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Determinants of New-Firm Formations in Manufacturing Industries: Industry Dynamics, Entry Barriers, and Organizational Inertia

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  • Thomas J. Dean
  • G. Dale Meyer
  • Julio DeCastro

Abstract

This article utilizes the Ideas of Austrian economists, Industrial organization economists, and organization theorists to build a model of new-firm creation In manufacturing industries. Market dynamics create disequilibrium and profit opportunities for entrepreneurs. Whether available opportunities are exploited by existing firms, or through the founding of new firms Is dependent on the constraints on each of these types of entrepreneurs. Entry barriers tend to constrain new firms and therefore decrease the relative occurrence of new business formations. Organizational Inertia acts as a constraint on existing firms and thereby encourages the creation of new organizations.

Suggested Citation

  • Thomas J. Dean & G. Dale Meyer & Julio DeCastro, 1993. "Determinants of New-Firm Formations in Manufacturing Industries: Industry Dynamics, Entry Barriers, and Organizational Inertia," Entrepreneurship Theory and Practice, , vol. 17(2), pages 49-60, January.
    • Handle: RePEc:sae:entthe:v:17:y:1993:i:2:p:49-60
    DOI: 10.1177/104225879301700205
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    References listed on IDEAS

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    Cited by:

    1. Hicheon Kim & Johngseok Bae & Garry Bruton, 2012. "Business groups and institutional upheaval in emerging economies: Corporate venturing in Korea," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 729-752, September.
    2. Linda F. Tegarden & Ann E. Echols & Donald E. Hatfield, 2000. "The Value of Patience and Start-up Firms: A Re-Examination of Entry Timing for Emerging Markets," Entrepreneurship Theory and Practice, , vol. 24(4), pages 41-58, July.
    3. Lennart Burger & Ivana Blažková, 2020. "Internal Determinants Promoting Corporate Entrepreneurship in Established Organizations: A Systematic Literature Review," Central European Business Review, Prague University of Economics and Business, vol. 2020(2), pages 19-45.
    4. G. Page West III, 2007. "Collective Cognition: When Entrepreneurial Teams, Not Individuals, Make Decisions," Entrepreneurship Theory and Practice, , vol. 31(1), pages 77-102, January.
    5. Belso Martínez, J.A., 2004. "Una aproximación inicial al papel del mercado de trabajo, la inmigración y la conflictividad socio-laboral como factores explicativos de la creación de empresas./An Initial Approach to the Role of Lab," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 22, pages 67-82, Abril.
    6. Drechsler, Wenzel & Natter, Martin, 2012. "Understanding a firm's openness decisions in innovation," Journal of Business Research, Elsevier, vol. 65(3), pages 438-445.
    7. Christopher Andrew Hartwell, 2014. "Capital Controls and the Determinants of Entrepreneurship," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 64(6), pages 434-456, December.
    8. Weerawardena, Jay & O'Cass, Aron & Julian, Craig, 2006. "Does industry matter? Examining the role of industry structure and organizational learning in innovation and brand performance," Journal of Business Research, Elsevier, vol. 59(1), pages 37-45, January.

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