A study on the impacts of firmspecific and industry-specific factors on the survival-based success of Spanish new firms

Abstract

With using decision tree approach, this paper explores the predictability and impacts of some firm-specific factors (mainly financial factors) and industry-specific factors on the survivalbased success of Spanish new firms in manufacturing sector. In particular, decision trees are built not only for comparing the impacts between different factors but also for observing the change of factor’s impact with firm´s ageing and after industry adjustment. The results from the generated trees are quite detailed and relatively complex, and the main results can be summarized as follows: (1) profitability is the most significant variable because of ranking at the first level in most trees; (2) the impact of firm size is also important due to frequently appearing at the second level; (3) the impact of liquidity tends to weaken with ageing; (4) industry adjustment degrades the impact of indebtedness; (5) as for industry-specific variables, concentration and entry rank before industry growth in the age 1 and age 2 predictions.