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Determinants of translation-firm survival: A fuzzy set analysis
JBR-09123; No of Pages 6 Journal of Business Research xxx (2016) xxx–xxx
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Journal of Business Research
Determinants of translation-firm survival: A fuzzy set analysis☆ Clara Gieure a,⁎, Inmaculada Buendía-Martínez b a b
Faculty of Education, Catholic University of Valencia, C/ Ramiro de Maeztu, 14, 46900 Torrent, Spain Facultad de Ciencias Sociales, University of Castilla-La Mancha, Avenida de los Alfares, 44, 16071 Cuenca, Spain
a r t i c l e
i n f o
Article history: Received 1 February 2016 Received in revised form 1 March 2016 Accepted 1 April 2016 Available online xxxx Keywords: firm survival self-employment translation firms fsQCA
a b s t r a c t This article presents an empirical analysis of determinants of the survival of firm or self-employed workers in the Spanish translation sector. In the midst of a global downturn, the survival of firm and self-employed workers is a key factor for the progress of the economy and for a better and more stable future. The analysis explores the combination of variables including human capital, contingency and economic investment that potentially drive translation and interpreting firms to survive. The study performs a comparative qualitative analysis using a fs/QCA methodology and identify seven combinations of causes that lead to the outcome. The results show that different causal paths predict the survival of those translation and interpreting firms or self-employed entrepreneurs. With little literature on the topic of firm survival in the translation sector, the research aims to fill that gap and make a valuable contribution to the current literature. © 2016 Published by Elsevier Inc.
1. Introduction Recently, economists and policymakers have been focusing on the role of small businesses in the economy. The current global recession has resulted in higher levels of unemployment; consequently, interest in the growth of entrepreneurs and self-employment has also increased. Firm creation contributes to the economy, boosting economic, social and cultural growth (Acs, Braunerhjelm, Audretsch, & Carlsson, 2009; Galindo, Guzman, & Ribeiro, 2009), promotes innovation and development, and creates jobs (Aidis, Estrin, & Mickiewicz, 2012; Audretsch & Thurik, 1999). However, interest should focus not only on firm creation, but also on growth and success. In a market where some businesses do well and others fail to survive, governments should also strive to minimize the number of business dissolutions. Some researchers claim that of every 100 start-ups only 50 firms survive the first three years (Alba-Ramirez, 1994; Van Praag, 2003). In other words, only about half of all new small businesses survive after 4 years (Cader & Leatherman, 2011; Headd, 2003). Another common belief holds that a small percent of new firms survive and that only a handful of the survivors grow and become prosperous. But the source of this statement remains unknown and little empirical evidence exists to support these beliefs, as survival rates vary by industry.
☆ The authors are grateful to contributions from Professor Pedro Mogorrón Huerta, University of Alicante, and Professor Benoît Tremblay, HEC Montréal for their careful reading and suggestions on revising this article. ⁎ Corresponding author. E-mail addresses: [email protected] (C. Gieure), [email protected] (I. Buendía-Martínez).
Phillips and Kirchhoff (1989) reveal a survival rate with the manufacturing sector having the highest number (46.9%) and construction the lowest (35.3%); another study shows that education and health services have the highest survival rates (46% and 44% respectively) in a 6- and 7-year study; leisure and hospitality sectors also show positive survival rates (Knaup & Piazza, 2007). To properly analyze the survival of firms, the investigation and understanding of the determinants of business survival is particularly relevant (Van Praag, 2003). This article studies the relationship between the survival of firms in the translation and interpreting (hereinafter T&I) sector and the variables of human capital, contingency and economic investment, with the purpose of outlining which combination of variables exerts an influence over T&I firm survival. To this end, the study performs a fuzzy-set qualitative comparative analysis (Fiss, 2011; Ragin, 2000, 2008) that includes 46 companies from the T&I sector in Spain including firms and self-employed workers. The T&I sector has grown in the last decade and many firms have successfully made their own way despite turbulent market conditions (Kelly, 2000). Some experts argue that new policies the Spanish government has developed to help entrepreneurs and to lower unemployment rates have successfully changed the job market. Together, the variables determine the survival of firms, and the results will help both new entrepreneurs and business owners to find many paths to success as one can see in the results and discussion section. The study's structure is as follows: the next section provides a brief summary of relevant literature on firm survival, and explains why certain variables of human capital, contingency and economic investment are relevant to this research. Section 3 presents the sample and data. Section 4 puts forth the empirical model, and Section 5 features a discussion of the results. Section 6 describes the conclusions and implications,
http://dx.doi.org/10.1016/j.jbusres.2016.04.141 0148-2963/© 2016 Published by Elsevier Inc.
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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where the results show that human capital factors, that is, entrepreneurship education, business background and media, have a positive influence on firm success. The results support the argument that different causal paths explain the survival of T&I firms.
2010, 2011; Morón, 2010). Following Phillips and Kirchhoff's (1989) assumptions claiming that the earlier a business grows the higher the chance of survival, the study looks more into the performance of the firms than their size.
2. Theoretical underpinnings
Proposition 1. The size of a T&I firm does not have an influence on the survival of the firm.
