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The contribution of start-ups and young firms to industry-level efficiency growth

Michel Dumont (UGent) , Glenn Rayp (UGent) , Marijn Verschelde (UGent) and Bruno Merlevede (UGent)
(2016) APPLIED ECONOMICS. 48(59). p.5786-5801
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Abstract
This article examines the impact of start-ups (active for 1 up to 5 years) and young firms (active for 6 up to 10 years) on industry-level efficiency growth in six EU countries, covering the period 2002–2009. Using semi-parametric estimates of meta-frontier efficiency, it is found that surviving entrants gradually raise their efficiency level in all countries considered. Firm-level efficiency growth decreases with firm age, whereas reallocation towards efficient firms contributes more to industry-level growth as firms mature. The relative contribution of start-ups appears to have been important as they actually contributed positively to overall efficiency growth which, over the period under consideration, was negative in most countries, even before the ‘Great Recession’. There are indications of ‘cleansing’, due to the exit of less efficient firms, during the ‘Great Recession’.
Keywords
efficiency, entry and exit, young firms, Start-ups, DYNAMICS, TURNOVER, SURVIVAL, EVOLUTION, INNOVATION, CYCLICALITY, SELECTION, PRODUCTIVITY, POST-ENTRY PERFORMANCE, MANUFACTURING-INDUSTRIES, reallocation, D24, L25, M13, O33

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Chicago
Dumont, Michel, Glenn Rayp, Marijn Verschelde, and Bruno Merlevede. 2016. “The Contribution of Start-ups and Young Firms to Industry-level Efficiency Growth.” Applied Economics 48 (59): 5786–5801.
APA
Dumont, M., Rayp, G., Verschelde, M., & Merlevede, B. (2016). The contribution of start-ups and young firms to industry-level efficiency growth. APPLIED ECONOMICS, 48(59), 5786–5801.
Vancouver
1.
Dumont M, Rayp G, Verschelde M, Merlevede B. The contribution of start-ups and young firms to industry-level efficiency growth. APPLIED ECONOMICS. 2016;48(59):5786–801.
MLA
Dumont, Michel, Glenn Rayp, Marijn Verschelde, et al. “The Contribution of Start-ups and Young Firms to Industry-level Efficiency Growth.” APPLIED ECONOMICS 48.59 (2016): 5786–5801. Print.
@article{7261423,
  abstract     = {This article examines the impact of start-ups (active for 1 up to 5 years) and young firms (active for 6 up to 10 years) on industry-level efficiency growth in six EU countries, covering the period 2002--2009. Using semi-parametric estimates of meta-frontier efficiency, it is found that surviving entrants gradually raise their efficiency level in all countries considered. Firm-level efficiency growth decreases with firm age, whereas reallocation towards efficient firms contributes more to industry-level growth as firms mature. The relative contribution of start-ups appears to have been important as they actually contributed positively to overall efficiency growth which, over the period under consideration, was negative in most countries, even before the {\textquoteleft}Great Recession{\textquoteright}. There are indications of {\textquoteleft}cleansing{\textquoteright}, due to the exit of less efficient firms, during the {\textquoteleft}Great Recession{\textquoteright}.},
  author       = {Dumont, Michel and Rayp, Glenn and Verschelde, Marijn and Merlevede, Bruno},
  issn         = {0003-6846},
  journal      = {APPLIED ECONOMICS},
  keyword      = {efficiency,entry and exit,young firms,Start-ups,DYNAMICS,TURNOVER,SURVIVAL,EVOLUTION,INNOVATION,CYCLICALITY,SELECTION,PRODUCTIVITY,POST-ENTRY PERFORMANCE,MANUFACTURING-INDUSTRIES,reallocation,D24,L25,M13,O33},
  language     = {eng},
  number       = {59},
  pages        = {5786--5801},
  title        = {The contribution of start-ups and young firms to industry-level efficiency growth},
  url          = {http://dx.doi.org/10.1080/00036846.2016.1184381},
  volume       = {48},
  year         = {2016},
}

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