New Firm Survival in Developing Countries: Evidence From Kosovo

Abstract

This paper examines both newborn firm survival and firm turnover in Kosovo using the population of new firms and registry information on active firms from 2008 to 2012. Survival analysis is employed to analyze the impact of firm- and industry-level characteristics on survival. We find that the hazard rate has an inverted U-shape relationship with both firm age and firm size. The risk of failure increases over the first two years and later decreases. In addition, firms with one employee and more than 10 employees enjoy better survival prospects than medium-sized companies. Interestingly, very large firms do not face fewer risks than very small companies. When compared to other developing countries, entry rates are lower but survival rates are higher. These features seem to be a distinctive characteristic of Kosovo.