Several studies have explored the determinants of firm survival (Agarwal & Gort, 2002; Arribas & Vila, 2007; Holmes, Hunt, & Stone, 2010; López-García & Puente, 2006; Van Praag, 2003). This article explores the relationship between firm survival and variables of human capital (entrepreneurship education, business background and the use of media), contingency (size and gender) and economic investment. By analyzing these variables, the study shows how they contribute to business success and how these factors can combine to yield such success. As Timmons and Spinelli (2008), a successful entrepreneur is one who sets up his/her own business and makes the organization grow and last - behavior number 2 of the 14 he claims entrepreneurs must generally demonstrate. The literature that analyzes firm survival suggests emphasizing certain factors that contribute to the firm's success (Más-Verdú, Ribeiro-Soriano, & Roig-Tierno, 2015). The central research question here claims the following: Do some human capital and contingency factors such as the ones in this study and economic investment exert an influence on the survival of T&I entrepreneurs? And if so, what combination of those factors drives translation entrepreneurs to succeed? The study examines six factors that the literature identifies in all translation entrepreneurs: business size; gender of the owner; entrepreneurship education; business background; economic investment; and media. The article analyzes these factors accordingly in order to find an answer to these questions. 3. Translation firm duration The business survival duration of translation firms, the dependent variable, (note that translation firms includes both enterprises and self-employed workers), represents in this study the period of time the firm stays in business, which will eventually end in an exit from the firm or an end to self-employment. In this context, this study considers duration, or the survival of the firm, to be the period a business performs in the market. This factor is essential because when gathering the number of years a business has performed; the market analysis in terms of business performance and the possibilities to draw conclusions when combining the outcome with the rest of the variables becomes possible. Literature on firm survival varies depending on the sector. The focus here is the T&I service sector, known for its long history and for its prosperous market within European institutions where hundreds of translators and interpreters work full time every day to meet all the language requirements of the European Commission and other related institutions and agencies. According to Gouadec (2007), firm survival depends on internationalization, technology, specialization, and ultimately, know-how. This market has abolished distance, strongly investing in translation tools, namely, computer-aided programs, and now featuring as many specializations as existing types of written and oral texts. In sum, this sector is growing quickly and has strongly benefited from globalization. 3.1. The influence of firm size on survival For certain industries, firm size may constitute a factor explaining productivity and growth. Nevertheless, a minimum efficiency size exists, below which firms generally seem to fail (Ribeiro-Soriano & Urbano, 2010; Zhao, Li, Lee, & Chen, 2011). This study analyzes both small and medium-sized firms and the self-employed, although the selfemployed prevail in this sector (Gouadec, 2007; Kelly, 2004; Kuznik,
3.2. The influence of gender on firm survival Kalleberg and Leicht (1991) state that while the rate of growth in selfemployment is greater among women than men, self-employment is still more prevalent among men than women. Buttner and Moore (1997), and Soriano and Dobon (2009) find that firms women create are smaller than those which men create with regard to sales, employees, profits and growth. Women's professional development is not often a priority in large organizations. Among the key reasons women give for deciding to start a business is family need. Many female entrepreneurs consider the integration of their personal and professional life an advantage. Hence, they consider family in many business decisions, thus revealing women to be less individualistic, as they place the needs of the group over their own. Other researchers claim that men-led businesses are more successful than those firms which women create (Renzulli, Aldrich, & Moody, 2000). Female-led businesses are more prevalent in the service sector, and some activities within this sector have a greater female presence; for instance, retail, hospitality and restaurants, personal assistance services, and education (Kalleberg & Leicht, 1991; Walker & Webster, 2006). In this study, women slightly dominate within the sector. Hence, the number of women-led businesses is comparable to the number men lead, showing that gender differences do not convey risk, and failure is not predictable solely on the basis of gender. Proposition 2. The gender of a T&I-business owner or of a selfemployed entrepreneur does not have an influence on the survival of the firm. 3.3. The impact of entrepreneurship education on firm survival According to the literature, the education of a business owner or entrepreneur influences his performance and thus, the survival of the firm or self-employed person. Kim, Aldrich, and Keister (2006) state that acquirement of knowledge increases the owner's management abilities, allowing him/her to run a better business or deploy a strategy specific to the sector. Consequently, owners can obtain resources more efficiently, reduce costs, and increase turnover; in sum, they can improve performance (Rey-Martí, Ribeiro-Soriano, & Palacios-Marqués, 2016). Reuber and Fischer (1999) recognize that education and training can enhance specific or general business skills, a philosophy the human capital theory also supports. However, although the traditional business skills business schools teach are essential, they are not sufficient for meeting the needs of a successful entrepreneur (Rae, 1997). The development of entrepreneurial skills, attributes and behaviors needs more attention. In this line, both Gibb (2002) and Kirby (2004) argue that entrepreneurship education is about developing entrepreneurial capabilities, and enhancing the attributes and behavior that go beyond the purely commercial. For the purposes of this study, the definition of entrepreneurship education includes the general entrepreneurial knowledge and skills a person acquires when undertaking training, and the specific knowledge of how to start and run a T&I business. The first type of education aims at training people to undertake and manage a new business, thus learning the basics of venture creation and acquiring all the necessary skills; the
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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latter focuses on gaining particular skills or knowledge applicable to the T&I sector. Proposition 3. When the owner of a T&I business has received entrepreneurial education before undertaking any business action, this training has a positive influence on the survival of the firm.
3.4. The impact of business background on firm survival One must also consider how having entrepreneurial kith and kin, or even close friends, may influence success (Kim et al., 2006). Several academics have reported on the topic, for instance, Gatewood, Shaver, and Gartner (1995) claim that entrepreneurs and business owners coming from business family backgrounds enjoy greater success than their peers coming from families with no history of entrepreneurship. Mintzberg (2004) also claims that professionals gain management skills only through previous experience. Further, he stresses the fact that understanding abstract concepts is challenging without an understanding of the relationship between those concepts and real experience. Having entrepreneurial experience may also confer a deeper insight into business management. This rationale suggests that any learning that takes place before setting up a business could be beneficial for the firm. Proposition 4. For the business owner, having an entrepreneurial family background has a positive influence on the survival of the firm.
