Growth, agglomeration externalities, and survival: Evidence from Chinese manufacturing start-ups

Previous studies on the impact of firm growth on survival have paid little attention to agglomeration external-ities. This study theoretically analyses how different agglomeration externalities affect the relationship between growth and survival. Using data from China's manufacturing start-ups, we confirm a U-shaped relationship between the growth and survival risks of start-ups. Moreover, we find that different agglomeration externalities have heterogeneous moderating effects on this U-shaped relationship. Specifically, specialization and diversifi-cation externalities have significantly negative and positive moderating effects, respectively. The positive moderating effect of diversification externalities comes from the moderating effect of related variety external-ities, whereas unrelated variety externalities have no significant moderating effect. The robustness test results support the above conclusions and suggest that the moderating effect of specialization externalities is hetero-geneous in terms of firms' resources.

Automated summary

Previous studies on the impact of firm growth on survival have overlooked the influence of agglomeration externalities. This study, based on data from Chinese manufacturing start-ups, found a U-shaped relationship between growth and survival risks, and identified different moderating effects of various agglomeration externalities on this relationship.