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The Turnover of Firms and Industry Growth
Örebro University, Örebro University School of Business. (Företagandet och företagandets villkor)ORCID iD: 0000-0002-5610-8526
2005 (English)In: Small Business Economics, ISSN 0921-898X, E-ISSN 1573-0913, Vol. 24, no 5, p. 487-495Article in journal (Refereed) Published
Abstract [en]

In a dynamic setting, every firm can be regarded as a “business experiment” with the objective to search and explore new business opportunities. It is suggested that the growth of an industry is enhanced by new-firm entry, since a positive correlation between the number of successes, i.e. fast-growing firms, and the number of business experiments is to be expected. Exit is necessary to sort out the firms that the market rejects. Hence, it is rather the entry and exit of firms that jointly should have a positive effect on growth, rather than the number of entries in isolation. This paper tests the hypothesis that a high turnover rate of firms has no, or a negative, effect on industry growth. The analysis is based on an extensive data set covering all Swedish IT firms that existed between 1994 and 1998. The turnover rate of firms is found to have a significantly positive effect on industry growth.

Place, publisher, year, edition, pages
Springer, 2005. Vol. 24, no 5, p. 487-495
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:oru:diva-42765DOI: 10.1007/s11187-005-6446-yISI: 000231998300006Scopus ID: 2-s2.0-25644450309OAI: oai:DiVA.org:oru-42765DiVA, id: diva2:789324
Available from: 2015-02-18 Created: 2015-02-18 Last updated: 2017-12-04Bibliographically approved

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Johansson, Dan

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CiteExportLink to record
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  • apa
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  • de-DE
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  • nn-NB
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  • Other locale
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Output format
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  • asciidoc
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