3.5. The impact of economic investment on firm survival Firm creation involves investing in different kinds of resources: knowledge-based, financial, organizational, social capital and intellectual property (Landry, Amara, & Rherrad, 2006). When an entrepreneur finds a business opportunity but lacks the resources for its exploitation, or lacks any possible supply sources, like for instance, training in a specific area or gaining access to financing, a business venture is difficult to pursue. Having access to some of these resources constitutes a key factor in the decision to start a new venture given that accessibility influences the perception of business viability. Following Urbano and Toledano (2008), an entrepreneur sees resources as being of utmost importance. In sum, access to capital and financing is a critical issue for small and medium firms for both men and women (Hill, Leitch, & Harrison, 2006; Verheul & Thurik, 2001) considering that without sufficient financial resources the entrepreneur will fail to develop new products and services, expand the business, or create jobs, among other things. For small business owners access to financial resources is one of the main obstacles when looking at business creation (Urbano & Toledano, 2008). However, others have argued that gaining access to capital, or having money to invest helps to overcome one of the major obstacles to success (Aldrich & Auster, 1986; Shapero, 1983). Proposition 5. Investing in a business has a positive influence on the survival of the firm.
3.6. The influence of media on firm survival The Internet and social networks have evolved to become part of almost every facet of today's private and professional lives. The world has now become accessible thanks to online social networks, platforms that offer a two-way interaction, leaving the former one-way interaction outdated (Ubeda, Gieure, de-la-Cruz, & Sastre, 2013). Social media (or Web 2.0) has had a substantial impact on costumer perceptions, attitudes and behavior, and is becoming a major source of costumer empowerment and influence (Urban, 2003).
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Web 2.0 tools benefit both customers and business owners. First, the tools enable customers to express their feelings and personal thoughts on firms and products to a group of people (Dellarocas, 2003), and thus, businesses enjoy direct access to their feedback. Second, the Web 2.0 and its social media tools help business owners expand their businesses through, for instance, the many marketing tools the Web offers. Nowadays, firms are increasingly aware of the potential of using the media to create brand recognition, generate revenue, gain feedback and insight from customers to improve customer relations, especially in times of economic recession (Müllern, 2011). This study identifies the media as those Internet communication tools the Web 2.0 deploys and business owners use to improve business performance and to communicate, such as social media networks. Proposition 6. Business owners media usage has a positive influence on the survival of the firm.
4. Sample and data A total number of 46 small and medium-sized firms and selfemployed entrepreneurs in the Spanish T&I sector participate in the survey. 41% of the participants are business owners and the remaining 59% are self-employed. To ensure rigor, a large group of business managers and self-employed translators and interpreters registered within the Spanish General Treasury received the survey. The fieldwork took place in July and August 2014. The team collected the data using a Web 2.0 application, a tool which enables the registration of all the responses in a database. Graphic 1 shows the geographical distribution of the participants. 5. Method This study uses qualitative comparative analysis (QCA), a methodology with a complex causality that uses a set-theoretic approach (Ragin, 2000). QCA focuses on asymmetric relationships that lead to detecting configurations necessary to produce a specific outcome –here, survival of the firms (Meyer, Tsui, & Hinings, 1993). A configuration is a combination of variables or factors – conditions in QCA terminology. QCA can also identify conditions that lead to the absence of the outcome –in this case, non-survival of the firms. The method is suitable for this study because comparative methods of configurations offer valid responses in studies with small samples (Fiss, 2007). Drawing general conclusions or implications for a larger population is then possible using the fuzzy-set qualitative comparative analysis (fsQCA). This study employs two specific QCA methods: crisp-set qualitative comparative analysis (csQCA) and fsQCA. csQCA is suitable for variables with binary values (0 or 1). A value of 1 indicates the presence of a particular characteristic, and 0 its absence. fsQCA is more appropriate for variables that take ordinal or continuous values. In this case, a calibration process expresses outcomes and antecedent conditions in fuzzy terms. (See Table 1.) The study performs the analysis with the help of the fsQCA software package version 2.5. After assigning the membership values for relevant causal conditions, a truth table contains all possible combinations of causal conditions. Thereafter the team removes lines so as to leave in only those elements with a sufficient number of cases. Because the sample is relatively small, the team has set the minimum number to 1 in keeping with Ragin (2008). 6. Results As a result of the empirical analysis, seven groups of configurations of antecedent conditions occur, all of them presenting acceptable consistency indices (≥ 0.80). These configurations make possible
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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Graphic 1. Geographical distribution of the T&I firms participating in the study
the description of certain patterns of those firms and self-employed entrepreneurs in the T&I sector. A condition is necessary when its consistency score exceeds the threshold value of 0.9 (Schneider & Wagemann, 2010). Table 2 shows
Table 1 Variable definition. Antecedent condition
Item description
Propositions
Entre Educa
Do you consider entrepreneurship education and training essential before starting your own business or starting as a freelance or self-employed entrepreneur? (1 = yes; 0 = no) Do you have a business background? (1 = yes; 0 = no)
P.3. When the owner of a T&I business has received entrepreneurial education before undertaking any business action, this training has a positive influence on the survival of the firm P.4. For the business owner, having an entrepreneurial family background has a positive influence on the survival of the firm P.6. Business owners media usage has a positive influence on the survival of the firm
Business backgrounda
Mediaa
Size
Gendera
Economic investmenta
Outcome: a
Do you use social media? (1 = yes; 0 = no) Do you use the Internet and, in particular, the Web 2.0 to promote your services and make yourself known in the market? (1 = yes; 0 = no) How many employees work for your company?
