Routine Work, Firm Boundaries, and the Rise of Local Supplier Entry

Duha T. Altindag, Nabamita Dutta, John M. Nunley, R. Alan Seals and Adam Stivers

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Abstract: Between 2005 and 2019, U.S. business applications rose 40 percent while conversion to employer firms fell by nearly half. We study whether boundary redrawing helps explain this pattern. Structured routine-cognitive work can be governed through deliverables and thinner buyer and supplier interfaces. When such work remains place-bound, outsourcing creates demand for domestic specialist suppliers. Across 722 commuting zones, a one percentage-point higher baseline routine employment share raises applications by 27.8 per 100,000 residents. Realized entry concentrates in micro-establishments, with no startup quality gains. Contract and industry evidence point to local supplier entry, not routine-manual displacement.

Date: 2026-04
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