Segmentation of Enterprises on the Basis of Their Duration Using Survival Trees—Results of an Analysis for Legal Persons and Organizational Entities Without Legal Personality in the Łódzkie Voivodship

Abstract

The studies, carried out so far, on established and liquidated enterprises in the Łodzkie Voivodship show that in terms of legal persons and organizational entities without legal personality, firm’s duration is significantly longer than in terms of natural persons conducting economic activity. These entities constitute a clearly different group of enterprises. The article presents the results of an analysis, whose aim was the segmentation of legal persons and organizational entities without legal personality by its duration. A total of 10,562 enterprises have been studied. Survival trees (CTree algorithm) have been used to define groups of enterprises similar in duration, while a specific legal form, firm’s location (county—“powiat”), type of conducted activity, size (measured in terms of the number of employees) and type of ownership have been used as explanatory variables. The use of recursive partitioning method made it possible to divide sets of objects into homogenous subsets. Then, estimation of survival function has been made in each of the obtained subsets with the use of Kaplan–Meier method. Such an approach to analysis enables more precise estimate of firm’s duration than the use of Kaplan–Meier function for the total data. Prediction error curves based on the bootstrap cross-validation estimates of the prediction error have been used to assess and compare predictions obtained from both models.