P.1. The size of a T&I firm does not have an influence on the survival of the firm Gender (1 = man; 0 = woman) P.2. The gender of a T&I-business owner or of a single self-employed entrepreneur does not have an influence on the survival of the firm P.5. Investing in a business has Do you consider that economic a positive influence on the investment and the long hours survival of the firm spent before launching a business are factors that discourage entrepreneurs? (1 = yes; 0 = no) Survival Has the company survived? (1 = yes; 0 = no)
Variables expressed in crisp-set terms.
the consistency and coverage values for all antecedent conditions. The highest consistency value among all conditions is 0.90, a value showing that entrepreneurship education barely exceeds the threshold. Given that this value is at the threshold, the study includes the number, and discusses the value in the results following the validation of all factors. As for the rest of the consistency values, none of the remaining variables report a necessary condition to produce the outcome. Table 3 shows the results. Following Ragin's (2009) recommendation, this study reports the intermediate solution. The coding for the solution table has followed Ragin and Fiss's (2008) approach. Black circles (●) indicate the presence of a condition, white circles (○) denote its absence, and blank cells represent ambiguous conditions. Seven configurations of antecedent conditions occur, all of them presenting acceptable consistency indices (≥0.80). Raw coverage indices range from 0.02 to 0.45. This variety of combinations suggests that these seven configurations are sufficient but not necessary. Consequently, no unifying causal path explains the outcome. Turning to the specific results, a background in business is evident in four out of seven configurations, meaning that having entrepreneurial relatives or previous business experience helps to perform better and leads to success; as for entrepreneurship education, a presence in three of the seven configurations exists, also meaning that undertaking entrepreneurship education and training before starting a new business helps business owners to succeed. This latter result shows that, contrary
Table 2 Individual analysis of the necessary conditions. Conditions tested⁎
Consistency
Coverage
gender ~gender Entre_educ ~Entre_educ busin_backgr ~busin_backgr investment ~investment size ~size media ~media
0.7143 0.2857 0.9048 0.0952 0.5238 0.4762 0.6667 0.3333 0.1310 0.8690 0.8333 0.1667
0.8824 1.0000 0.9048 1.0000 1.0000 0.8333 0.8750 1.0000 1.0000 0.9012 0.8974 1.0000
⁎ Following the nomenclature, the symbol (~) represents the negation of the characteristic.
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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Table 3 Configurations of antecedent conditions for income. Configuration number
Antecedent conditions Gender
1 2 ○ 3 ● 4 ● 5 6 ● 7 Solution coverage: 0.726190 Solution consistency: 1.000000
Entre Edu
Coverage Investment
Size
Media
Raw
Unique
○ ○ ● ● ● ● ●
● ●
●
● ● ○ ○ ●
0.452381 0.095238 0.119048 0.107143 0.238095 0.02381 0.02381
0.166667 0.047619 0.023809 0.107143 0.023809 0.023809 0.023809
●
● ●
Consistency
Busin Backgr
● ● ●
○
to what the analysis of necessity in Table 2 infers, this factor is acceptable within the model as a dominating behavior is not the result and therefore valid for the inclusion in the study. As for the rest of antecedent conditions, media reveals a presence in five out of seven configurations, meaning that the use of media has a positive effect on business performance. When analyzing size, small and medium firms and the self-employed success when using the media, when investing in their business, and when undertaking entrepreneurship education. Thus, size is not a necessary condition as the survival of those small firms comes from the qualities and skills of the entrepreneur. As for gender, the study shows that women have a greater presence in this sector; however, the results reveal an unclear pattern, meaning gender does not have an influence on the survival of the firm. Similarly, the investment results are unclear, as they show a presence in three conditions and absence in another three conditions; however, they also show a positive relationship with education, business background and media. Following Ragin's (2008) recommendation, the two causal paths with greater raw coverage (configurations 1 and 5) deserve further attention. Configuration 1 − investment* ~ size media* − shows that small firms and self-employed entrepreneurs survive when they invest in their business and use the media. Configuration 5 − business background* investment* size* ~ media − shows that those firms or self-employed entrepreneurs that invest in the firm and have undertaken entrepreneurial education survive and have no need to use the media, as this factor offsets the other two. In both cases, investment is a positive factor for the firms, meaning that entrepreneurs who invest in the business are more prone to succeed. 7. Conclusions, implications, and future lines of research This study examines the determinants of T&I firm survival. Because the survival of firms is key for the progress of the economy and for the transfer of knowledge, this research is a valuable contribution to the literature. With the objective of finding the combination of variables that drives T&I firms or self-employed entrepreneurs to survive, the study sheds light on a sector that has a limited number of related research studies. Academics have long devoted attention to entrepreneurship and firm success; however, policymakers and universities have only recently realized their strong impact on society and the economy, and are now shifting their focus from theory to practice. This study uses fsQCA, a sufficiently robust and accepted method, for testing the hypothesis herein. The results suggest the existence of seven structural configurations that predict the survival of T&I firms. According to the results, both human capital factors and economic investment have a positive influence on the survival of businesses, thus corroborating the research hypothesis. The results present different options for entrepreneurs and show as many forms of success as the causal conditions describe. Entrepreneurship education acts as a proxy for business success since for both business owners and the self-employed, as well as for
● ○ ● ●
1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000
people who are willing to start a new business, training can have a real and lasting impact. Likewise, business backgrounds act as a proxy for business success. In fact, as many practitioners acknowledge, the more you train and learn by doing, the more you gain. The findings will, hopefully, encourage both practitioners stablish their business, and researchers, to continue in this line and by using richer data sets, broaden the scope of this academic area. Despite filling an existing gap in the literature, this study presents several limitations, creating, in turn, opportunities for future research. First, although addressing both groups of firm entrepreneurs and the self-employed, the study would need to discuss group differences further, a step which would be more informative and cover a wider scope of the T&I market. Second, further research addressing every region in Spain could help to define the sector more precisely. To achieve the latter, a bigger sample would be necessary as well as a focus on both qualitative and quantitative analysis. Finally, cross-country comparisons represent another opportunity for future studies.
