t h e r m o r e the p r o b a b i l i t y
of s u r v i v a l f o r a f a m i l y firm, (a type of f i r m q u i t e
com m o n in the s t u d i e d p o p u l a t i o n ) , is h i g h e r w h e n the f i r m
has p a s s e d its f i r s t m a n a g e m e n t s u c c e s s i o n . This s e e m s to
tak e p l a c e in m a n y fir m s 20 to 30 y e ars a f t e r f o r m a t i o n .
M o r e o v e r , the rat e of g r o w t h in e m p l o y m e n t s e e m s to d e p e n d
s o m e w h a t m o r e upon age than upon size. It i m p l i e s t h a t no
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c l e a r d i f f e r e n c e s are to be f o u n d w h e n d e a l i n g w i t h p a t t e r n s of g r o w t h f o r f i r m s in d i f f e r e n t c l a s s e s of size, if one be a r s in m i n d t h a t s m a l l f i r m s are g e n e r a l l y y o u n g e r than l a r g e r units.
F i r m d e v e l o p m e n t d u r i n g the f i r s t y e a r s a f t e r f o r m a t i o n s e e m s to h a v e c h a n g e d s i n c e the m i d d l e of the 1940's and the
b e g i n n i n g of the 1950's. Thus, it s e e m s t h a t tod a y , the p r o p o r t i o n of f i r m s w i t h a high rate of g r o w t h d u r i n g the fir s t y e a r s of the l i f e - c y c l e is s m a l l e r than it w a s 20 to 25 y e a r s ago. At the s a m e time, the p r o p o r t i o n of d e c l i n i n g f i r m s is s o m e w h a t larger. In o t h e r w o r d s , the a v e r a g e rate of g r o w t h d u r i n g t he f i rst y e a r s has d e c r e a s e d . This may, ho w e v e r , be m o r e the r e s u l t of a c e r t a i n s t a g n a t i o n in the e x p a n s i o n of the m a g n i t u d e of e m p l o y m e n t in S w e d i s h i n d u s t r y as a w h o l e r a t h e r than the r e s u l t of a r a d i c a l c h a n g e in the c h a r a c t e r of n e w f i r m d e v e l o p m e n t .
Ho w e v e r , in the i n d u s t r i e s h ere a n a l y s e d , the e f f e c t on e m p l o y m e n t of n e w f i r m s is, by the e n d of the p e r i o d , s t i l l h i g h e r than that of g r o w t h in e x i s t i n g firms. This is, b e s i d e s t he g r o w t h of y o u n g firms, also a r e s u l t of the fact t h a t e n t r i e s n o w a d a y s o c c u r w i t h i n l a r g e r c l a s s e s of size.
The a n a l y s e s of the d a t a s h o w that, a m o n g the ten s t u d i e d
p a t t e r n s of d e v e l o p m e n t , the m o s t c o m m o n one is a m o d e r a t e
but s t a b l e g r o w t h in e m p l o y m e n t . H o w e v e r , mor e than h a l f
of the e x a m i n e d f i r m s e x p e r i e n c e d a s t a g n a t i o n o r a c o n
t r a c t i o n in e m p l o y m e n t . F i r m s at a s t a g e of s t a g n a t i o n or
c o n t r a c t i o n and c h a r a c t e r i z e d by an i r r e g u l a r and u n s t a b l e
d e v e l o p m e n t h a v e a l s o the h i g h e s t r ate of m o r t a l i t y in the
s t u d i e d p o p u l a t i o n . Yet, the c h a n g e s o v e r t i m e in the
p a t t e r n s of d e v e l o p m e n t in the s t a g e of d i s c o n t i n u a n c e
s u g g e s t t h a t t he f i r m s hav e s u c c e s s i v e l y r e a c h e d a level
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