Working Papers,
Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness

Abstract: This research explores both industry and temporal aspects of entry, exit and industry turbulence in Austrian manufacturing in the period between 1981 to 1994. It is shown that while the net entry of both firms and establishments is quite stable over time, exit and especially the turnover and volatility of firms is influenced more by temporal effects. A regression analysis into the determinants of industry dynamics associated with entry and exit shows that sunk costs, scale economies and industry growth are primary determinants for different entry and exit regimes across 2-digit sectors, while profitability is found to be significant for dynamics related to exit but not for the entry of firms. The net entry dynamics of firms and establishments are found to be different in regard to capital intensity and profitability.

Keywords: exit, entry; industry turbulence; Austrian manufacturing

JEL-codes: L1; L6 May 2002

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