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Creative Destruction and Productivity: Entrepreneurship by Type, Sector and Sequence
CIRCLE, Lund University and Blekinge Institute of Technology.
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Economics.
KTH, School of Industrial Engineering and Management (ITM), Industrial Economics and Management (Dept.), Economics.ORCID iD: 0000-0001-8377-1633
2012 (English)In: Journal of Entrepreneurship and Public Policy, ISSN 2045-2101, Vol. 1, no 2, 125-146 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – Schumpeter claimed the entrepreneur to be instrumental for creative destruction and industrial dynamics. Entrepreneurial entry serves to transform and revitalize industries, thereby enhancing their competitiveness. The purpose of this paper is to investigate if entry of new firms influences productivity amongst incumbent firms, and the extent to which altered productivity can be attributed sector and time specific effects.

Design/methodology/approach – Implementing a unique dataset the paper estimates a firm-level production function in which the productivity of incumbent firms is modeled as a function of firm attributes and regional entrepreneurship activity.

Findings – The analysis finds support for positive productivity effects of entrepreneurship on incumbent firms, albeit the effect varies over time, what the authors refer to as a “delayed entry effect”. An immediate negative influence on productivity is followed by a positive effect several years after the initial entry. Moreover, the productivity of incumbent firms in services sectors appears to be more responsive to regional entrepreneurship, as compared to the productivity of manufacturing firms.

Originality/value – The paper employs a firm-level production function approach allowing for time lags of the effect of entrepreneurship. The unique data implemented allow the authors to identify genuinely new ventures as compared to those associated with reorganizations of existing businesses, thereby overcoming much of data deficiencies in previous studies. In addition, data are distributed on Swedish functional labor market regions.

Place, publisher, year, edition, pages
2012. Vol. 1, no 2, 125-146 p.
National Category
URN: urn:nbn:se:kth:diva-107452DOI: 10.1108/20452101211261417OAI: diva2:575967

QC 20121213

Available from: 2012-12-11 Created: 2012-12-11 Last updated: 2012-12-13Bibliographically approved

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