Survival and Growth in Retail and Service Industries: Evidence from Franchised Chains
The Journal of Industrial Economics, Vol. 53, No. 1, pp. 1-37, 2010
Posted: 12 Jul 2010 Last revised: 6 Jun 2013
Date Written: July 12, 2010
Abstract
Using data on franchised chains, which are the type of single-product entities emphasized in industry dynamics models, we show that age and size affect growth and survival even after controlling for chain characteristics and unobserved chain-specific efficiency. This implies that age and size affect firm growth and survival for reasons other than those emphasized in learning-type models. We also find that several chain characteristics affect growth and survival directly, and thus controlling for firm characteristics is important. Finally, we find that chain size increases rather than decreases exit among young chains, and chains converge in size over time.
Keywords: Franchising, firm growth, survival, services
JEL Classification: L11, L21, L81, M21
Suggested Citation: Suggested Citation
Francine Lafontaine
University of Michigan at Ann Arbor - Stephen M. Ross School of Business ( email )
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