Yuji Honjo

Business failure of new firms: an empirical analysis using a multiplicative hazards model

Abstract This paper investigates business failure of new firms. Using a multiplicative hazards model, we estimate the determinants of business failure among new manufacturing firms in Tokyo during the period 1986 to 1994. It is found that a new firm without sufficient capital or a sufficient size has a higher risk of business failure. It is also found that the new firm tends to have more difficulty surviving in an industry characterized by a high entry rate. With respect to the timing of entry, the new firm that entered just before or after the collapse of the so-called bubble economy has been more likely to fail. Furthermore, we estimate a regression model based not only on age but also on calendar time. By using a regression model based on calendar time, it is found that the firms age has been related to business failure.

Growth of new start-up firms: evidence from the Japanese manufacturing industry

This paper investigates firm growth as the post-entry performance of new start-up firms. Using data on Japanese manufacturing firms founded during 1992–1996, the determinants of growth among new start-up firms are identified. The effect not only of firm-specific characteristics, but also of entrepreneur-specific, industry-specific and local characteristics on firm growth are examined. It is found that younger and small-sized firms are more likely to grow among the start-ups. It is also found that entrepreneurs age and educational background affect the growth of start-ups. It is not shown, however, that industry specialization induces the growth of start-ups.

Business failure of new software firms

This paper investigates business failure of newly-established software firms. Using a proportional hazards model, we estimate the determinants of business failure among software firms in Japan founded during 1986–1995. The main findings of this paper are as follows. First, software firms with sufficient size or paid-up capital are less likely to fail. Secondly, vertical integration increases the probability of failure. Thirdly, managers attributes, such as age, affect the probability of failure. Finally, local agglomeration increases the probability of failure, while macroeconomic growth decreases the probability.

Science-Based Business : Knowledge Capital or Entrepreneurial Ability? : Theory and Evidence from a Survey of Biotechnology Start-ups

We present a model of science-based entrepreneurship where ideas initially produced by researchers with scientific knowledge capital may be developed by high-ability entrepreneurs. With moderate verification costs, startups continuously managed by inventors-founders coexist in equilibrium with startups that experience entrepreneurial turnover. The model predicts that startups managed by non-founder entrepreneurs would on average outperform the startups managed by their founders, and that better functioning of the market for entrepreneurial talent should result in more entrepreneurial turnover in equilibrium which in its turn leads to more ideas being commercialized and higher rewards to successful startups. We probe the implications of the model using a unique dataset from the survey of a representative sample of biotechnology startups in Japan and we find them to be broadly supported in the data.

Do innovative start-ups really wish to go public? Evidence from Japanese electrical manufacturing companies

This paper examines whether innovative start-ups have the intention to go public. Using a sample of electrical manufacturing firms in Japan, it is found that firms investing heavily in research and development (R&D) are more likely to have the intention to go public. From the viewpoint of entrepreneurs, the result may support the trend toward the creation of new stock markets for innovative start-ups.

Petty Cash from Parents: Provision Liquidity to Spin-Offs by Trade Credit Channel

This study shows that spin-offs acquire liquidity from their parent firms through the trade credit channel. We compare the trade credit of spin-offs with that of independent start-ups. Our findings reveal that spin-offs increase accounts payable when their parent firms are major suppliers. Moreover, spin-offs decrease accounts receivable when their parent firms are major customers. These results support the view that parent firms provide liquidity for their subsidiaries.

High-Tech Start-Ups in Japan: The Case of the Biotechnology Industry

This chapter explores the high-tech start-ups in the biotechnology industry in Japan. I provide evidence that many biotechnology start-ups originate from universities and that the emergence of some biotechnology start-ups is significantly associated with R&D activities in universities. I also find that emerging stock markets in Japan play a critical role in equity financing for biotechnology start-ups. Moreover, I examine whether biotechnology start-ups improve performance by going public. The results reveal that biotechnology start-ups increase equity financing, although they do not improve their performance after initial public offering.