The effects of entry on incumbent innovation and productivity

Arbeitspapier

How does firm entry affect innovation incentives in incumbent firms? Micro data suggest that there is heterogeneity across industries. Specifically, incumbent productivity growth and patenting is positively correlated with lagged greenfield foreign firm entry in technologically advanced industries, but not in laggard industries. To explain this pattern, we use a Schumpeterian growth model with entry and multiple sectors which differ by their distance to the world technology frontier. We show that technologically advanced entry threat spurs innovation incentives in sectors close to the technology frontier - successful innovation allows incumbents to survive the threat. In laggard sectors it discourages innovation - increased entry threat reduces incumbents' expected rents from innovating. We find that the empirical patterns hold using rich micro panel data for the UK, and controlling for the endogeneity of entry by exploiting major European and UK policy reforms.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: WZB Discussion Paper ; No. SP II 2006-18

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Structure, Firm Strategy, and Market Performance: General ; Innovation and Invention: Processes and Incentives ; Firm Behavior: Theory ; International Investment; Long-term Capital Movements
• Thema: entry threat ; innovation incentives ; distance to the technology frontier ; firm entry ; productivity growth ; patenting

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Aghion, Philippe ; Blundell, Richard ; Griffith, Rachel ; Howitt, Peter ; Prantl, Susanne
• Ereignis: Veröffentlichung
• (wer): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (wo): Berlin
• (wann): 2006

Weitere Informationen

• Handle: http://hdl.handle.net/10419/51205
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