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Company demographics: performance and market selection

DEMOGEN
The 2008 crisis has hand a tangible effect on company creation and destruction. INSEE figures show a sharp drop in company creation between the pre-crisis period in 2007 and the post-crisis period between 2009 and 2010. They went from 330 K to an average of 260 K per year, for a total 21% drop. Business failures also rose during that time, from 50 K in 2007 to 61 K per year between 2009 and 2014, amounting to a 20% increase, in line with the drop in creation. The crisis seems to have had a direct impact on the flux, resulting in less creation and more failures. However we know that business creation is vital to GDP growth, it drives innovation and increases production efficiency (Geroski, 1995). Other studies have shown how creations have contributed to the creative destruction process, because new companies drive up efficiency in the sector (Bartelsman, Haltiwanger and Scarpetta, 2005). However the survival rate for new businesses (focusing on a lifespan ranging from 5 to ten years) is lower than for longer standing businesses, especially when measuring the survival rate of small companies (Geroski, 1995; Bartelsman, Scarpetta, Schivardi, 2003).