An empirical analysis of the discontinuance of business for startup contractors and property companies in Japan

Abstract

Purpose

The purpose of this paper is to examine the factors that affect the discontinuance of business of start-up contractors and property companies in Japan. It will help managers of start-up contractors and property companies to effectively manage their companies. Furthermore, it will be useful for stakeholders with links to start-up companies to analyse the credit risks associated with these businesses.

Design/methodology/approach

This study uses data from the Japan Finance Corporation Business Startup Panel Survey to empirically examine the factors that affect the discontinuance of business of start-up companies. A binary logit model is used as the statistical method. Utilising the resource-based view theory, this study explores the relationships between resources and company capabilities at both start-up and discontinuance of business.

Findings

Start-up contractors tend to discontinue their business, as managers grow older and when a sufficient workforce cannot be found at start-up. On the other hand, start-up property companies tend to discontinue business when securing of orderers is not sufficient at start-up.

Originality/value

This study analyses start-up contractors and property companies and finds that factors that affect the discontinuance of business differ across construction and property industries, with each industry facing important, sector-specific issues.

Citation

Konno, Y. (2015), "An empirical analysis of the discontinuance of business for startup contractors and property companies in Japan", Journal of Financial Management of Property and Construction, Vol. 20 No. 1, pp. 50-64. https://doi.org/10.1108/JFMPC-07-2014-0012