Successful Entrants

This is the second in a series of three studies on small and medium-sized enterprises conducted by the Micro-Economic Analysis Division of Statistics Canada on the causes of firm dynamics. The first, Strategies for success, catalogue no. 61-523-XPE, provides an overview of the strategies and activities of a group of small and medium-sized enterprises (GSME) that were growing during the last half of the 1980s. These are typically "established firms". It focuses on differences between the faster and slower growing firms in the sample and finds that innovation is the key to success but that general and financal management provided the core capabilities of a firm. The third study, Failing concers: business bankruptcy in Canada catalogue no. 61-525-XPE, investigates which characterisitcs are associated with failure. The major findings of this paper are that internal and external factors are about equally responsible for firm failure. Internal factors are more important among firms that are less five years old. The major internal deficiencies, particularly in these younger firms, fall in the area of managment capabilities. This study looks at firms that are typically somewhat older than firms investigated in the bankruptcy study, but younger than firms invertigated in the GSME stydy.