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Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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Journal of Business Research
Determinants of translation-firm survival: A fuzzy set analysis☆ Clara Gieure a,⁎, Inmaculada Buendía-Martínez b a b
Faculty of Education, Catholic University of Valencia, C/ Ramiro de Maeztu, 14, 46900 Torrent, Spain Facultad de Ciencias Sociales, University of Castilla-La Mancha, Avenida de los Alfares, 44, 16071 Cuenca, Spain
a r t i c l e
i n f o
Article history: Received 1 February 2016 Received in revised form 1 March 2016 Accepted 1 April 2016 Available online xxxx Keywords: firm survival self-employment translation firms fsQCA
a b s t r a c t This article presents an empirical analysis of determinants of the survival of firm or self-employed workers in the Spanish translation sector. In the midst of a global downturn, the survival of firm and self-employed workers is a key factor for the progress of the economy and for a better and more stable future. The analysis explores the combination of variables including human capital, contingency and economic investment that potentially drive translation and interpreting firms to survive. The study performs a comparative qualitative analysis using a fs/QCA methodology and identify seven combinations of causes that lead to the outcome. The results show that different causal paths predict the survival of those translation and interpreting firms or self-employed entrepreneurs. With little literature on the topic of firm survival in the translation sector, the research aims to fill that gap and make a valuable contribution to the current literature. © 2016 Published by Elsevier Inc.
1. Introduction Recently, economists and policymakers have been focusing on the role of small businesses in the economy. The current global recession has resulted in higher levels of unemployment; consequently, interest in the growth of entrepreneurs and self-employment has also increased. Firm creation contributes to the economy, boosting economic, social and cultural growth (Acs, Braunerhjelm, Audretsch, & Carlsson, 2009; Galindo, Guzman, & Ribeiro, 2009), promotes innovation and development, and creates jobs (Aidis, Estrin, & Mickiewicz, 2012; Audretsch & Thurik, 1999). However, interest should focus not only on firm creation, but also on growth and success. In a market where some businesses do well and others fail to survive, governments should also strive to minimize the number of business dissolutions. Some researchers claim that of every 100 start-ups only 50 firms survive the first three years (Alba-Ramirez, 1994; Van Praag, 2003). In other words, only about half of all new small businesses survive after 4 years (Cader & Leatherman, 2011; Headd, 2003). Another common belief holds that a small percent of new firms survive and that only a handful of the survivors grow and become prosperous. But the source of this statement remains unknown and little empirical evidence exists to support these beliefs, as survival rates vary by industry.
☆ The authors are grateful to contributions from Professor Pedro Mogorrón Huerta, University of Alicante, and Professor Benoît Tremblay, HEC Montréal for their careful reading and suggestions on revising this article. ⁎ Corresponding author. E-mail addresses: [email protected] (C. Gieure), [email protected] (I. Buendía-Martínez).
Phillips and Kirchhoff (1989) reveal a survival rate with the manufacturing sector having the highest number (46.9%) and construction the lowest (35.3%); another study shows that education and health services have the highest survival rates (46% and 44% respectively) in a 6- and 7-year study; leisure and hospitality sectors also show positive survival rates (Knaup & Piazza, 2007). To properly analyze the survival of firms, the investigation and understanding of the determinants of business survival is particularly relevant (Van Praag, 2003). This article studies the relationship between the survival of firms in the translation and interpreting (hereinafter T&I) sector and the variables of human capital, contingency and economic investment, with the purpose of outlining which combination of variables exerts an influence over T&I firm survival. To this end, the study performs a fuzzy-set qualitative comparative analysis (Fiss, 2011; Ragin, 2000, 2008) that includes 46 companies from the T&I sector in Spain including firms and self-employed workers. The T&I sector has grown in the last decade and many firms have successfully made their own way despite turbulent market conditions (Kelly, 2000). Some experts argue that new policies the Spanish government has developed to help entrepreneurs and to lower unemployment rates have successfully changed the job market. Together, the variables determine the survival of firms, and the results will help both new entrepreneurs and business owners to find many paths to success as one can see in the results and discussion section. The study's structure is as follows: the next section provides a brief summary of relevant literature on firm survival, and explains why certain variables of human capital, contingency and economic investment are relevant to this research. Section 3 presents the sample and data. Section 4 puts forth the empirical model, and Section 5 features a discussion of the results. Section 6 describes the conclusions and implications,
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Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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where the results show that human capital factors, that is, entrepreneurship education, business background and media, have a positive influence on firm success. The results support the argument that different causal paths explain the survival of T&I firms.
2010, 2011; Morón, 2010). Following Phillips and Kirchhoff's (1989) assumptions claiming that the earlier a business grows the higher the chance of survival, the study looks more into the performance of the firms than their size.
2. Theoretical underpinnings
Proposition 1. The size of a T&I firm does not have an influence on the survival of the firm.
