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Creative destruction and firm-specific performance heterogeneity

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Author Info
Chun, Hyunbae
Kim, Jung-Wook
Morck, Randall
Yeung, Bernard

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Abstract

Traditional U.S. industries with higher firm-specific stock return and fundamentals performance heterogeneity use information technology (IT) more intensively and post faster productivity growth in the late 20th century. We argue that this mechanically reflects a wave of Schumpeter's creative destruction disrupting a wide swath of industries, with successful IT adopters unpredictably undermining established firms. This validates endogenous growth theory models of creative destruction and suggests intensified creative destruction as explaining findings associating greater firm-specific performance variation with higher per capita GDPs, economy growth rates, accounting standards, financial system development, and property right protection.

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Publisher Info
Article provided by Elsevier in its journal Journal of Financial Economics.

Volume (Year): 89 (2008)
Issue (Month): 1 (July)
Pages: 109-135
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Handle: RePEc:eee:jfinec:v:89:y:2008:i:1:p:109-135

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Web page: http://www.elsevier.com/locate/inca/505576

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  1. Che, Natasha Xingyuan, 2009. "The great dissolution: organization capital and diverging volatility puzzle," MPRA Paper 13701, University Library of Munich, Germany. [Downloadable!]
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