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Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity.

Banks & Banking Reform --- Capital market imperfections --- Creative destruction --- Economic Theory & Research --- Financial crisis --- Firm survival --- Labor Markets --- Labor Policies --- Macroeconomics and Economic Growth --- Microfinance --- Productivity decompositions

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Using Indonesian manufacturing census data (1991-2001), this paper rejects the hypothesis that the East Asian crisis unequivocally improved the reallocative process. The correlation between productivity and employment growth did not strengthen and the crisis induced the exit of relatively productive firms. The attenuation of the relationship between productivity and survival was stronger in provinces with comparatively lower reductions in minimum wages, but not due to reduced entry, changing loan conditions, or firms connected to the Suharto regime suffering disproportionately. On the bright side, firms that entered during the crisis were relatively more productive, which helped mitigate the reduction in aggregate productivity.

Banks & Banking Reform --- Capital market imperfections --- Creative destruction --- Economic Theory & Research --- Financial crisis --- Firm survival --- Labor Markets --- Labor Policies --- Macroeconomics and Economic Growth --- Microfinance --- Productivity decompositions

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While innovation is a source of competitiveness, it may expose plants to survival risks. Using a rich set of plant-product data for Chilean manufacturing plants during the period 1996-2006 and discrete-time hazard models controlling for unobserved plant heterogeneity, this paper shows that innovating plants have higher survival odds. However, risk plays an important role for the innovation-survival link: only innovators that retain diversified sources of revenues survive longer. Single-product innovators are at greater risk of exiting. In addition, only innovators facing lower market risk, measured by fewer innovative competitors, low-pricing strategies, or lower sales volatility in the new products' markets, see their odds of survival increase significantly. Technical risk, measured by the proximity of product innovations to the plants' past expertise, the degree of sophistication of new products, or their novelty to the Chilean market, does not play a substantial role in the innovation-survival link. Engaging in risky innovation is not an irrational decision, since plants reap big payoffs-higher productivity, employment and sales growth-from such innovations. However, those payoffs are not always higher than those from cautious innovation, suggesting that constraining factors, such as credit constraints, force plants to take on more risk when innovating. An implication of the findings for industry dynamics is that among innovators, only the survival of cautious innovators is guaranteed. Since engaging in cautious innovation may not be feasible for all plants, there could be a role for policy in reducing innovators' exposure to risks and providing assistance to deal with failed innovations, while setting the right incentives.

E-Business --- Firm Exit --- Firm Survival --- Innovation --- International Economics & Trade --- Knowledge for Development --- Labor Policies --- Markets and Market Access --- Multi-Product Firms --- Product Innovation --- Chile

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This paper provides one of the first comprehensive and most updated studies on the effects of firms' organizational resources, country institutions, and national culture on the survival and growth of private firms around the world during the COVID-19 pandemic. Analyzing World Bank Enterprise Follow-up Surveys on COVID-19 that cover 18,770 firms in 36 countries, the paper documents four sets of findings. (1) During the pandemic, firms with favorable organizational resources (state ownership and affiliation with parent companies) are more likely to survive and grow, whereas firms with foreign ownership or more financial obstacles are less likely to survive or grow. Firms in countries with a higher per capita income, a lower COVID-19 spread, and a less stringent COVID-19 control policy are more likely to survive and grow. (2) Favorable ownership and parent-company affiliations help cushion the pandemic shock during the pandemic. (3) The relationship between firm characteristics and firm survival/growth is significantly affected by the stringency of a country's COVID-19 policy. (4) Firm survival and growth are positively related to a country's cultural tendency in terms of long-term orientation and are not significantly related to uncertainty avoidance and individualism. The overall quality of country governance is negatively linked to the odds for firm survival as well as revenue and employment growth.

Access to Finance --- Coronavirus --- COVID-19 --- Enterprise Development and Reform --- Finance and Financial Sector Development --- Firm Growth --- Firm Survival --- Organizational Resources --- Private Firms --- Private Sector Development --- Private Sector Economics

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This paper estimates the survival time of nearly 7,000 firms in a dozen high-income and middle-income countries in a scenario of extreme economic distress, using the World Bank's Enterprises Surveys. Under the assumption that firms have no incoming revenues and cover only fixed costs, the median survival time across industries ranges within 8 to 19 weeks, while on average firms have liquidity to survive between 12 and 38 weeks. Schumpeter's theory of creative destruction is not corroborated in the data, as potential exit is not predicated on the size of firms, their age, or their productivity.

Bankruptcy and Resolution of Financial Distress --- Business Cycles and Stabilization Policies --- Creative Destruction --- Economic Conditions and Volatility --- Economic Crisis --- Economic Distress --- Enterprise Survey --- Firm Exit --- Firm Hybernation --- Firm Survival --- Private Sector Economics --- Survival Time