New business formation and the productivity of manufacturing incumbents: Effects and mechanisms

Fritsch, Michael; Changoluisa, Javier

doi:10.1016/j.jbusvent.2017.01.004

Cited by 37 publications

(30 citation statements)

References 95 publications

(33 reference statements)

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“…In accordance to the finding of Fritsch and Changoluisa (2017) we expect an effect of domestic entrants on incumbents. However, we do not assume the effect of entry to be limited to country boundaries.…”

Section: First Hypotheses Setsupporting

confidence: 88%

“…The more ATV knowledge incumbents accumulated, the higher was the ATV-patent-increase effect of foreign entrants on incumbents. Given that more advanced incumbents responded more strongly, their responses seem to be of competitive nature which was found also in previous studies (e.g., Czarnitzki et al, 2011;Iacovone et al, 2011;Fritsch and Changoluisa, 2014). One explanation is that incumbents increased patenting in response to foreign entrants that are exceptionally challenging (e.g., Tesla Motors or BYD).…”

supporting

confidence: 73%

“…Aghion and Bessonova (2006), Czarnitzki et al (2011), Iacovone et al (2011, and Fritsch and Changoluisa (2014) find stronger responses to entry for leading incumbents in terms of sales, productivity, and distance to the technological frontier. Their studies, however, are based on a different framework.…”

Section: Second Hypotheses Setmentioning

confidence: 93%

“…Recent studies found that entrants positively influence incumbents' general innovation activity while incumbents responded asymmetrically, depending on their competitive performance (Aghion and Bessonova, 2006;Aghion et al, 2009; Iacovone et al, 2011;Fritsch and Changoluisa, 2014). Such studies utilized quantitative entry measures (e.g., entry rates, import flows, or employment size) and focused on industry-level entry into incumbents' domestic markets.…”

Section: Introductionmentioning

confidence: 99%

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Incumbents' Responses to Innovative Entrants A Multi-Country Dynamic Analysis

Diekhof

Cantner

2017

SSRN Journal

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Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW. Incumbents' Responses to Innovative Entrants -A Multi-Country Dynamic AnalysisAuthors:Josefine Diekhof, josefine. AbstractThe influence of innovative entrants on incumbents is considered important for technological change. We analyze this influence for the global transition towards alternative technology vehicles (ATVs). Our results indicate that entrants' ATV-related knowledge accumulation stimulates average incumbent's ATV-related research. Regarding global entrants, incumbents with higher ATV patent stocks increased patenting stronger; supporting previous literature on competitive reactions to entry. Responding to domestic entrants, however, incumbents with low ATV patent stocks increased whereas incumbents with high stocks decreased patenting; suggesting that advanced incumbents outsource research or overtake entrants. Further, certain characteristics and not merely the quantity of entrants drive incumbents' responses. IntroductionThe crucial role of innovative entrepreneurs in accelerating technological change is well known by Schumpeter's (1911/34) early work. While increasing firm concentration has a hampering effect, entry stimulates innovations within an industry (Geroski, 1990). Especially new markets for radical innovations are often shaped by many new entrants (Markides and Geroski, 2005). Given their lack of competences in dominant designs, entrants barely face opportunities to exploit mature technologies but instead spark technological transitions by introducing disruptive innovations that reduce entry barriers (Tushman and Anderson, 1986;Utterback, 1994) [a] . Entrants are considered as intrinsically motivated and not purely profit driven, often intending to achieve social change. However, they are not strong enough to enforce transitions alone and often remain in niche markets (Markides and Geroski, 2005;Schaltegger and Wagner, 2011). Radical technologies cannibalize profit from incumbents' existing products and disrupt the value of their present knowledge base. Consequently, incumbents tend to advance their existing products with incremental improvements and process innovations instead of propelling immature radical technologies in early transitional phases (Gort and Klepper, 1982;Henderson and Clark, 1990;Christensen, 1997). 1We perceive these different innovation tendencies of entrants and incumbents as especially relevant for the transition from dirty towards environmentally friendly technologies. Many sectors in need for a change are chara...

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Section: First Hypotheses Setsupporting

confidence: 88%

supporting

confidence: 73%

Section: Second Hypotheses Setmentioning

confidence: 93%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

Incumbents' Responses to Innovative Entrants A Multi-Country Dynamic Analysis

Diekhof

Cantner

2017

SSRN Journal

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“…Both studies (Andersson, Braunerhjelm and Thulin 2012; Changoluisa 2016) find a positive effect for start-ups in the region where the incumbent is located, but they differ with regards to the spatial scope of this effect. While Andersson, Braunerhjelm and Thulin (2012) ignore the possibility that incumbent productivity could be influenced by start-ups from other regions, Fritsch and Changoluisa (2016) present evidence that new business formation in the same industry does have an effect on the performance of incumbent establishments in other regions. This latter result, however, seems to contradict the available analyses of the effect of new business formation at the aggregate level of regions that clearly show that this effect is highly concentrated in the region where the new businesses are set up (Fritsch 2013).…”

Section: Evidence Of Previous Studiesmentioning

confidence: 68%

New Business Formation and Incumbents’ Perception of Competitive Pressure

Changoluisa

Fritsch

2019

Rev Ind Organ

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A b s t r a c tWe investigate the relationship between new business formation and the level of competitive pressure perceived by manufacturing incumbent establishments. The perceived pressure of competition is stronger the higher the level of entries in the respective industry. This relationship holds not only for start-ups located in the same region of the incumbent, but also for start-ups across all regions of Germany. The productivity level of an incumbent moderates the extent of the perceived competitive pressure from start-ups. Highly productive incumbents are less threatened by new business formation. Such a moderating effect cannot be found for incumbent size and regional population density. JEL classification: L26, L60, D20, O12, R11

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The Effect of New Business Formation on Regional Development

Fritsch

2017

The Wiley Handbook of Entrepreneurship

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New business formation and the productivity of manufacturing incumbents: Effects and mechanisms

Cited by 37 publications

References 95 publications

Incumbents' Responses to Innovative Entrants A Multi-Country Dynamic Analysis

Incumbents' Responses to Innovative Entrants A Multi-Country Dynamic Analysis

New Business Formation and Incumbents’ Perception of Competitive Pressure

The Effect of New Business Formation on Regional Development

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