IDEAS home Printed from https://ideas.repec.org/a/oup/indcch/v21y2012i1p127-149.html
   My bibliography  Save this article

Appetite for destruction: the impact of the September 11 attacks on business founding

Author

Listed:
  • Srikanth Paruchuri
  • Paul Ingram

Abstract

It is widely accepted that entrepreneurial creation affects destruction, as new and better organizations, technologies and transactions replace old ones. This phenomenon is labeled creative destruction, but it might more accurately be called destructive creation, given the driving role of creation in the process. We reverse the typical causal ordering, and ask whether destruction may drive creation. We argue that economic systems may get stuck in suboptimal equilibria due to path dependence, and that destruction may sweep away this inertia, and open the way for entrepreneurship. To test this idea, we need an exogenous destructive shock, rather than destruction that is endogenous to the process of economic progress. Our identification strategy relies on the September 11 attacks as an exogenous destructive shock to the economic system centered on New York City. Consistent with our theoretical claim, we find that 15 months after the attacks the rate of business founding close to New York City exceeds the rate before the attacks, even after controlling for the inflow of recovery funds. Furthermore, the increase in the business founding rate after the attacks grows faster closer to Manhattan than it does further away from the epicenter of destruction. Copyright 2012 The Author 2012. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Srikanth Paruchuri & Paul Ingram, 2012. "Appetite for destruction: the impact of the September 11 attacks on business founding," Industrial and Corporate Change, Oxford University Press, vol. 21(1), pages 127-149, February.
  • Handle: RePEc:oup:indcch:v:21:y:2012:i:1:p:127-149
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/icc/dtr075
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Michael Wyrwich, 2014. "Ready, set, go! Why are some regions entrepreneurial jump starters?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(2), pages 487-513, September.
    2. Konon, Alexander & Kritikos, Alexander S., 2017. "Media and Occupational Choice," IZA Discussion Papers 11015, Institute for the Study of Labor (IZA).
    3. Martin Henning & Erik Stam & Rik Wenting, 2013. "Path Dependence Research in Regional Economic Development: Cacophony or Knowledge Accumulation?," Regional Studies, Taylor & Francis Journals, vol. 47(8), pages 1348-1362, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:indcch:v:21:y:2012:i:1:p:127-149. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: https://academic.oup.com/icc .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.