University of Tasmania
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Towards a consistent account of firm survival

posted on 2023-05-26, 06:14 authored by Jones, CD
This study commenced with an interest in the question; why do some firms survive for considerably longer periods of time when other apparently similar types of firms operating under apparently similar conditions do not? Considering this issue in the context of the Hobart pizza industry led to the initial discovery of a very interesting paradox; an increase in apparent competition over time was associated with increased firm survival. Thus, this study sought to explain why firms appear to gain a survival advantage in the face of apparent competition. A theory-building methodology from the critical realism paradigm was used to facilitate an explanation-based case study approach. The process of retroduction was used to develop a novel explanation of firm survival, incorporating a stratified reality in which mechanisms, events and experiences exist. Thus, the study sought to confirm or disconfirm the operation of a generative mechanism and describe the contingent conditions under which it operates and/or is suppressed. The study proceeded through two distinct phases. First, the history of the Hobart pizza industry (1975 to 2005) was recorded and its development was compared to three other independent market places in northern Tasmania and Victoria across the same (general) period of time. From this process, five specific areas of focus emerged through which the events related to an unobservable mechanism seemed explainable. Those areas were; non-harmful relations, environmental heterogeneity, the ability of firms to alter their environment, the presence of an invisible energy, and lastly, firm survival. From a review of the organizational studies and broader ecological literatures, an initial model of Transferred Demand emerged. Second, the empirical investigation of the proposed Transferred Demand model occurred in North Yorkshire (UK), covering the period 1975 to 2004. Strong support for the postulates suggests that the proposed model of Transferred Demand has empirical strength as a new and innovative explanation of firm survival. Importantly, during the second phase of the study the specific transfactual conditions related to the operation of Transferred Demand where determined. In summary, this study solved the initial contradiction of increased apparent competition occurring alongside increased firm survival by enlisting a range of broader ecological theories to redefine what competition actually is. An important opportunity for future research arising from this study is the need to better understand the positive and negative coactions occurring between franchised firms and independent firms during the process of franchisation.


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