Small Firm Survival: An Australian Perspective

Abstract

This paper analyzes the factors and conditions that potentially help enhance the likelihood of survival of small firms. The purported sub-optimal output scale of small firms runs counter to their seemingly invariable preponderance across time, industries, and countries. Three key findings are obtained. First, small firms, indeed, face a hazard in surviving, albeit the magnitude is not as dramatic as contended by other studies. This implies that a cohort of small firms do survive and constitute the backbone of the observed small firm asymmetry. Second, small firms which are organized as a family-run corporation, have extensive business linkages, use government small business advisory services, and innovate realize a greater likelihood of surviving. Third, the paper finds that employees and decision makers with tertiary qualifications in the allied fields of business are not indispensable conditions for lowering the hazard of survival of small firms. These findings are based from sample data of the Australian Business Longitudinal Survey. Keywords: small firms, survival, Cox regression, longitudinal survey