Industrial Organization and New Findings on the Turnover and Mobility of Firms

Posted: 17 Nov 2009

See all articles by Richard E. Caves

Richard E. Caves

Harvard University & Statistics Canada; Government of Canada - Analytical Studies Branch

Date Written: 1998

Abstract

Assesses the entry, exit, and mobility of firms in the context of industrial organization's traditional framework by reviewing prior research (which increased in the 1990s as a result of the availability of new datasets). In this analysis, the term turnover is used to encompass firm entry and exit, firm mobility, and changes in firm control. For small firms, the mean growth rates decrease with their initial size. In addition, gross entry is higher for all firm sizes than net entry because of high rates of infant mortality. The size selected by entrants appears to be a result of the structure of the market that is entered and perceived capabilities. There does not appear to be any qualitative difference among countries for turnover processes. Industry technology and demand conditions are shown to impact mobility. Both the number of entries and the entrants' survival rate is affected by traditional structural barriers. Also discussed are productivity growth and efficiency. The insights gained from this analysis help to explain concentration levels, their changes, and the effects of structural entry barriers on actual entrants. (SRD)

Keywords: Industrial organization, Firm mobility, Industry concentration, Market structures, Productivity growth, Firm turnover, Firm growth, Firm survival, Mortality risks, Firm control, Closing firms, Startups, Barriers to entry

Suggested Citation

Caves, Richard E., Industrial Organization and New Findings on the Turnover and Mobility of Firms (1998). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1506377

Richard E. Caves (Contact Author)

Harvard University & Statistics Canada ( email )

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