Small Business Economics

, Volume 26, Issue 1, pp 39–60 | Cite as

Sectoral Differences in Plant Start-up Size in the Finnish Economy

  • Satu Nurmi


New knowledge on the factors behind the choice of plant entry scale is important for understanding the entry process and the recruitment decisions of new plants in different sectors of the economy. The purpose of this paper is to evaluate the effect of various industry attributes on plant start-up size, measured with employment, using data on the entire Finnish business sector. The paper extends previous research by examining the differences between manufacturing and services and by using a richer set of explanatory variables. The relative importance of the covariates for different-sized entrants is taken into account by using a quantile regression approach. The results for manufacturing and services are remarkably similar. However, the findings imply that in the future analysis it is also important to consider the effect of the regional availability of educated and experienced work force on plant start-up size in these two sectors. The findings on the importance of scale economies and industry turbulence in determining start-up size correspond to the earlier studies. The results also show that single plant and multiplant entrants face a rather different entry environment. In addition, the employment share of foreign-owned entrants in the industry has to be taken into account.


entry industry differences quantile regression start-up size 

Jel Code

J21 J23 L11 L25 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acs, Z.J., Audretsch, D.B. 1989‘Small-firm Entry in US Manufacturing’Economica56255265Google Scholar
  2. Audretsch, D. 1995Innovation and Industry EvolutionThe MIT PressCambridge, MAGoogle Scholar
  3. Buchinsky, M. 1998‘Recent Advances in Quantile Regression Models: A Practical Quideline for Empirical Research’Journal of Human Resources3388126Google Scholar
  4. Cabral, L. 1995‘Sunk Costs, Firm Size and Firm Growth’Journal of Industrial Economics43161172Google Scholar
  5. Caves, R. 1998‘Industrial Organization and New Findings in the Turnover and Mobility of Firms’Journal of Economic Literature3619471982Google Scholar
  6. Chennells, L. and J. V. Reenen 1999, Has Technology Hurt Less Skilled Workers? An Econometric Survey of the Effects of Technical Change on the Structure of Pay and Jobs. Institue for Fiscal Studies Working Paper No. W99/27, London.Google Scholar
  7. Comanor, W.S., Wilson, T.A. 1967‘Advertising Market Structure and Performance’Review of Economics and Statistics49423440Google Scholar
  8. Disney, R., J. Haskel and Y. Heden, 1999, ‘Entry, Exit and Establishment Survival in UK Manufacturing’, Center for Research on Globalisation and Labour Markets, Research Paper 99/9. University of Nottingam.Google Scholar
  9. Dunne, T, Roberts, M., Samuelson, L. 1989‘The Growth and Failure of U.S. Manufacturing Plants’Quarterly Journal of Economics104671698Google Scholar
  10. Evans, D. 1987‘Tests of Alternative Theories of Firm Growth’Journal of Political Economy95657674Google Scholar
  11. Geroski, P. 1991Market Dynamics and EntryBasil BlackwellOxfordGoogle Scholar
  12. Görg, H., Strobl, E. 2002‘Multinational Companies and Entrant Start–up Size: Evidence from Quantile Regressions’Review of Industrial Organization201531Google Scholar
  13. Görg, H, Strobl, E., Ruane, F. 2000‘Determinants of Firm Start-Up Size: An Application of Quantile Regression for Ireland’Small Business Economics14211222Google Scholar
  14. Ilmakunnas, P., M. Maliranta and J. Vainiomäki, 2001, ‘Linked Employer–Employee Data on Finnish Plants for the Analysis of Productivity, Wages and Turnover’, in T. P. Jensen and A. Holm (eds.), Nordic Labour Market Research on Register Data, Copenhagen: TemaNord 2001: 593, Nordic Council of Ministers. pp. 205–246.Google Scholar
  15. Jovanovic, B. 1982‘Selection and Evolution of Industry’Econometrica50649670Google Scholar
  16. Koenker, R., Bassett, G. 1978‘Regression Quantiles’Econometrica463350Google Scholar
  17. Koenker, R., Hallock, K. 2001‘Quantile Regression’Journal of Economic Perspectives15143156CrossRefGoogle Scholar
  18. Mata, J. 1991‘Sunk Costs and Entry by Small and Large Plants’Geroski, P.Schwalbach, J. eds. Entry and Market Contestability: An International ComparisonBasil BlackwellOxford4962Google Scholar
  19. Mata, J., Machado, J.A.F. 1996‘Firm start-up size: A conditional quantile approach’European Economic Review4013051323CrossRefGoogle Scholar
  20. Mata, J., Portugal, P. 1994‘Life Duration of New Firms’Journal of Industrial Economics42227245Google Scholar
  21. Mata, J, Portugal, P., Guimarães, P. 1995‘The Survival of New Plants: Start-up Conditions and Post-entry Evolution’International Journal of Industrial Organization13459481CrossRefGoogle Scholar
  22. Moulton, B.R. 1990‘An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Units’Review of Economics and Statistics72334338Google Scholar
  23. Nurmi, S., 2003, Sectoral Differences in Plant Start-up Size. Helsinki School of Economics, Working Papers No. W-335.Google Scholar
  24. White, H. 1982‘Maximum Likelihood Estimation of Misspecified Models’Econometrica50125Google Scholar
  25. You, J.I. 1995‘Small Firms in Economic Theory’Cambridge Journal of Economics19441462Google Scholar

Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Statistics FinlandStatistics FinlandFinland

Personalised recommendations