Transitional economy survival champions : the experience of South African firms

Abstract

The profound institutional change inherent in transitional economies creates a challenging climate for firms to survive. Although a significant amount of empirical research has been conducted on the subject of organisational longevity in developed economies, limited research had been conducted in emerging markets. This paper addresses this shortcoming by looking at firm survival and institutional change during South Africa's political transition spanning the period 1991 to 2013. Using perspectives from population ecology theory and institutional theory, a cluster of absorption variables is developed and empirically tested to identify the characteristics of those firms that were able to endure shifts in the operating environment. Findings resulting from the Kaplan-Meier survival function and the Cox proportional hazard model suggest that so-called ?survival champions' develop a shared set of characteristics that take the form of bulk and heft in a transitional economy, which better equips them to absorb and negotiate change. In addition, the research shows that the sensitivity of survival to the cluster of absorption variables is significantly higher during the post-transition period of 1999 to 2013 compared to the period during which the transition takes place. This research paper contributes to the survival literature by adding a more nuanced voice to the understanding of corporate longevity in emerging markets. Findings offer key lessons for managers and stakeholders not only in South Africa, but also for those economies which have undergone - or may still undergo - similar institutional transition.