A Schumpeterian approach to entry barrier and firm profitability: cycle time of technology

Keun Lee () and Sung Hoon Lee

Economics of Innovation and New Technology, 2023, vol. 32, issue 7, 1019-1036

Abstract: Entry barrier has long been considered as a major determinant of firm profitability. Although a less competitive market structure has been commonly known as an indicator of an entry barrier, pieces of past empirical evidence are mixed. Moreover, technological factors, such as R&D intensity, have also been considered. However, no satisfactory empirical analysis has been made, mostly due to the lack of a suitable proxy variable that can reflect the technological environment of a sector. This study addresses this problem by trying a new proxy variable, cycle time of technologies (CTT), and shows, using the US firm data, that firms in a sector with a long CTT tend to enjoy higher profitability and values than others. A long CTT of a sector presents a high entry barrier against any entrant because in such sectors, an existing stock of knowledge tends to be important for a longer period of time, making new innovation continuously rely on old knowledge owned by incumbents and protected by patent rights.

Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10438599.2022.2067150 (text/html)
Access to full text is restricted to subscribers.

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: https://EconPapers.repec.org/RePEc:taf:ecinnt:v:32:y:2023:i:7:p:1019-1036

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/GEIN20

DOI: 10.1080/10438599.2022.2067150

Access Statistics for this article

Economics of Innovation and New Technology is currently edited by Professor Cristiano Antonelli

More articles in Economics of Innovation and New Technology from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().