Exit or Continue? An Empirical Analysis of SMEs in Ota-ku and Higashiosaka, Japan

This study investigates what types of firms and managers wish to exit or to continue in a market by focusing on two areas renowned for the high concentrations of manufacturing small and medium enterprises (SMEs) in Japan: Ota-ku in Tokyo Metropolitan and Higashiosaka in Osaka Prefecture. The results clearly indicate that high profitability and the possession of a specific technology are associated with a wish to continue in a market, while low profitability and the absence of a specific technology are associated with a wish to exit. The results also show that sole proprietor operations and small-scale businesses are associated with a desire to exit. Furthermore, it is found that firms in Ota-ku have a tendency toward a desire to exit than those in Higashiosaka.