Abstract
The paper presents a new sectoral taxonomy, which classifies industries according to the opportunity and cost of experimentation. Econometric tests show for a sample of 24 countries that in the 1990s ‘entrepreneurial’ industries with a mutable and growing firm population experienced the highest growth in terms of value added and employment, but also the lowest growth of labour productivity. ‘Entrepreneurial’ industries generally earned a better profit-ratio than ‘routinised’ industries with an inertial population. The results are consistent with entrepreneurial theories of market competition, which suggest that entry follows profit opportunities but does not deplete them.
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Acknowledgements
This paper has benefited from the technical assistance of Eva Sokoll and Traude Novak as well as comments and suggestions by Karl Aiginger, Martin Falk, Werner Hölzl, Serguei Kaniovski, Gunther Tichy, an anonymous referee, the Associate Editor and participants in the conferences of the European Association for Research in Industrial Economics (EARIE) 2006, the International Schumpeter Society (ISS) 2006, as well as the Industrial Organisation Society (IOS) 2005. The author retains the sole responsibility for any errors, or omissions.
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Peneder, M.R. Firm entry and turnover: the nexus with profitability and growth. Small Bus Econ 30, 327–344 (2008). https://doi.org/10.1007/s11187-007-9048-z
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DOI: https://doi.org/10.1007/s11187-007-9048-z