Do Temporary Demand Shocks have Long-Term Effects for Startups?

Hans K. Hvide () and Tom G. Meling ()
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Hans K. Hvide: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway, https://www.uib.no/en/persons/Hans.K..Hvide
Tom G. Meling: University of Bergen, Department of Economics, Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway

No 6/19, Working Papers in Economics from University of Bergen, Department of Economics

Abstract: Using detailed procurement auctions and register data from Norway, we find that temporary demand shocks have long-term effects on startup outcomes. Startups that win a procurement auction are more than 20% larger in terms of sales and employment than startups that narrowly lose an auction, even several years after the contract work ends. For mature firms, we do not find long-term effects of auction wins. The persistent effects of temporary demand shocks for startups appear driven by learning-by-doing effects and by winning startups undertaking irreversible investments. The results point to the importance of path dependence in shaping the long-term outcomes of startups.

Keywords: Entrepreneurship; Path-dependency; Productivity; Startups (search for similar items in EconPapers)
JEL-codes: D21 D24 G39 J23 L11 L25 (search for similar items in EconPapers)
Pages: 91 pages
Date: 2019-12-24
New Economics Papers: this item is included in nep-ent, nep-eur and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Working Paper: Do Temporary Demand Shocks have Long-Term Effects for Startups? (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:bergec:2019_006

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