An empirical analysis on the start-up status and survival of service industries in South Korea

This study analyzed the survival rate of newly established businesses in various service industries in Korea and examined the factors influencing the survival of start-up businesses in each industry using the Cox proportional hazards model. The analysis revealed that approximately 60% of all start-ups in the service industry originated from ‘Wholesale and Retail Trade’ and ‘Accommodation and Food Service Activities’. The survival rate of two years after startup was only at around 53.6%, and after eight years, the survival rate reached only 16%. Using the Cox proportional hazards model, the analysis of factors influencing the survival of start-up businesses revealed that smaller businesses had a higher probability of shut down, but as the size of the workforce increased, the likelihood of survival also increased. In sectors such as ‘Financial and Insurance Activities’, ‘Real Estate Activities’, and ‘Professional, Scientific, and Technical Activities’, it was analyzed that the agglomeration effect resulting from the density of similar businesses positively influenced the survival of start-up businesses. In the case of sectors such as ‘Wholesale and Retail Trade’ and ‘Transportation and storage’ businesses started in metropolitan areas showed higher survival rates. Conversely, for sector ‘Accommodation and Food Service Activities’, it was found that starting a business in non-metropolitan areas was more advantageous for survival. The study results provide several useful policy implications for promoting sustainable regional economic growth by enhancing the survival prospects of start-up businesses.