New businesses usually start a chain of events at a certain time. During every time period after the initial startup, there is a transition of some businesses from the state of existence to the state of death, as well as a transition of some other bus...
New businesses usually start a chain of events at a certain time. During every time period after the initial startup, there is a transition of some businesses from the state of existence to the state of death, as well as a transition of some other businesses from the state of death to the state of comeback. Previously, studies have mostly used statistical methods to analyze firms’ survival over time. Unlike existing methods, we derive theoretically an analytical tool based on economic dynamics. Using that tool we also analyze the long-term survival rate of accommodation and restaurant businesses in Gangwon province. As a result, we find that the proportion of the original 6,494 new businesses that were born during 2014 in Gangwon province converge to 53.8%, or 3,494. Another 46.2%, or 3,000 businesses, cease to exist at any one time. Of course, there will continue to be transitions of businesses between the two states of birth and death, so the makeup of the two groups continues to change, but the proportion in each group tends to converge to steady-state values.