Industry Growth and Industrial Firms Exit: Artificial Neural Network Approach

Industrial firms play important roles in creating jobs and products nationwide، thus، their survival is of vital importance. The existing studies on closure of the firms show that various factors contribute to the exit of firms from the industry which industry growth is the main factor in this context. Industry growth affects the exit of firms in different ways، for instance، industries having high growth are of high entry rate that influences significantly on the firms exit. This study examines the industry growth effect on exit of firms from industry and uses an artificial neural network (ANN) model for this purpose. The statistical population includes 10000 industrial firms at 4-digit level ISIC codes during the third national development plan over the 2000-2004. The industry growth is calculated with different indexes such as absolute growth and mean growth rates. The results show that industry growth followed at firm size can explain the most of exit incentives of the firms.