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

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.