Foreign presence, technical efficiency and firm survival in Greece: a simultaneous equation model with latent variables approach

The aim of the paper is to explain the role that technical efficiency and foreign spillover effects have on firm survival. Panel data from Greek manufacturing industry (3142 firms) in 1997-2003 are used. Technical efficiency is estimated through a CES translog production function. A hazard function is then used (corresponding to the Exponential and Weibull distributions as well as the Cox model) to estimate survival probabilities. While foreign spillovers exercise a positive impact on hazard, foreign firms do not have any distinctive survival advantage compared to their domestic rivals. On the contrary, technical efficiency affects hazard in a negative way, improving survival expectations.