A Study On The Influencing Factor Of The Entry And Exit Of Chinese Service Industry Firms

With the development of economy, the proportion of service industry in Chinese economy has gradually increased. Chinese industrialization process is starting changing from the mid to later stages of industrialization. The study of the Chinese service industry firms entry and exit on the mid level is helpful for exploring the rules of Chinese firms entry and exit in general sense, also supplies the supports to make scientific and effective industry policy for our country with reference studies and policy basis, so that it will promote the rapid development of service industry.This structure is divided into five parts. The first part introduces the background and significance of the topic and the present situation of the research of domestic and foreign scholars about firms entry and exit. The second part describes the relative theory of services economics and the firms entry and exit. The third part is the model of the influencing factors of the Chinese services firms entry and exit, it describes the model establishing, data sources and selection, and the model definition and description of variables. The fourth part is the analyses of empirical results about service industry firms entry and exit. The fifth part is the conclusions and recommendations, a summary of the article, and put forward policy suggestions.This article uses the classical model which Orr made in 1974 on firms entry and exit, selects the cross-sectional data of seventy-three four-digit industries from 2004 economic census Yearbook of China's tertiary industry. Through model analysis, on the firms entry, the proportion of foreign capital takes a positive effect on the firms entry, which may be due to the imperfect capital market in China. The average size of firms can block the firms entry. On the firms exit, the average size of firms and proportion of senior technical staffs have a negative impact on the entry of firms. This shows that scale economy of firms and human capital can inhibit the exit. In the industry which the state-owned economy proportion less than 15%, profit margins and the proportion of senior technical staffs of firms take a significant negative effect on firms exit.Empirical analysis shows that the human capital is the most important factor, and this is also the greatest different influencing factor from manufacturing firms in the service industry firms entry and exit. This difference is inseparable with the important features of the modern service industry. Modern service industry is the information, knowledge and human capital-intensive industry, human capital with special knowledge and skills is the source of the modern service industry competitiveness. Therefore, the key factor in promoting the development of service industry is to build talent introduction, development and education and training mechanisms to continually enhance the professionalism and vocational skills of service employees.