Declining Business Dynamism Among Our Best Opportunities: The Role of the Burden of Knowledge

47 Pages Posted: 3 Nov 2020 Last revised: 4 Nov 2020

See all articles by Thomas B. Astebro

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences

Serguey Braguinsky

University of Maryland - Department of Management & Organization; National Bureau of Economic Research (NBER); Osaka University - Institute of Social and Economic Research

Yuheng Ding

University of Maryland - Robert H. Smith School of Business

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Date Written: August 31, 2020

Abstract

We document that since 1997, the rate of startup formation has precipitously declined for firms operated by U.S. PhD recipients in science and engineering. These are supposedly the source of some of our best new technological and business opportunities. We link this to an increasing burden of knowledge by documenting a long-term earnings decline by founders, especially less experienced founders, greater work complexity in R&D, and more administrative work. The results suggest that established firms are better positioned to cope with the increasing burden of knowledge, in particular through the design of knowledge hierarchies, explaining why new firm entry has declined for high-tech, high-opportunity startups.

Keywords: Business Dynamism, High-Tech Entrepreneurship, Startup Rates, Doctorate Degree Recipients, Burden of Knowledge

JEL Classification: J24, O3

Suggested Citation

Astebro, Thomas B. and Braguinsky, Serguey and Ding, Yuheng, Declining Business Dynamism Among Our Best Opportunities: The Role of the Burden of Knowledge (August 31, 2020). ISER DP No. 1099, 2020, HEC Paris Research Paper No. ECO/SCD-2020-1397, Available at SSRN: https://ssrn.com/abstract=3684945 or http://dx.doi.org/10.2139/ssrn.3684945

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences ( email )

Jouy-en-Josas Cedex, 78351
France

HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/ASTEBRO-Thomas

Serguey Braguinsky (Contact Author)

University of Maryland - Department of Management & Organization ( email )

United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Osaka University - Institute of Social and Economic Research ( email )

6-1, Mihogaoka
Ibaraki, Osaka 567-0047
Japan

Yuheng Ding

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

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