Firm survival and the rise of the factory

Abstract

This paper uses longitudinal establishment‐level data to trace the rise of the factory during Sweden's industrialization between 1864 and 1890. We document a sharp shift from the small artisan shop to the mechanized factory, which can largely be ascribed to differences in survival. Whilst non‐mechanized establishments could compete with the factory during early industrialization, a distinct survival advantage of the factory appeared at later stages of industrialization. The evolving advantage of the factory can mainly be attributed to its larger scale, labour productivity, and technology use. By the end of the nineteenth century, these factors became increasingly important determinants of firm survival.