Barriers to Creative Destruction: Large Firms and Non-Productive Strategies

26 Pages Posted: 24 Sep 2021 Last revised: 11 Nov 2021

Multiple version iconThere are 2 versions of this paper

Date Written: September 19, 2021

Abstract

This chapter reviews recent empirical evidence on large firms’ use of non-productive strategies that hinder creative destruction and reallocation. The focus is on three types of non-productive strategies: political connections, non-productive patenting, and anti-competitive acquisitions. The studies analyzing granular micro data sets from different contexts show that as firms gain market share, they tend to rely more on non-productive strategies to hold their dominant market positions while curtailing their use of productive, innovation-based growth strategies. Theoretical channels, aggregate implications, and some potential for policy are discussed.

Keywords: creative destruction, growth, innovation, non-productive strategies, political connection, patents, acquisitions

JEL Classification: 03, 04, E00

Suggested Citation

Baslandze, Salome, Barriers to Creative Destruction: Large Firms and Non-Productive Strategies (September 19, 2021). Available at SSRN: https://ssrn.com/abstract=3927528 or http://dx.doi.org/10.2139/ssrn.3927528

Salome Baslandze (Contact Author)

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
30309 (Fax)

HOME PAGE: http://https://sites.google.com/site/sabaslandze/home

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