Several studies have explored the determinants of firm survival (Agarwal & Gort, 2002; Arribas & Vila, 2007; Holmes, Hunt, & Stone, 2010; López-García & Puente, 2006; Van Praag, 2003). This article explores the relationship between firm survival and variables of human capital (entrepreneurship education, business background and the use of media), contingency (size and gender) and economic investment. By analyzing these variables, the study shows how they contribute to business success and how these factors can combine to yield such success. As Timmons and Spinelli (2008), a successful entrepreneur is one who sets up his/her own business and makes the organization grow and last - behavior number 2 of the 14 he claims entrepreneurs must generally demonstrate. The literature that analyzes firm survival suggests emphasizing certain factors that contribute to the firm's success (Más-Verdú, Ribeiro-Soriano, & Roig-Tierno, 2015). The central research question here claims the following: Do some human capital and contingency factors such as the ones in this study and economic investment exert an influence on the survival of T&I entrepreneurs? And if so, what combination of those factors drives translation entrepreneurs to succeed? The study examines six factors that the literature identifies in all translation entrepreneurs: business size; gender of the owner; entrepreneurship education; business background; economic investment; and media. The article analyzes these factors accordingly in order to find an answer to these questions. 3. Translation firm duration The business survival duration of translation firms, the dependent variable, (note that translation firms includes both enterprises and self-employed workers), represents in this study the period of time the firm stays in business, which will eventually end in an exit from the firm or an end to self-employment. In this context, this study considers duration, or the survival of the firm, to be the period a business performs in the market. This factor is essential because when gathering the number of years a business has performed; the market analysis in terms of business performance and the possibilities to draw conclusions when combining the outcome with the rest of the variables becomes possible. Literature on firm survival varies depending on the sector. The focus here is the T&I service sector, known for its long history and for its prosperous market within European institutions where hundreds of translators and interpreters work full time every day to meet all the language requirements of the European Commission and other related institutions and agencies. According to Gouadec (2007), firm survival depends on internationalization, technology, specialization, and ultimately, know-how. This market has abolished distance, strongly investing in translation tools, namely, computer-aided programs, and now featuring as many specializations as existing types of written and oral texts. In sum, this sector is growing quickly and has strongly benefited from globalization. 3.1. The influence of firm size on survival For certain industries, firm size may constitute a factor explaining productivity and growth. Nevertheless, a minimum efficiency size exists, below which firms generally seem to fail (Ribeiro-Soriano & Urbano, 2010; Zhao, Li, Lee, & Chen, 2011). This study analyzes both small and medium-sized firms and the self-employed, although the selfemployed prevail in this sector (Gouadec, 2007; Kelly, 2004; Kuznik,
3.2. The influence of gender on firm survival Kalleberg and Leicht (1991) state that while the rate of growth in selfemployment is greater among women than men, self-employment is still more prevalent among men than women. Buttner and Moore (1997), and Soriano and Dobon (2009) find that firms women create are smaller than those which men create with regard to sales, employees, profits and growth. Women's professional development is not often a priority in large organizations. Among the key reasons women give for deciding to start a business is family need. Many female entrepreneurs consider the integration of their personal and professional life an advantage. Hence, they consider family in many business decisions, thus revealing women to be less individualistic, as they place the needs of the group over their own. Other researchers claim that men-led businesses are more successful than those firms which women create (Renzulli, Aldrich, & Moody, 2000). Female-led businesses are more prevalent in the service sector, and some activities within this sector have a greater female presence; for instance, retail, hospitality and restaurants, personal assistance services, and education (Kalleberg & Leicht, 1991; Walker & Webster, 2006). In this study, women slightly dominate within the sector. Hence, the number of women-led businesses is comparable to the number men lead, showing that gender differences do not convey risk, and failure is not predictable solely on the basis of gender. Proposition 2. The gender of a T&I-business owner or of a selfemployed entrepreneur does not have an influence on the survival of the firm. 3.3. The impact of entrepreneurship education on firm survival According to the literature, the education of a business owner or entrepreneur influences his performance and thus, the survival of the firm or self-employed person. Kim, Aldrich, and Keister (2006) state that acquirement of knowledge increases the owner's management abilities, allowing him/her to run a better business or deploy a strategy specific to the sector. Consequently, owners can obtain resources more efficiently, reduce costs, and increase turnover; in sum, they can improve performance (Rey-Martí, Ribeiro-Soriano, & Palacios-Marqués, 2016). Reuber and Fischer (1999) recognize that education and training can enhance specific or general business skills, a philosophy the human capital theory also supports. However, although the traditional business skills business schools teach are essential, they are not sufficient for meeting the needs of a successful entrepreneur (Rae, 1997). The development of entrepreneurial skills, attributes and behaviors needs more attention. In this line, both Gibb (2002) and Kirby (2004) argue that entrepreneurship education is about developing entrepreneurial capabilities, and enhancing the attributes and behavior that go beyond the purely commercial. For the purposes of this study, the definition of entrepreneurship education includes the general entrepreneurial knowledge and skills a person acquires when undertaking training, and the specific knowledge of how to start and run a T&I business. The first type of education aims at training people to undertake and manage a new business, thus learning the basics of venture creation and acquiring all the necessary skills; the
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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latter focuses on gaining particular skills or knowledge applicable to the T&I sector. Proposition 3. When the owner of a T&I business has received entrepreneurial education before undertaking any business action, this training has a positive influence on the survival of the firm.
3.4. The impact of business background on firm survival One must also consider how having entrepreneurial kith and kin, or even close friends, may influence success (Kim et al., 2006). Several academics have reported on the topic, for instance, Gatewood, Shaver, and Gartner (1995) claim that entrepreneurs and business owners coming from business family backgrounds enjoy greater success than their peers coming from families with no history of entrepreneurship. Mintzberg (2004) also claims that professionals gain management skills only through previous experience. Further, he stresses the fact that understanding abstract concepts is challenging without an understanding of the relationship between those concepts and real experience. Having entrepreneurial experience may also confer a deeper insight into business management. This rationale suggests that any learning that takes place before setting up a business could be beneficial for the firm. Proposition 4. For the business owner, having an entrepreneurial family background has a positive influence on the survival of the firm.
