Entry, exit, mergers and growth

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  • Articles and reports: 11F0019M2006287
    Geography: Canada
    Description:

    We model the effects of product market competition on agency costs, and develop two main empirical predictions. First, competition, by reducing agency costs, unambiguously increases the importance firms place on quality improvements. This leads to higher powered incentives, and in turn to increased effort and quality. Second, these effects are increasing in the severity of agency problems, and should be stronger in large, hierarchical corporations (where agency problems are more severe) than in entrepreneurial firms. We test the predictions of our model using a unique dataset with both firm and employee characteristics.

    Release date: 2006-12-04

  • Articles and reports: 11-010-X20060109500
    Geography: Canada, Geographical region of Canada
    Description:

    The number and rate of bankruptcies have fallen steadily since the mid-1990s. However, the liabilities from these failures have trended up, implying that more large firms are going bankrupt. There has been a marked narrowing of regional differences in bankruptcy rates.

    Release date: 2006-10-12

  • Articles and reports: 11-624-M2006015
    Geography: Canada
    Description:

    This paper provides an overview of the long-run trend in business bankruptcies in Canada, examines the reaction of bankruptcies by region to the stresses associated with fluctuations in the economy and analyses the relation between the incidence of bankruptcies and the economic health of the regions. Over the past 25 years, Canadian businesses have experienced a number of tumultuous periods. After 2 decades of high bankruptcy associated with 2 major recessions and the implementation of 2 free trade agreements in the 1980s and 1990s, bankruptcies have returned by 2005 to levels experienced in the early 1980s. At the same time, the differences between the bankruptcy rates of Ontario, Quebec and British Columbia fell as the intensity of bankruptcies in these 3 provinces converged. Throughout the period, bankruptcies in these 3 provinces moved in concert with unemployment rates in most provinces. The exceptions are Alberta and Nova Scotia, which experienced marked increases in bankruptcies in the early 1990s.

    Release date: 2006-10-12

  • Articles and reports: 88F0006X2006010
    Description:

    It is well-known that small firms are managed differently from large firms, and this paper provides further evidence in support of this idea while suggesting that some small firms are adopting management behaviours of larger firms. Could these small firms be positioning themselves for growth or using organisational innovation as a tool for survival or adopting some formal organization practices early? In 2004, the Survey of Electronic Commerce and Technology provided a list of eight management practices that according to interviews with small and medium-sized firms indicated potential firm growth. The management practices listed were organisational structures; employee feedback surveys; mentoring or coaching programs; and written strategies for marketing; managing growth; commercialisation of intellectual property; succession management; and risk management.

    Release date: 2006-10-02

  • Articles and reports: 11F0027M2006042
    Geography: Canada
    Description:

    This paper investigates the extent to which productivity growth is the result of firm turnover as output is shifted from one firm to another, driven by the competitive process. Turnover occurs as some firms gain market share and others lose it. Some of the resulting turnover is due to entry and exit. Another part arises from growth and decline in incumbent continuing firms. This paper proposes a method for measuring the impact of firm turnover on productivity growth and shows that it is far more important than many previous empirical studies have concluded. It argues that firm turnover associated with competition is the main source of aggregate labour productivity growth in Canadian manufacturing industries.

    Release date: 2006-09-25

  • Articles and reports: 11-622-M2006013
    Geography: Canada
    Description:

    This paper summarizes the findings of a research program aimed at outlining the importance to the firm growth process of competencies that arise from investments in intangible assets. The program has consisted of two parts. First, longitudinal databases have provided a rich set of studies on entry, exit, mergers and other aspects of dynamics related to growth and decline in firm populations. These studies have shown the pervasiveness of growth and decline in the firm population. By themselves, these studies do not demonstrate what strategies differentiate the most successful from the least successful. To do so, we have built a set of firm surveys that allowed profiles to be developed of the type of competencies that stem from investments in organizational capital. In turn, these are linked to administrative data that allow us to classify firms as either growing or declining. We then asked how differences in competencies were related to the performance of firms.

    Release date: 2006-09-18

  • Articles and reports: 11-624-M2006014
    Geography: Canada
    Description:

    This paper provides an analysis of trends in business sector head office employment in Canada from 1999 to 2005. It investigates changes in the number of head offices and head office employment over this period. The paper also examines the effect of foreign ownership on head office employment. It asks how much foreign-controlled firms contribute to Canadian head office employment and employment growth and what happens to head office employment when control of a firm changes from domestic to foreign. The paper also looks at the rate at which head offices enter and exit over time with a view to ascertaining whether the loss of a head office is a rare occurrence or a relatively common event. Finally, the paper presents trends in head office employment across metropolitan areas over the past six years.

    Release date: 2006-07-13

  • Articles and reports: 88-003-X20060029238
    Geography: Canada
    Description:

    In Canada, two-in three new businesses do not survive to their fifth year. Business incubators provide space, advice and other support designed to assist new and growing businesses to become established and profitable. There are at least 78 operating business incubators in Canada and their funding totals almost $40 million which are discussed in this article.

    Release date: 2006-06-27

  • Articles and reports: 88F0006X2006003
    Description:

    The objective of this study was to continue the investigation into growth factors initiated by the previous project: The characteristics of firms that grow from small to medium size in collaboration with the National Research Council Industrial Research Assistance Program (NRC-IRAP). Twenty five interviews augmented the original 25 with a more heterogeneous mix of Canadian technology-based firms led to the development of a framework for assessing the technology phase of small companies (or business lines in larger companies).

