New Business Formation and the Productivity of Manufacturing Incumbents: Effects and Mechanisms

Michael Fritsch () and Javier Changoluisa ()
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Javier Changoluisa: School of Economics and Business Administration, Friedrich-Schiller-University Jena

No 2014-025, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: We analyze the effect of new business formation on the productivity of incumbent manufacturing establishments. We obtain robust empirical evidence of productivity improvements that are due to the emergence of new businesses in the same industry, that is, on the output market. This effect is spatially limited to the respective region. Regional competition from new businesses on the input market and cross-industry effects are not related to incumbents' productivity changes. The effect that new competition has on incumbents is moderated by an incumbent's distance from the technological frontier; incumbents close to the frontier exhibit a more pronounced positive reaction.

Keywords: New business formation; productivity; incumbent firms (search for similar items in EconPapers)
JEL-codes: D20 L26 O12 (search for similar items in EconPapers)
Date: 2014-10-27
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-eff, nep-ent, nep-sbm and nep-tid
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: New business formation and the productivity of manufacturing incumbents: Effects and mechanisms (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2014-025

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