The Life Cycle of New SMEs Firms and their Role in Job Turnover: Experiences of Textile Industry in the 1995-2005

The main purpose of this paper is to analyze the role of the total new SMEs established during 1995–2002 and their life cycles in job turnover up to 2005. The focus of this paper is on textile industry (ten employees and more) as a major industry in Iran. Proportionate hazard model is made and the findings show that, although small and medium-sized firm, plays an important role in job generation, most of the existing SMEs have had more share in job failure. The results also revealed that only a few SMEs can survive during the first three years after their startup and a small number of them are able to grow and create employment. From the policy making point of view, these findings have emphasized that SMEs have to be supported during their infancy.