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Small Business Economics

, Volume 31, Issue 4, pp 379–393 | Cite as

The death of firms: exploring the effects of environment and birth cohort on firm survival in Sweden

  • Marcus Box
Article

Abstract

This paper investigates the death of firms and seizes a long-term perspective. It investigates the life spans of nearly 2,200 firms in seven birth cohorts of Swedish joint-stock companies, founded during seven separate years between 1899 and 1950. Research has traditionally emphasized individual- and micro-oriented factors in explaining post-entry performance, or has often focused on the influence of firm-specific structural factors (firm age and size). A less attended field recognizes environmental forces. This paper focuses on the interaction between the micro and macro levels, and combines structural and environmental factors. Employing a cohort approach, it relates firm survival to firm age and size, as well as to the effect of cohort affiliation and environmental change over time (period effects). During macroeconomic expansion, the risk of death decreases. Cohort effects are also evident. Firms founded during times of economic crisis exhibit lower survival rates. Consequently, cohort affiliation and environmental forces, i.e. period effects, can explain differences in death rates in different firm populations.

Keywords

Firm death Firm survival Firm size Firm age Cohort Environment Macroeconomic conditions 

JEL Classifications

L25 L26 M13 

Notes

Acknowledgments

The article is a revised version of some parts of my doctoral dissertation (Box 2005). The database in the article has been widely extended and refined: new data and variables have been added, and new methods of analysis are employed. I am grateful for comments from Niclas Berggren, Andreas Bergh, Dan Johansson and Henrik Lindberg. Stig Blomskog has been most helpful with methodological issues.

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.The Ratio InstituteStockholmSweden
  2. 2.Södertörn University CollegeHuddingeSweden

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