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New Business Formation and Incumbents' Perception of Competitive Pressure

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  • Javier Changoluisa

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Michael Fritsch

    (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Abstract

We investigate the relationship between new business formation and the level of competitive pressure perceived by manufacturing incumbent establishments. The perceived pressure of competition is stronger the higher the level of entries in the respective industry. This relationship holds not only for start-ups located in the same region of the incumbent, but also for start-ups across all regions of Germany. The productivity level of an incumbent moderates the extent of the perceived competitive pressure from start-ups. Highly productive incumbents are less threatened by new business formation. Such a moderating effect cannot be found for incumbent size and regional population density.

Suggested Citation

  • Javier Changoluisa & Michael Fritsch, 2016. "New Business Formation and Incumbents' Perception of Competitive Pressure," Jena Economic Research Papers 2016-019, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2016-019
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    Keywords

    New business formation; competitive pressure; regional competition; incumbent firms; manufacturing industries;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • D20 - Microeconomics - - Production and Organizations - - - General
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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