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The Resource-Based Theory of the Firm and Firm Survival

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Abstract

This paper examines the determinants of firm survival. We use hazard models to test a number of hypotheses mainly drawn from the Resource-Based Theory of the Firm. According to the Resource-Based View the ability of a firm to develop distinct capabilities enhances its ability to adapt to the changing competitive environment and improves its survival prospects. The results confirm that firms that develop firm-specific assets through advertising and making R&D (independently of the technological intensity of the industry) enjoy better survival prospects. Furthermore, failure risk increases up to about 20 years of trading, and then decreases to later rise in line with liability of “adolescence” and “senescence.”

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Author information

Authors and Affiliations

  1. Facultad de Economía, Departamento de Economía Aplicada II, Universidad de Valencia and LINEEX, Avenida de los Naranjos, s/n, 46022, Valencia, Spain

    Silviano Esteve-Pérez & Juan A. Mañez-Castillejo

Authors
  1. Silviano Esteve-Pérez
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  2. Juan A. Mañez-Castillejo
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Corresponding author

Correspondence to Silviano Esteve-Pérez.

Appendix

Appendix

TABLE A.1 Variable definitions (Source: ESEE) (All variables are time-varying covariates)

Dgrsize

Dummy variable that takes the value of 1 if the firm has more than 200 workers and 0 if otherwise

Adv

Dummy variable that takes the value of 1 if the firm advertising expenditure is positive and 0 if otherwise

Intec

Variable that takes the value of 1 if the firm belongs to a low- technological intensity industry, the value of 2 if the firm belongs to a medium-technological intensity industry, and 3 if the firm belongs to a high-technological intensity industry (see Table A.2)

Rdgroup

Variable that takes the value of 1 if the firm neither buys nor makes R&D, the value of 2 if the firm buys R&D, and the value of 3 if the firm makes R&D.

Intrd11

Dummy variable that takes the value of 1 if the firm belongs to a low-technological intensity industry and it neither makes nor buys R&D and 0 if otherwise

Intrd12

Dummy variable that takes the value of 1 if the firm belongs to a low-technological intensity industry and it buys but does not make R&D and 0 if otherwise

Intrd13

Dummy variable that takes the value of 1 if the firm belongs to a low-technological intensity industry and it makes R&D and 0 if otherwise

Intrd21

Dummy variable that takes the value of 1 if the firm belongs to an intermediate-technological intensity industry and it neither makes nor buys R&D and 0 if otherwise

Intrd22

Dummy variable that takes the value of 1 if the firm belongs to a medium-technological intensity industry and it buys but does not make R&D and 0 if otherwise

Intrd23

Dummy variable that takes the value of 1 if the firm belongs to a medium-technological intensity industry and it makes R&D and 0 if otherwise

Intrd31

Dummy variable that takes the value of 1 if the firm belongs to a high-technological intensity industry and it neither makes nor buys R&D and 0 if otherwise

Intrd32

Dummy variable that takes the value of 1 if the firm belongs to a high-technological intensity industry and it buys but does not make R&D and 0 if otherwise

Intrd33

Dummy variable that takes the value of 1 if the firm belongs to a high-technological intensity industry and it makes R&D and 0 if otherwise

Pro

Variable that takes the value of 1 if the firm’s labor productivity belongs to the first third of the sample labor productivity distribution, the value of 2 if the firm’s labor productivity belongs to the second third of the productivity distribution, and the value of 3 if the firm’s productivity belongs to the upper third of the labor productivity distribution

Pro1

Dummy variable that takes the value of 1 if the firm’s productivity belongs to the first third of the labor productivity distribution

Pro2

Dummy variable that takes the value of 1 if the firm’s productivity belongs to the second third of the labor productivity distribution

Pro3

Dummy variable that takes the value of 1 if the firm’s productivity belongs to the upper third of the labor productivity distribution

Pcmi

The price cost margin is approximated by the value of gross output minus variable costs of production, divided by the value of gross output. The gross value of output is computed as sales + stock variation + other revenues. The variable cost of production is computed as intermediate consumption (raw material and services) + labor costs. The variable pcmi takes the value of 1 if the firm’s price-cost margin is negative, the value of 2 if the firm’s price-cost margin is greater than or equal to 0 and lower than or equal to 10%, the value of 3 if the firm’s price-cost margin is greater than 10% and lower than or equal to 25%, and takes the value of four if the firm’s price cost margin is greater than 25%

Pcmi1

Dummy variable that takes the value of 1 if the firm’s price cost margin is negative

Pcmi2

Dummy variable that takes the value of 1 if the firm’s price-cost margin is greater than or equal to 0 and lower than or equal to 10%

Pcmi3

Dummy variable that takes the value of 1 if the firm’s price-cost margin is greater than 10% and lower than or equal to 25%

Pcmi4

Dummy variable that takes the value of 1 if the firm’s price cost margin is greater than 25%

Expint

Variable that takes the value of 1 if the firm does not export, the value of 2 if the firm’s export intensity is greater than 0% and lower than or equal to 25%, and takes the value of 3 if firm’s export intensity is greater than 25%,

Expint1

Dummy variable that takes the value of 1 if the firm does not export and 0 if otherwise

Expint2

Dummy variable that takes the value of 1 if the firm’s export intensity (ratio of export over sales) is greater than 0% and lower than or equal to 25%

Expint3

Dummy variable that takes the value of 1 if the firm’s export intensity (ratio of export over sales) is greater than 25%

Limited

Dummy variable that takes the value of 1 if the firm is a limited liability company and 0 if it has any other legal structure

Pkext

Dummy variable that takes the value of 1 if the firm’s capital is participated by foreign capital and 0 if otherwise

  TABLE A.2 Industrial technological intensity (NACE−93 industrial classification)
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Esteve-Pérez, S., Mañez-Castillejo, J.A. The Resource-Based Theory of the Firm and Firm Survival. Small Bus Econ 30, 231–249 (2008). https://doi.org/10.1007/s11187-006-9011-4

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