Selection Versus Evolutionary Adaptation: Learning and Post- Entry Performance

Baldwin, John R.; Rafiquzzaman, Mohammed

doi:10.2139/ssrn.4168

“…In their model, a firm knows its own characteristics and those of its competitors, along with the future distribution of industry structure, conditional on the current structure. From an empirical perspective, a recent stream of literature has focused on the post-entry performance of firms and has investigated survival, growth and early exit of newborn firms (see, for instance, Reid, 1991;Boeri and Cramer, 1992;Baldwin and Rafiquzzaman, 1995).Within this field, it is possible to analyse the relationship between ex-ante features of entry, survival and, in the case of survival, post-entry performance of newborn firms, which can be measured in terms of employment growth, profitability or market penetration.For instance, some of these studies have discovered a positive relationship between startup size and survival (see Audretsch and Mahmood, 1995;Mata, Portugal and Guimaraes, 1995; for more controversial results, see Audretsch, Santarelli and Vivarelli, 1999a;and Agarval and Audretsch, 2001). Others have found a negative relationship between start-up size and post-entry growth, thus rejecting Gibrat's Law (see Gibrat, 1931;Hall, 1987;Evans, 1987;Dunne and Hughes, 1994;Hart and Oulton, 1996;Sutton, 1997;Vivarelli, 2001 and.…”

mentioning

confidence: 99%

“…In their model, a firm knows its own characteristics and those of its competitors, along with the future distribution of industry structure, conditional on the current structure. From an empirical perspective, a recent stream of literature has focused on the post-entry performance of firms and has investigated survival, growth and early exit of newborn firms (see, for instance, Reid, 1991;Boeri and Cramer, 1992;Baldwin and Rafiquzzaman, 1995).…”

mentioning

confidence: 99%

Entrepreneurship and the process of firms' entry, survival and growth

Santarelli¹,

Vivarelli²

2007

Industrial and Corporate Change

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes.You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. licence. www.econstor.eu IZA DP No. 2475 Any opinions expressed here are those of the author(s) and not those of the institute. Research disseminated by IZA may include views on policy, but the institute itself takes no institutional policy positions. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated Entrepreneurship and the Process of Firms' Entry, Survival and Growth Enrico Santarelli Marco Vivarelli D I S C U S S I O N P A P E R S E R I E SThe Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit company supported by Deutsche Post World Net. The center is associated with the University of Bonn and offers a stimulating research environment through its research networks, research support, and visitors and doctoral programs. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public.IZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author. ABSTRACT Entrepreneurship and the Process of Firms' Entry, Survival and GrowthThis survey paper aims at critically discussing the recent literature on firm formation and survival and the growth of new-born firms. The basic purpose is to single out the microeconomic entrepreneurial foundations of industrial dynamics (entry and exit) and to characterise the founder's ex-ante features in terms of likely ex-post business performance. The main conclusion is that entry of new firms is heterogeneous with innovative entrepreneurs being found together with passive followers, over-optimist gamblers and even escapees from unemployment. Since founders are heterogeneous and may make "entry mistakes", policy incentives sh...

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“…This is in accordance with Hypothesis (1) -and tallies with reported findings in the empirical literature. As indicated above, McCloughan and Stone (1998) and Baldwin and Rafiquzzaman (1995) find a significant relationship between market concentration and firm survival. However, and…”

Section: Modelling the Relationship Between Randd And Survivalmentioning

confidence: 73%

Inverted-U Relationship between Innovation and Survival: Evidence from Firm-Level UK Data

Uğur

¹

,

Trushin

²

,

Solomon

³

et al. 2015

SSRN Journal

1

0

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Theoretical and empirical work on innovation and firm survival has produced varied and often conflicting findings. In this paper, we draw on Schumpeterian models of competition and innovation and stochastic models of firm dynamics to demonstrate that the conflicting findings may be due to linear specifications of the innovation-survival relationship. We demonstrate that a quadratic specification is appropriate theoretically and fits the data well. Our findings from an unbalanced panel of 39,705 UK firms from 1997-2012 indicate that an inverted-U relationship holds for different types of R&D expenditures and sources of funding. We also report that R&D intensity is more likely to increase survival when firms are in more concentrated industries and in Pavitt technology classes consisting of specialized suppliers of technology and scale-intensive industries. Finally, we report that the effects of firm and industry characteristics as well as macroeconomic environment indicators are all consistent with prior findings. The results are robust to step-wise modeling, controlling for left truncation and use of lagged values to address potential simultaneity bias.

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“…the discussion in Baldwin and Rafiquzzaman (1995) and Doms and Bartelsman (2000)). A good deal of such turbulence is due to "churning" of going firms, with 20% − 40% of entrants die in the first two years and only 40% − 50% survive beyond the seventh year in a given cohort.…”

Section: Market Turbulencementioning

confidence: 93%

The Footprint of Evolutionary Processes of Learning and Selection Upon the Statistical Properties of Industrial Dynamics

Dosi

¹

,

Pereira

²

,

Virgillito

³

2015

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in 2015/04March 2015 ISSN (online) 2284-0400The footprint of evolutionary processes of learning and selection upon the statistical properties of industrial dynamicsGiovanni Dosi * 1 , Marcelo C. Pereira †2 and Maria Enrica Virgillito ‡11 Sant'Anna School of Advanced Studies 2 University of Campinas March 2015Abstract Evolutionary theories of economic change identify the processes of idiosyncratic learning by individual firms and of market selection as the two main drivers of the dynamics of industries. Are such processes able to robustly account for the statistical regularities which industrial structures and dynamics display? In this work we address this question by means of a simple agent-based model formalizing the mechanisms of learning and selection. The interplay between these two engines shapes the dynamics of entry-exit and market shares and, collectively, the productivity and the size distributions and their patterns of growth. As such, and despite its simplicity, the model is able to robustly reproduce an ensemble of empirical stylised facts, including ample heterogeneity in productivity distributions, persistent market turbulence and fat-tailed distribution of growth rates.

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Selection Versus Evolutionary Adaptation: Learning and Post- Entry Performance

Cited by 49 publications

References 13 publications

Entrepreneurship and the process of firms' entry, survival and growth

Entrepreneurship and the process of firms' entry, survival and growth

Inverted-U Relationship between Innovation and Survival: Evidence from Firm-Level UK Data

The Footprint of Evolutionary Processes of Learning and Selection Upon the Statistical Properties of Industrial Dynamics

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