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Firm growth, survival and productivity in South Africa
In developing economies, the existence of a healthy industrial structure is vital to the pursuit of long term policy objectives of employment and sustainable economic growth. This makes it important to understand the dynamics of firm survival and growth. There has been little attention on the topic...
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| Format: | Thesis |
| Language: | English |
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School of Economics
2018
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| _version_ | 1867613521393483776 |
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| access_status_str | Open Access |
| author | Masenyetse, Rethabile Francis |
| author2 | Dunne, John Paul |
| author_browse | Dunne, John Paul Masenyetse, Rethabile Francis |
| author_facet | Dunne, John Paul Masenyetse, Rethabile Francis |
| author_sort | Masenyetse, Rethabile Francis |
| collection | Thesis |
| description | In developing economies, the existence of a healthy industrial structure is vital to the pursuit of long term policy objectives of employment and sustainable economic growth. This makes it important to understand the dynamics of firm survival and growth. There has been little attention on the topic in developing countries because of data limitations, which prevalent in most developing countries except for few countries with established stock exchanges such as South Africa. This thesis studies the relationship between firm growth, survival and productivity using South Africa as the case study and fills the gap in industrial organisation literature by providing new empirical evidence on developing countries. The first paper analyses the changing size distribution, concentration rates and reasons for non-survival. The data on companies listed in the Johannesburg Stock Exchange (JSE) during the period 2000-2010 is used. Firm sales is adopted as the main measure of firm size while assets are used for comparison purposes. Following the Law of Proportionate Effects (LPE) framework, it evaluates of the relative growth rates of large and small companies in general and at sectoral and industrial levels. The result indicates that smaller firms are growing faster than larger ones, and more interestingly it is the smallest of the small and medium firms that are growing the fastest indicating that the industrial structure in South Africa is quite healthy. This finding is robust to correction of potential econometric problems of sample selection bias, growth persistence and heteroscedasticity. The second paper considers the patterns of growth and survival and specifies a simple logit binary survival model that allows for firm and industry specific characteristics as determinants of survival. The model is improved upon using the non-parametric Kaplan-Meier product limit method and estimating Cox proportional hazard model. The results indicate that large firms, high leverage and profitability operating in the primary sector have higher probability of survival in South Africa. This is robust after taking into account the global financial crisis of 2008-2009. The last paper tests the validity of the link between firm finance and total factor productivity. Using leverage and liquidity are the indicators of finance, the results from panel data estimation indicates that low leverage firms are more productive compared to the high leverage, while the low liquid firms are less productive compared to high liquid firms. The results were subjected to a number of robustness tests to address potential econometric issues that may invalidate the findings. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/27099 |
| institution | University of Cape Town (South Africa) |
| language | eng |
| last_indexed | 2026-06-10T12:37:28.326Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2018 |
| publishDateRange | 2018 |
| publishDateSort | 2018 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/27099 Firm growth, survival and productivity in South Africa Masenyetse, Rethabile Francis Dunne, John Paul Black, Anthony Economics In developing economies, the existence of a healthy industrial structure is vital to the pursuit of long term policy objectives of employment and sustainable economic growth. This makes it important to understand the dynamics of firm survival and growth. There has been little attention on the topic in developing countries because of data limitations, which prevalent in most developing countries except for few countries with established stock exchanges such as South Africa. This thesis studies the relationship between firm growth, survival and productivity using South Africa as the case study and fills the gap in industrial organisation literature by providing new empirical evidence on developing countries. The first paper analyses the changing size distribution, concentration rates and reasons for non-survival. The data on companies listed in the Johannesburg Stock Exchange (JSE) during the period 2000-2010 is used. Firm sales is adopted as the main measure of firm size while assets are used for comparison purposes. Following the Law of Proportionate Effects (LPE) framework, it evaluates of the relative growth rates of large and small companies in general and at sectoral and industrial levels. The result indicates that smaller firms are growing faster than larger ones, and more interestingly it is the smallest of the small and medium firms that are growing the fastest indicating that the industrial structure in South Africa is quite healthy. This finding is robust to correction of potential econometric problems of sample selection bias, growth persistence and heteroscedasticity. The second paper considers the patterns of growth and survival and specifies a simple logit binary survival model that allows for firm and industry specific characteristics as determinants of survival. The model is improved upon using the non-parametric Kaplan-Meier product limit method and estimating Cox proportional hazard model. The results indicate that large firms, high leverage and profitability operating in the primary sector have higher probability of survival in South Africa. This is robust after taking into account the global financial crisis of 2008-2009. The last paper tests the validity of the link between firm finance and total factor productivity. Using leverage and liquidity are the indicators of finance, the results from panel data estimation indicates that low leverage firms are more productive compared to the high leverage, while the low liquid firms are less productive compared to high liquid firms. The results were subjected to a number of robustness tests to address potential econometric issues that may invalidate the findings. 2018-01-30T10:25:58Z 2018-01-30T10:25:58Z 2017 Doctoral Thesis Doctoral PhD http://hdl.handle.net/11427/27099 eng application/pdf School of Economics Faculty of Commerce University of Cape Town |
| spellingShingle | Economics Masenyetse, Rethabile Francis Firm growth, survival and productivity in South Africa |
| thesis_degree_str | Doctoral |
| title | Firm growth, survival and productivity in South Africa |
| title_full | Firm growth, survival and productivity in South Africa |
| title_fullStr | Firm growth, survival and productivity in South Africa |
| title_full_unstemmed | Firm growth, survival and productivity in South Africa |
| title_short | Firm growth, survival and productivity in South Africa |
| title_sort | firm growth survival and productivity in south africa |
| topic | Economics |
| url | http://hdl.handle.net/11427/27099 |
| work_keys_str_mv | AT masenyetserethabilefrancis firmgrowthsurvivalandproductivityinsouthafrica |