    Release date: 2006-05-11

  • Articles and reports: 88-003-X20050038761
    Geography: Canada
    Description:

    For many organizations involved in economic development, business incubation is a key to creating and nurturing new business. There is currently very little information available on the business incubator sector in Canada. A new Statistics Canada pilot survey will collect and benchmark vital information on this largely unknown sector of the Canadian economy.

    Release date: 2005-10-26
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  • Articles and reports: 18-001-X2024002
    Description: This study examined the impact of federal business innovation and growth support (BIGS) programs on firm financial performance measured using revenue, profit and employment metrics. Using Statistics Canada’s Business Linkable File Environment data, the study observed the effects of BIGS on exporting versus non-exporting firms and Canadian- versus U.S.-owned firms from 2015 to 2020. Unlike previous studies that relied mainly on survey data, one significant aspect of this research was the use of a new dataset, enabling panel data structures and models to be employed. To assess the impact of BIGS and research and development spending on three interrelated measures of firm financial performance, the CDM (Crépon et al., 1998) framework was adopted.
    Release date: 2024-04-25

  • Articles and reports: 36-28-0001202301000005
    Description: The COVID-19 pandemic had a substantial impact on business dynamics, leading to the temporary or permanent closure of many businesses. Using a newly developed linked database, this paper presents trends in exits, insolvency proposals and bankruptcies across business and financial characteristics among corporations from 2004 to 2020.
    Release date: 2023-10-25

  • Articles and reports: 11F0019M2022001
    Description:

    This study uses data from the Statistics Canada Longitudinal Worker File linked to Canadian census records to examine the impact of firm closures and involuntary job loss on entry into gig work. The analysis distinguishes between the actions of those who experienced an actual layoff associated with a firm closure and those who worked in a closing firm but did not necessarily wait until the closure (“impending layoff”).

    Release date: 2022-09-27

  • Articles and reports: 36-28-0001202200200006
    Description:

    The COVID-19 pandemic had a major impact on businesses in 2020. In response, the Government of Canada introduced measures to support both individuals and businesses through the pandemic. The largest program for businesses was the Canada Emergency Wage Subsidy (CEWS). This paper presents firm-level evidence on the relationship between the usage of the CEWS programs and the survival and growth of businesses controlling for the pre-pandemic characteristics of businesses and where possible, their use of two other important programs, the Canada Emergency Business Account and the Canada Emergency Commercial Rental Assistance programs.

    Release date: 2022-02-23

  • Articles and reports: 18-001-X2021001
    Description:

    The federal government offers business innovation and growth support through program streams managed by its departments and agencies. In 2017, enterprises in the manufacturing sector accounted for almost one-quarter of the beneficiaries of this support and received almost one-third of the total value of support (Statistics Canada, 2020). The objective of this analysis is to assess the impact of federal growth and innovation support on the employment and revenue of beneficiary enterprises in the manufacturing sector between 2007 and 2017. This analysis suggests that enterprises that received federal support for growth and innovation experienced stronger employment and revenue growth relative to non-beneficiary enterprises. Over the three years following receipt of support, employment growth for beneficiary enterprises averaged 1.8% per year while, on average, enterprises that did not receive support experienced employment declines. Over the same period, the average annual revenue growth of beneficiary enterprises was higher than that of non-beneficiary enterprises by 4.6 percentage points.

    Release date: 2021-04-29

  • Articles and reports: 36-28-0001202100300002
    Description: Using the newly developed experimental series on monthly business openings and closures, this article examines the impacts of the COVID-19 pandemic on employment in the Canadian business sector and—in particular—the extent to which businesses that were active in February 2020 increased or decreased their employment since February. It also examines these impacts by business size.
    Release date: 2021-03-24

  • Articles and reports: 36-28-0001202100300003
    Description: This article compares the characteristics of employer businesses that were closed by September 2020 and remained closed as of November 2020 to those that were active before the onset of the pandemic in February 2020. Characteristics related to the risk of closure are examined: businesses size, age, indebtedness, liquidity and profitability. Based on these characteristics, the risk of closure is estimated for each business.
    Release date: 2021-03-24

  • Articles and reports: 11F0019M2021002
    Description:

    This study analyzes the determinants of entry into business ownership (defined as ownership of private incorporated businesses). Entrants into business ownership are defined as individuals who were primarily business owners in 2016, but not in 2015. An individual can become an entrant by starting an enterprise or acquiring shares of an existing private enterprise. Using a matched employer–employee database over the 2011-to-2016 period for approximately 24 million individuals, this study assesses the role of factors including personal characteristics, labour market experience and family characteristics.

    Release date: 2021-03-08

  • Articles and reports: 36-28-0001202100100001
    Description:

    The COVID-19 pandemic has affected the economy in extraordinary ways. Statistics Canada has developed new information sources to measure its impacts on businesses and workers. This article highlights the latest findings from new datasets on monthly business openings and closures and on businesses conditions, as well as supplementary analysis from the Labour Force Survey low-wage employees.

    Release date: 2021-01-27

  • Articles and reports: 11-633-X2020003
    Description:

    Timely measures of economic activity are critical for understanding how economies perform, and for informing policy responses to macroeconomic fluctuations. The onset of the pandemic due to the emergence of the SARS-Cov-2 virus emphasized this, as well as the need for geography-specific measures. Presently, Canada has a robust system for producing up-to-date measures of activity, such as real gross domestic product (GDP), at the national level. For provincial and territorial economies, monthly information on labour markets or particular activities such as manufacturing or international trade are available, but a monthly measure of aggregate economic activity is not available. This paper explores methods for creating a monthly indicator of economic activity for the provinces and territories.

    Release date: 2020-08-19
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