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Times are a Changin’? The Emergence of New Firms and Rank Reshuffling

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  • Stefan Schneck

    (Institut für Mittelstandsforschung (IfM) Bonn)

Abstract

Young firms are known to grow at a faster rate than incumbents. With administrative firm data from Germany, we show that the higher growth rates indeed translate into upward mobility within the sector-specific firm size distribution. Young firms are therefore not only able to catch up with incumbents, but also able to grow larger in absolute values. Recentered influence function regression results reveal that young firms cause significant rank mobility within the stock of firms, which even holds when the local skewness of the firm size distribution is accounted for. The results clearly indicate a Schumpeterian growth process where young firms challenge established ones.

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  • Stefan Schneck, 2020. "Times are a Changin’? The Emergence of New Firms and Rank Reshuffling," Journal of Industry, Competition and Trade, Springer, vol. 20(1), pages 1-33, March.
    • Handle: RePEc:kap:jincot:v:20:y:2020:i:1:d:10.1007_s10842-019-00312-5
    DOI: 10.1007/s10842-019-00312-5
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    2. Schneck, Stefan & Werner, Arndt & Wolter, Hans-Jürgen, 2021. "A replication study on growth paths of young firms: Evidence from German administrative data," Journal of Business Venturing Insights, Elsevier, vol. 16(C).

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    More about this item

    Keywords

    Competition; Entrepreneurship; Firm entry; Firm growth;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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