Factors Affecting the Probability of Survival of Startups in Tajikistan

Small and medium enterprises proved to be the key economic drivers. Startups and small businesses contribute significantly to job creation and poverty alleviation. In small countries, like Tajikistan this role is even more critical. Each year thousands of new firms start their business, however less than half of them survive in five-year time. So, what are the factors that affect the probability of startup to survive? This study attempted to examine external and internal factors that are causal to startups’ survival rate in Tajikistan. It is important to identify the determinants causing startups to fail or succeed for the founders and other stakeholders to increase the chance of startups’ success. Using large sample of businesses from one region of Tajikistan, we explored the relationship of startups’ survival rate, human capital, ownership, size and sales growth, location, industry membership, legal structure, real GDP growth, unemployment rate and prime interest rate. Seven hypotheses were developed to find the effect of chosen factors on survival rates for the first four years of firm’s existence. The hypotheses were tested through regression analysis, Kaplan-Meirer Method and visual analytics. The results from the study reveal that 1) size, sales growth and GDP are factors stimulating survival; 2) while interest rate is the determinant of restriction for survival of firm; 3) geographic location, type of industry, human capital, education level and legal structure affect the probability of survival of startups in GBAO region of Tajikistan; 4) Unemployment rate neither stimulate nor restricts the survival of firms.