Firm exits as a determinant of new entry: Is there evidence of local creative destruction?

Pe'er, Aviad and Ilan Vertinsky

Journal of Business Venturing, 2008, vol. 23, issue 3, pages 280-306

Abstract: This study posits that a local process of creative destruction provides an impetus to regional industrial renewal. We argue that exits of older firms release resources that stimulate local entry. New entrants add value to these resources by redeploying them in more productive uses. We test our hypotheses with a unique longitudinal database encompassing the entry and exit of Canadian manufacturing enterprises. We find that exits of old firms increase entry and that on average new entrants are more productive. Persistent high local rates of exit, however, deter entry.

Date: 2008

Downloads: (external link)
http://www.sciencedirect.com/science/article/B6VDH ... 7f769b1c76d810c38d82
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:eee:jbvent:v:23:y:2008:i:3:p:280-306

Access Statistics for this article

Journal of Business Venturing is edited by S. Venkataraman

More articles in Journal of Business Venturing from Elsevier
Series data maintained by Heidi Boesdal ().