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New-Firm Startups, Technology, and Macroeconomic Fluctuations

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  • Audretsch, David B
  • Acs, Zoltan J

Abstract

New-firm startup activity is examined within a framework pooling a cross-section of 117 industries over six time periods between 1976 and 1986. A model is introduced relating startup activity both to elements of the business cycle, in particular the macroeconomic growth rate, the cost of capital, and the unemployment rate, and to industry-specific characteristics, especially the technological conditions underlying the industry. The pooled cross-section regression results suggest that macroeconomic fluctuations as well as industry-specific elements contribute to startup activity. While new-firm startups respond positively to macroeconomic growth, they are promoted by a low cost of capital and high unemployment rate. A somewhat surprising result is that new-firm startups are not apparently deterred in capital intensive industries and where R&D expenditures play an important role. The empirical results suggest that new firms may be able to overcome their inherent size and experience disadvantages in such markets through exploiting university research and pursuing innovative activity. Copyright 1994 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 6 (1994)
Issue (Month): 6 (December)
Pages: 439-49

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Handle: RePEc:kap:sbusec:v:6:y:1994:i:6:p:439-49

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Web page: http://www.springerlink.com/link.asp?id=100338

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Cited by:
  1. Panu Kalmi, 2013. "Catching a wave: the formation of co-operatives in Finnish regions," Small Business Economics, Springer, Springer, vol. 41(1), pages 295-313, June.
  2. Emilio Congregado & Antonio Golpe & Simon Parker, 2012. "The dynamics of entrepreneurship: hysteresis, business cycles and government policy," Empirical Economics, Springer, Springer, vol. 43(3), pages 1239-1261, December.
  3. Klapper, Leora & Love, Inessa & Randall, Douglas, 2014. "New firm registration and the business cycle," Policy Research Working Paper Series 6775, The World Bank.
  4. Koski, Heli & Sierimo, Carolina, 2003. "Entry and Exit in the ICT Sector - New Markets, New Industrial Dynamics?," Discussion Papers, The Research Institute of the Finnish Economy 847, The Research Institute of the Finnish Economy.
  5. Jeng, Leslie A. & Wells, Philippe C., 2000. "The determinants of venture capital funding: evidence across countries," Journal of Corporate Finance, Elsevier, Elsevier, vol. 6(3), pages 241-289, September.
  6. Higson, C. & Holly, S. & Kattuman, P. & S. Platis, 2001. "The Business Cycle, Macroeconomic Shocks and the Cross Section: The Growth of UK Quoted Companies," Cambridge Working Papers in Economics 0114, Faculty of Economics, University of Cambridge.
  7. Klapper, Leora & Richmond, Christine, 2011. "Patterns of business creation, survival and growth: Evidence from Africa," Labour Economics, Elsevier, vol. 18(S1), pages S32-S44.
  8. Shaoming Cheng, 2011. "Business cycle, industrial composition, or regional advantage? A decomposition analysis of new firm formation in the United States," The Annals of Regional Science, Springer, Springer, vol. 47(1), pages 147-167, August.
  9. Elisabete Gomes Santana Felix & Cesaltina Pires & Mohamed Azzim Gulamhussenb, 2007. "The Determinants of Venture Capital in Europe - Evidence Across Countries," CEFAGE-UE Working Papers 2007_01, University of Evora, CEFAGE-UE (Portugal).
  10. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
  11. Aki Kangasharju, 1998. "Regional variation in firm formation: Panel and cross-sectional data evidence from Finland," ERSA conference papers ersa98p134, European Regional Science Association.
  12. Thai, Mai Thi Thanh & Turkina, Ekaterina, 2014. "Macro-level determinants of formal entrepreneurship versus informal entrepreneurship," Journal of Business Venturing, Elsevier, vol. 29(4), pages 490-510.

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