where MES denotes minimum efficient scale, S is firm start-up size, C is industry concentration
and G is the industry sales growth). High minimum efficient scale indicates that entrants need to
be large in order to avoid a competitive disadvantage against incumbent firms. If there are
significant sunk costs for entrants then high MES can of itself present a disadvantage for new
entrants regardless of their start-up size so there is also justification for including MES on its own
also. Firm start-up size is often justified as a determinant of firm survival without recourse to MES
when there is uncertainty regarding entrepreneurs’ assessment of the prospects of survival. As
such, a higher start-up size should translate into higher predicted success probability or else these
investments would not be undertaken.