Investigating the effect of industry and company characteristics on the survival of new companies in the electricity and electronics industries of Mazandaran province

Master's Thesis in Business Management (Tendency of Transformation)

Abstract

In today's competitive markets that are constantly changing and evolving, the survival and growth of new companies due to their impact on employment and economic growth are among the factors that are of great importance, so the purpose of this research is to investigate the effect of company and industry characteristics on the survival of new companies in the electricity and electronics industries of Mazandaran province during the year 1360-1390. For this purpose, the effect of seven variables of company size, company initial capital, degree of innovation in the industry, industry entry rate, industry capital intensity, industry growth rate and company type on the survival of new entrants is investigated. Data and information have been collected from the database of the Department of Industry, Mining and Trade of Mazandaran province and the winTDA software program has been used to process the data. To analyze the data, the product limit estimation model (Kaplan-Meier) and the life table approach have been used, and the semi-parametric Cox regression model has been used to test the hypotheses. As a result of this research, a positive and significant relationship between industry entry rate and survival was confirmed. Also, the positive effect of initial capital and capital intensity on survival was confirmed. The negative relationship between company size and survival was not confirmed, and no significant relationship was found between the variable of industry growth rate and the degree of innovation in the industry with the survival of new entrant companies.

Key words:

Industry and company characteristics, new entrants, electrical and electronic industries, Mazandaran province, survival analysis.

Chapter 1

Research overview

Introduction

Economic companies, which are likened to humans in terms of their life situation, are born at a certain time and die in different ways after going through different stages of life. But what is meaningful about the life of economic enterprises is their life span. Because perhaps it is possible to delay their exit from economic activity by identifying the factors that affect the life span of economic enterprises. The formation of new businesses is an important stimulus in economic activities and is the main driving force of economic development in a region. New business is not only creating employment and investment, but also improving productivity through new ideas and creativity (Esjoqvist and Christie [1], 2012). The rate of change and transformation in the population of industrial enterprises, which is caused by the birth of new companies and the death of existing companies, has been noticed among economists and policymakers in recent years. One of the reasons for paying attention to this issue is the existence of unemployment in the society, which is hoped to be solved by new companies. In the studies conducted in this field in different countries, other reasons for the importance of this issue have been stated. For example, increased competition, efficiency, innovation and technological improvement are created by the entry of new companies into the industry. The birth of industrial enterprises plays a key role in the evolution and shaping of an industry. New companies are the main factor in creating dynamism in the economy because they cause this dynamism through providing new goods and services, supplying new technology, increasing competition in the market and expanding the industry (Arab Najafabadi, 1390).

The importance and necessity of research

In the last few years, a new literature has emerged that focuses on the question of what happens to companies after their entry (in terms of their survival probability and their growth patterns). Although the creation of new companies is important, their growth rate and lifespan can also be considered as a factor that is very important in achieving the goals of long-term policies in the field of employment and economic growth (Dollinger [2], 1999). High losses in the early period of establishment of companies is one of the most prominent empirical rules about company performance. In this regard, in recent years, a lot of attention has been paid to the growth of companies and factors affecting it at different national and local levels in different countries. Although a lot of attention has been paid to the factors affecting the birth and death of companies and their lifespan in America and Europe, but so far few studies have been conducted on the survival of new companies in Iran. Conducting more research on the factors affecting the survival of new companies can be effective in achieving the goals of long-term policies related to employment and solving the problem of unemployment.

By examining the situation of human resources in the countries of the region, we come to the conclusion that our country compared to the surrounding countries, including the countries of Central Asia, Turkey and the countries of the Persian Gulf, Pakistan and . In the field of human resources of electricity and electronics, it has high power. The presence of prominent research forces in the country and their connection with foreign research centers that can be very effective in training human resources is one of the advantages of the electrical and electronic industries (Bastenegar, 2014). The importance of these industries can be examined from different angles: today, one of the most important forms of energy used all over the world is electricity. Almost more than half of the produced electricity is used to meet industrial needs. Also in agriculture, transportation, telecommunications and so on. It is also used. On the other hand, the development of information and communication technology has created changes in different aspects of human life. For example, e-education, e-government and e-health, as well as in economy and business, have shown themselves in the form of concepts such as digital economy and e-commerce. Undoubtedly, in today's world, which has become a global village, using electronic services can speed up and facilitate things. Electronics, computer and e-commerce are names that cannot be easily ignored in today's world and have entered almost all aspects of human life. Also, with the transition from the industrial age to the information age, key players have been widely noticed, which are called knowledge-oriented employees (Horwitz et al.[3], 2006).

With the advancement of the business world towards electronics and computers, the number of knowledge workers has increased more and more, and managers in such an environment full of ambiguity and uncertainty, must pay more attention to them (Mirbaghri et al., 2009). On the other hand, the establishment of Mazandaran province next to the Caspian Sea and enjoying the entry and exit points of goods with the countries of Central Asia and Europe, the existence of a specialized workforce and favorable weather conditions and natural environment for living and living that provide the possibility of attracting domestic and foreign investors and experts, are among the advantages of investing in this province, and considering that the electrical and electronic industries are part of the green and clean industries, the study and investigation of these industries is important for Mazandaran province, which has a clean and green environment. will pay attention Basically, capital-intensive industries with high technical knowledge are important for Mazandaran province, and the electrical and electronics industry is also one of these industries. According to the public relations report of the Mazandaran Industry, Mining and Trade Organization, the head of the Mazandaran Industry, Mining and Trade Organization announced a 51% growth in the province during the first five months of 2019, that more than 1 million tons of food, cement, agricultural products, all kinds of minerals, construction materials, wooden artifacts, etc. The value of about 165 million dollars was exported to different countries, among which the products of the electrical and electronic industry are not observed, and according to the latest statistics available in the Mazandaran Province Industry, Mining and Trade Organization database, 2% of the investment of production units in the province is dedicated to the electrical and electronic industry (Mazandaran Province Industry, Mining and Trade Organization Portal). This in itself clearly reveals the necessity of studying the survival of companies in the electricity and electronics industry of Mazandaran province. Successful entry into the market and competition is associated with high uncertainty and has various limitations. Therefore, a large number of companies, especially new companies, leave the market early after entering; Therefore, in some industries or regions, only a few new entrants survive. Until our knowledge about the growth processes of new companies is not improved, the success and failure of companies will also be an ambiguous issue (Fritch et al. [4], 2006). Since the creation of new companies is of great importance as a tool to reduce unemployment and increase employment in a region, the exit of these companies and its economic and social consequences reveal the need to study the survival of companies (Madhhoshi and Tari, 2016). On the other hand, recent studies show that the probability of survival differs significantly among companies in each industry. Part of these inconsistencies are explained by the specific characteristics of the industry. In fact, the type of policy chosen by the company is related to the type of effective factor in this inconsistency (Oderesh, Howling and Trick[5], 1997).