Black-box business dynamics
AbstractThis article highlights the contributions of business dynamics research to industrial policy design. Business creation support programs are widespread despite the fact that the optimal rate of business creation and destruction remains unknown. Economic analysis emphasizes heterogeneity as the most salient characteristic of industrial dynamics. A better knowledge of the different types of entrepreneurs, their behavior and their specific contribution to innovation and growth would allow to see into ‘black box’ of business dynamics and would facilitate the design of appropriate public policies. The empirical analysis performed shows that self-employment has a quite different economic nature than business with employees. Public programs should not promote indiscriminate entry but rather give priority to able entrants with survival capacities. Survival of entrants is positively related to their size at birth. Innovation and investment improve the survival of new manufacturing firms. Investment in R&D increases the risk of failure in new firms, although it improves the competitiveness of the incumbents.
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Bibliographic InfoArticle provided by Asociación Española de Ciencia Regional in its journal Investigaciones Regionales.
Volume (Year): (2009)
Issue (Month): 15 ()
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Industrial dynamics; industrial policy; creative destruction; business demography.;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
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