The Influence of Market Concentration on the Development of Newly Born Businesses in the Czech Republic

• Main Authors: Ivana Blažková, Gabriela Chmelíková
• Format: Article
• Language: English
• Published: Mendel University Press 2016-01-01
• Series: Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis
• Subjects: start-up firms; market concentration; regional development
• Online Access: https://acta.mendelu.cz/64/3/0929/
• ISSN: 1211-8516; 2464-8310

The paper deals with the market concentration as a detractor of life expectancy of new-born economic entities in the Czech economy. Although the start-up firms are small companies, their role in the economy exceeds their size, they are seen as providing the energy for economic growth. The aim of the paper is to evaluate the influence of different levels of market concentration on the business lifespan and consequently the job destruction in the economy. The analysis has shown that the greatest decline of start-up firms comes during the first and second year and that only around 30% of them get to their sixth year. From the viewpoint of the job creation it was found out that almost 30% of all new positions in the Czech economy are established in wholesale and retail trade sector, followed by manufacturing and professional, scientific and technical activities, both with 14% of new jobs. Using the regression analyses and statistical hypotheses testing the relationship between market concentration and firms’ lifespan was investigated with result of semi-strong dependency of the business success on the market structure. The positive correlation between the probability of decline across individual economic sectors and the market concentration in these sectors was confirmed on the level of statistical significance α = 0.01.