New Technology and Business Dynamics

Fisher College of Business Working Paper No. 2023-03-019

Charles A. Dice Working Paper No. 2023-19

88 Pages Posted: 13 May 2023 Last revised: 25 Dec 2023

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Tom Meling

Ohio State University (OSU) - Fisher College of Business

Date Written: July 5, 2023

Abstract

How does the economy adapt to new technologies? While existing literature focuses on the response by established fi rms, we highlight the response by entrepreneurs. The context is a natural experiment: the staggered rollout of broadband internet in Norway. We find that the new technology had small effects on the survival, employment, and asset growth of established fi rms, but led to a sustained 25% increase in startup rates. Startup quality did not decline. Our findings support ideas from Schumpeter (1934) and Arrow (1962) that startups play an important role in adapting the economy to new technologies.

Keywords: Entrepreneurship, general-purpose technologies, startups, technology adoption, technology diffusion.

JEL Classification: D21, D24, J23, L11, L25, G39

Suggested Citation

Hvide, Hans and Meling, Tom, New Technology and Business Dynamics (July 5, 2023). Fisher College of Business Working Paper No. 2023-03-019, Charles A. Dice Working Paper No. 2023-19, Available at SSRN: https://ssrn.com/abstract=4444785 or http://dx.doi.org/10.2139/ssrn.4444785

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Tom Meling

Ohio State University (OSU) - Fisher College of Business ( email )

2100 Neil Avenue
Columbus, OH 43210-1144
United States

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