Does Business Success Enhance With Firm's Age? Case of Croatian Food Manufacturing Industry

Although different aspects of firm's success have occupied researchers over the years, most researches that analysed this issue refer to the developed countries and, to a much lesser extent, to the developing countries, such as Croatia. However, in general there is a small number of researches examining the influence of firm's age on its success. In order to give contribution to this subject and enrich the understanding of firms' performance as firms get older, the authors conducted an analysis on a sample of 956 firms operating in the Croatian food manufacturing industry during the 2005-2014 period. The results of the dynamic panel analysis showed that firm performance deteriorates with age. As firms get older, benefits of their accumulated knowledge in all crucial aspects of the business (technology, supply channels, customers relations, human capital and financing costs) become overcome with their inertia, inflexibility and osseous by accumulated rules, routines and organizational structure. All control variables (size, liquidity, solvency, except gearing) proved to be statistically significant and in line with theoretical consideration.