What makes new firms resilient? A spatial analysis for Romania

Abstract

Resilient regions seem to be able to retain a higher level of entrepreneurial activity in times of crisis, when the capacity of new firms to survive and thrive is severely put to test. Aiming to find which regional characteristics sustain entrepreneurship resilience, this paper explores the impact of the recent economic and financial crisis on the survival of new firms, using Romania as an exponent of postcommunist countries in Central and Eastern Europe. After testing a wide range of potential explicative factors, we found that the most consequential ones are the foreign direct investments, population growth and the agglomeration of active firms. A custom-made economic crisis variable differentiated the recession time span for each county, according to its individual response to crisis, and allowed us to find how the economic crisis changes the spatial influence of the variables. The spatial panel framework used for this analysis showed that location matters for the survival of newly born firms.

Determinants of manufacturing micro firms' productivity in Ecuador. Do industry and canton where they operate matter?

“…Although, the heterogeneity of manufacturing micro firms' productivity is explained by differences across cantons to a lesser extent than the differences across industries, regional characteristics matter for micro firms' productivity. For instance, in resilient regions, existing and nascent firms can improve their performance and survival (Brixy & Grotz, 2007;Ebert et al, 2018;Goschin, 2020). In addition, the overall mean (constant estimate) of the total factor productivity across all industries and cantons is −0.11 in a scale from −3 to 3.…”

Entrepreneurship Recovery in Romania after the Great Recession. A Dynamic Spatial Panel Approach

“…Our main contribution to the literature stems from investigating the dynamic linkage between entrepreneurial initiative and resilience to crises, by considering spatial spillovers over space and time based on a dynamic spatial panel data model. In comparison, previous studies have investigated the determinants of new business formation using a spatial panel data framework without the dynamic component [4,8].…”

“…Our variable of interest is a custom-made indicator of economic crisis recorded at the county level. It is built as a binary economic variable that identifies the recession time span for each county according to its annual GDP dynamics, as follows: GDP decline is coded 1, and GDP growth is coded 0 [4].…”

“…Economic shocks might exert a powerful, yet territorially uneven influence on the birth of new firms and the survival of existing ones. Some regions can be more resilient than others to economic shocks, therefore the entrepreneurial initiative is less affected by the economic crises [4]. However, all regions are impacted to a certain degree when a major recession occurs, such as the one triggered by the 2007-2009 global economic crisis.…”

“…It implies that neighboring regions tend to be alike, i.e., their characteristics are usually positively correlated. Given the scarcity of studies that acknowledge spatial dependence while modelling entrepreneurship activity (e.g., [4,5,7]), we aim to fill a gap in the literature by analyzing entrepreneurship recovery and dynamics after a crisis from a spatial perspective, using appropriate spatial econometrics tools.…”