The Effects Of Entry On Incumbent Innovation And Productivity
- Topics:
- Organization
- Tags:
- Entry,
- Incumbent,
- Innovation,
- Leadership,
- Management,
- Strategy
- Source:
- Harvard University
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Overview: How does firm entry affect innovation incentives and productivity growth in incumbent firms? Micro-data suggests that there is heterogeneity across industries - incumbents in technologically advanced industries react positively to entry, but not in laggard industries. To explain this pattern, entry into a Schumpeterian growth model with multiple sectors which differ by their distance to the technological frontier is introduced. It shows that entry threat spurs innovation incentives in technologically advanced sectors - successful innovation allows incumbents to prevent entry. In laggard sectors it discourages innovation - increased entry reduces incumbents' expected rents from innovating.
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Format: PDF | Size: 1,044KB | Date: Oct 2005 | Pages: 49






