Natural Selection: A Review of Studies on Firms’ Exit and Efficiency

29 Pages Posted: 5 Sep 2020

See all articles by Hirofumi Uchida

Hirofumi Uchida

Kobe University - Graduate School of Business Administration

Date Written: March 29, 2020

Abstract

In this study, we review the studies on the relation between firms’ efficiency or profitability and their exit. Although we take it for granted that inefficient or unprofitable firms are more likely to exit, which we call the natural selection hypothesis, some theories predict that it is not necessarily the case. After reviewing these theories, we sort out a large amount of empirical studies that report direct and related evidence on the relation between efficiency or profitability and exit.

Keywords: Natural selection, exit, efficiency, cleansing effect

JEL Classification: D22, D24, L25, E32

Suggested Citation

Uchida, Hirofumi, Natural Selection: A Review of Studies on Firms’ Exit and Efficiency (March 29, 2020). Available at SSRN: https://ssrn.com/abstract=3662911 or http://dx.doi.org/10.2139/ssrn.3662911

Hirofumi Uchida (Contact Author)

Kobe University - Graduate School of Business Administration ( email )

2-1, Rokkodai-cho, Nada-ku
Kobe, 657-8501
Japan
81-78-803-6949 (Phone)

HOME PAGE: http://www.b.kobe-u.ac.jp/~uchida

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