Assessment of Enterprise Life Cycle Based on Two-Stage Logistic Model: Exemplified by China’s Automobile Manufacturing Enterprises

Abstract

Enterprises in socio-economic ecosystems, like organisms in natural ecosystems, have life cycles. Since the enterprise life cycle theory was proposed, how to measure the enterprise life cycle has been a hot research topic. In order to assess the life cycle of an enterprise, a two-stage logistic model was proposed in this research, based on ecological theory and a population dynamics model. The first-stage logistic model measures the internal inhibition coefficient, intrinsic growth rate, and theoretical upper limit of enterprise development scale. The second-stage logistic model deals with the theoretical upper limit of enterprise development scale in the declining period, and measures the intrinsic growth rate, internal inhibition coefficient, and the theoretical upper limit of enterprise development scale in the declining period. In this study, an empirical analysis is conducted with Chinese automobile enterprises, which shows that an enterprise should withdraw from the market by insolvency liquidation or restructuring when both the intrinsic growth rate and internal inhibition coefficient are less than zero. Finally, this paper proposes the evaluation matrix of intrinsic growth and market potential. This matrix can intuitively give the evaluation method of the enterprise life cycle.