3.5. The impact of economic investment on firm survival Firm creation involves investing in different kinds of resources: knowledge-based, financial, organizational, social capital and intellectual property (Landry, Amara, & Rherrad, 2006). When an entrepreneur finds a business opportunity but lacks the resources for its exploitation, or lacks any possible supply sources, like for instance, training in a specific area or gaining access to financing, a business venture is difficult to pursue. Having access to some of these resources constitutes a key factor in the decision to start a new venture given that accessibility influences the perception of business viability. Following Urbano and Toledano (2008), an entrepreneur sees resources as being of utmost importance. In sum, access to capital and financing is a critical issue for small and medium firms for both men and women (Hill, Leitch, & Harrison, 2006; Verheul & Thurik, 2001) considering that without sufficient financial resources the entrepreneur will fail to develop new products and services, expand the business, or create jobs, among other things. For small business owners access to financial resources is one of the main obstacles when looking at business creation (Urbano & Toledano, 2008). However, others have argued that gaining access to capital, or having money to invest helps to overcome one of the major obstacles to success (Aldrich & Auster, 1986; Shapero, 1983). Proposition 5. Investing in a business has a positive influence on the survival of the firm.
3.6. The influence of media on firm survival The Internet and social networks have evolved to become part of almost every facet of today's private and professional lives. The world has now become accessible thanks to online social networks, platforms that offer a two-way interaction, leaving the former one-way interaction outdated (Ubeda, Gieure, de-la-Cruz, & Sastre, 2013). Social media (or Web 2.0) has had a substantial impact on costumer perceptions, attitudes and behavior, and is becoming a major source of costumer empowerment and influence (Urban, 2003).
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Web 2.0 tools benefit both customers and business owners. First, the tools enable customers to express their feelings and personal thoughts on firms and products to a group of people (Dellarocas, 2003), and thus, businesses enjoy direct access to their feedback. Second, the Web 2.0 and its social media tools help business owners expand their businesses through, for instance, the many marketing tools the Web offers. Nowadays, firms are increasingly aware of the potential of using the media to create brand recognition, generate revenue, gain feedback and insight from customers to improve customer relations, especially in times of economic recession (Müllern, 2011). This study identifies the media as those Internet communication tools the Web 2.0 deploys and business owners use to improve business performance and to communicate, such as social media networks. Proposition 6. Business owners media usage has a positive influence on the survival of the firm.
4. Sample and data A total number of 46 small and medium-sized firms and selfemployed entrepreneurs in the Spanish T&I sector participate in the survey. 41% of the participants are business owners and the remaining 59% are self-employed. To ensure rigor, a large group of business managers and self-employed translators and interpreters registered within the Spanish General Treasury received the survey. The fieldwork took place in July and August 2014. The team collected the data using a Web 2.0 application, a tool which enables the registration of all the responses in a database. Graphic 1 shows the geographical distribution of the participants. 5. Method This study uses qualitative comparative analysis (QCA), a methodology with a complex causality that uses a set-theoretic approach (Ragin, 2000). QCA focuses on asymmetric relationships that lead to detecting configurations necessary to produce a specific outcome –here, survival of the firms (Meyer, Tsui, & Hinings, 1993). A configuration is a combination of variables or factors – conditions in QCA terminology. QCA can also identify conditions that lead to the absence of the outcome –in this case, non-survival of the firms. The method is suitable for this study because comparative methods of configurations offer valid responses in studies with small samples (Fiss, 2007). Drawing general conclusions or implications for a larger population is then possible using the fuzzy-set qualitative comparative analysis (fsQCA). This study employs two specific QCA methods: crisp-set qualitative comparative analysis (csQCA) and fsQCA. csQCA is suitable for variables with binary values (0 or 1). A value of 1 indicates the presence of a particular characteristic, and 0 its absence. fsQCA is more appropriate for variables that take ordinal or continuous values. In this case, a calibration process expresses outcomes and antecedent conditions in fuzzy terms. (See Table 1.) The study performs the analysis with the help of the fsQCA software package version 2.5. After assigning the membership values for relevant causal conditions, a truth table contains all possible combinations of causal conditions. Thereafter the team removes lines so as to leave in only those elements with a sufficient number of cases. Because the sample is relatively small, the team has set the minimum number to 1 in keeping with Ragin (2008). 6. Results As a result of the empirical analysis, seven groups of configurations of antecedent conditions occur, all of them presenting acceptable consistency indices (≥ 0.80). These configurations make possible
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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Graphic 1. Geographical distribution of the T&I firms participating in the study
the description of certain patterns of those firms and self-employed entrepreneurs in the T&I sector. A condition is necessary when its consistency score exceeds the threshold value of 0.9 (Schneider & Wagemann, 2010). Table 2 shows
Table 1 Variable definition. Antecedent condition
Item description
Propositions
Entre Educa
Do you consider entrepreneurship education and training essential before starting your own business or starting as a freelance or self-employed entrepreneur? (1 = yes; 0 = no) Do you have a business background? (1 = yes; 0 = no)
P.3. When the owner of a T&I business has received entrepreneurial education before undertaking any business action, this training has a positive influence on the survival of the firm P.4. For the business owner, having an entrepreneurial family background has a positive influence on the survival of the firm P.6. Business owners media usage has a positive influence on the survival of the firm
Business backgrounda
Mediaa
Size
Gendera
Economic investmenta
Outcome: a
Do you use social media? (1 = yes; 0 = no) Do you use the Internet and, in particular, the Web 2.0 to promote your services and make yourself known in the market? (1 = yes; 0 = no) How many employees work for your company?
