The Spatial Dynamic Between Established Firms and Entrants

Lawrence A. Plummer

The Office of Advocacy Small Business Working Papers from U.S. Small Business Administration, Office of Advocacy

Abstract: The research uses 377 firms that filed initial public offerings from 1990 to 1993 as the basis for existing firms and follows their financial performance from 1990 to 2004. In the first year of a new firm’s existence, before the entrant has time to contribute to positive local effects, its entry is more likely to hurt the financial performance of existing firms. By the third year after entry, however, the effect on the financial performance of existing firms is positive. In the short term, entrants are foes and in the long term, entrants are friends.

Pages: 35 pages
Date: 2007
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse and nep-ent
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