Structural Change in Firm Dynamics, Inter-firm Network, and Geography

         
Author Name OGURA Yoshiaki (Waseda University) / SAITO Yukiko (Senior Fellow, RIETI)
Creation Date/NO. March 2018 18-P-004
Research Project Dynamics of Inter-organizational Network and Geography
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Abstract

This paper investigates how firm dynamics, such as firm growth and firm exit, are influenced in an unpreceded aging society using firm-level panel data for 10 years. We find that both firm age and executive age increase due to insufficient entry and exit rates and executive turnover, especially for firms in periphery regions, which prevents firm growth. Because executive age is positively related to firm exit rate, we expect that firm exit rate will increase in the future. Firm exit caused by the transaction partner's exit, i.e., chain of exit, occurs more frequently in periphery regions because low firm location density increases the search cost of new transaction partners. These results imply the necessity of policy depending on firm age stage and regions.