P.1. The size of a T&I firm does not have an influence on the survival of the firm Gender (1 = man; 0 = woman) P.2. The gender of a T&I-business owner or of a single self-employed entrepreneur does not have an influence on the survival of the firm P.5. Investing in a business has Do you consider that economic a positive influence on the investment and the long hours survival of the firm spent before launching a business are factors that discourage entrepreneurs? (1 = yes; 0 = no) Survival Has the company survived? (1 = yes; 0 = no)
Variables expressed in crisp-set terms.
the consistency and coverage values for all antecedent conditions. The highest consistency value among all conditions is 0.90, a value showing that entrepreneurship education barely exceeds the threshold. Given that this value is at the threshold, the study includes the number, and discusses the value in the results following the validation of all factors. As for the rest of the consistency values, none of the remaining variables report a necessary condition to produce the outcome. Table 3 shows the results. Following Ragin's (2009) recommendation, this study reports the intermediate solution. The coding for the solution table has followed Ragin and Fiss's (2008) approach. Black circles (●) indicate the presence of a condition, white circles (○) denote its absence, and blank cells represent ambiguous conditions. Seven configurations of antecedent conditions occur, all of them presenting acceptable consistency indices (≥0.80). Raw coverage indices range from 0.02 to 0.45. This variety of combinations suggests that these seven configurations are sufficient but not necessary. Consequently, no unifying causal path explains the outcome. Turning to the specific results, a background in business is evident in four out of seven configurations, meaning that having entrepreneurial relatives or previous business experience helps to perform better and leads to success; as for entrepreneurship education, a presence in three of the seven configurations exists, also meaning that undertaking entrepreneurship education and training before starting a new business helps business owners to succeed. This latter result shows that, contrary
Table 2 Individual analysis of the necessary conditions. Conditions tested⁎
Consistency
Coverage
gender ~gender Entre_educ ~Entre_educ busin_backgr ~busin_backgr investment ~investment size ~size media ~media
0.7143 0.2857 0.9048 0.0952 0.5238 0.4762 0.6667 0.3333 0.1310 0.8690 0.8333 0.1667
0.8824 1.0000 0.9048 1.0000 1.0000 0.8333 0.8750 1.0000 1.0000 0.9012 0.8974 1.0000
⁎ Following the nomenclature, the symbol (~) represents the negation of the characteristic.
Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141
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Table 3 Configurations of antecedent conditions for income. Configuration number
Antecedent conditions Gender
1 2 ○ 3 ● 4 ● 5 6 ● 7 Solution coverage: 0.726190 Solution consistency: 1.000000
Entre Edu
Coverage Investment
Size
Media
Raw
Unique
○ ○ ● ● ● ● ●
● ●
●
● ● ○ ○ ●
0.452381 0.095238 0.119048 0.107143 0.238095 0.02381 0.02381
0.166667 0.047619 0.023809 0.107143 0.023809 0.023809 0.023809
●
● ●
Consistency
Busin Backgr
● ● ●
○
to what the analysis of necessity in Table 2 infers, this factor is acceptable within the model as a dominating behavior is not the result and therefore valid for the inclusion in the study. As for the rest of antecedent conditions, media reveals a presence in five out of seven configurations, meaning that the use of media has a positive effect on business performance. When analyzing size, small and medium firms and the self-employed success when using the media, when investing in their business, and when undertaking entrepreneurship education. Thus, size is not a necessary condition as the survival of those small firms comes from the qualities and skills of the entrepreneur. As for gender, the study shows that women have a greater presence in this sector; however, the results reveal an unclear pattern, meaning gender does not have an influence on the survival of the firm. Similarly, the investment results are unclear, as they show a presence in three conditions and absence in another three conditions; however, they also show a positive relationship with education, business background and media. Following Ragin's (2008) recommendation, the two causal paths with greater raw coverage (configurations 1 and 5) deserve further attention. Configuration 1 − investment* ~ size media* − shows that small firms and self-employed entrepreneurs survive when they invest in their business and use the media. Configuration 5 − business background* investment* size* ~ media − shows that those firms or self-employed entrepreneurs that invest in the firm and have undertaken entrepreneurial education survive and have no need to use the media, as this factor offsets the other two. In both cases, investment is a positive factor for the firms, meaning that entrepreneurs who invest in the business are more prone to succeed. 7. Conclusions, implications, and future lines of research This study examines the determinants of T&I firm survival. Because the survival of firms is key for the progress of the economy and for the transfer of knowledge, this research is a valuable contribution to the literature. With the objective of finding the combination of variables that drives T&I firms or self-employed entrepreneurs to survive, the study sheds light on a sector that has a limited number of related research studies. Academics have long devoted attention to entrepreneurship and firm success; however, policymakers and universities have only recently realized their strong impact on society and the economy, and are now shifting their focus from theory to practice. This study uses fsQCA, a sufficiently robust and accepted method, for testing the hypothesis herein. The results suggest the existence of seven structural configurations that predict the survival of T&I firms. According to the results, both human capital factors and economic investment have a positive influence on the survival of businesses, thus corroborating the research hypothesis. The results present different options for entrepreneurs and show as many forms of success as the causal conditions describe. Entrepreneurship education acts as a proxy for business success since for both business owners and the self-employed, as well as for
● ○ ● ●
1.000000 1.000000 1.000000 1.000000 1.000000 1.000000 1.000000
people who are willing to start a new business, training can have a real and lasting impact. Likewise, business backgrounds act as a proxy for business success. In fact, as many practitioners acknowledge, the more you train and learn by doing, the more you gain. The findings will, hopefully, encourage both practitioners stablish their business, and researchers, to continue in this line and by using richer data sets, broaden the scope of this academic area. Despite filling an existing gap in the literature, this study presents several limitations, creating, in turn, opportunities for future research. First, although addressing both groups of firm entrepreneurs and the self-employed, the study would need to discuss group differences further, a step which would be more informative and cover a wider scope of the T&I market. Second, further research addressing every region in Spain could help to define the sector more precisely. To achieve the latter, a bigger sample would be necessary as well as a focus on both qualitative and quantitative analysis. Finally, cross-country comparisons represent another opportunity for future studies.
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Please cite this article as: Gieure, C., & Buendía-Martínez, I., Determinants of translation-firm survival: A fuzzy set analysis, Journal of Business Research (2016), http://dx.doi.org/10.1016/j.jbusres.2016.04.141