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Foreign Competition and Small-Firm Entry in US Manufacturing

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  • Robert M. Feinberg

Abstract

In our increasingly globalized economy, the growth and profit prospects of domestic firms, especially small firms, seem clearly impacted by competitive pressures from foreign firms. This article analyzes annual data for 1989-1998 for 140 3-digit SIC manufacturing industries and for 1998-2004 for 86 4-digit NAICS industries on establishment -- plant-level -- births by small firms in several size categories. The major finding is that international pressures, in the form of import share weighted exchange rate appreciation, seem to lead to reduced rates of smallest-firm entry in manufacturing, though the magnitudes of these effects are smaller than sometimes discussed (and there is the suggestion that dollar appreciation may actually benefit small firm entry through access to cheaper inputs where the final product import threat is weak).

Suggested Citation

  • Robert M. Feinberg, 2009. "Foreign Competition and Small-Firm Entry in US Manufacturing," Working Papers 2009-04, American University, Department of Economics.
  • Handle: RePEc:amu:wpaper:2009-04
    as

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    References listed on IDEAS

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    1. Carree, Martin & Thurik, Roy, 1994. "The Dynamics of Entry, Exit and Profitability: An Error Correction Approach for the Retail Industry," Small Business Economics, Springer, vol. 6(2), pages 107-116, April.
    2. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
    3. Young Choi & Phillip Phan, 2006. "The Influences of Economic and Technology Policy on the Dynamics of New Firm Formation," Small Business Economics, Springer, vol. 26(5), pages 493-503, June.
    4. Baldwin, John R. & Gorecki, Paul K., 1987. "Plant creation versus plant acquisition : The entry process in canadian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 5(1), pages 27-41, March.
    5. Acs, Zoltan J & Audretsch, David B, 1989. "Small-Firm Entry in U.S. Manufacturing," Economica, London School of Economics and Political Science, vol. 56(222), pages 255-265, May.
    6. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    7. Robert Feinberg, 2009. "Patterns and Determinants of Entry in Rural County Banking Markets," Journal of Industry, Competition and Trade, Springer, vol. 9(2), pages 101-115, June.
    8. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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    Keywords

    small firms; entry; foreign competition; exchange rates;

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