Heterogeneity, Innovation and Entrepreneurship
Science, Innovation, Technology and Entrepreneurship series
Edited by Elias G. Carayannis, Aris Kaloudis and Åge Mariussen
Chapter 8: Heterogeneity Interpreted and Identified as Changes in the Populations of Firms
8. Heterogeneity interpreted and identiﬁed as changes in the populations of ﬁrms Svein Olav Nås and Tore Sandven INTRODUCTION The term ‘heterogeneity’ refers to diﬀerences between units of observation, such as persons, organizations, routines or ﬁrms. The perspective concerns diﬀerences between ﬁrms, but the diﬀerences identiﬁed may originate in properties of components of the ﬁrms, including the composition of employees, industry, size, organization, routines or other capabilities. The aim of this chapter is to consider how one can identify, operationalize and describe the development over time of some aspects of heterogeneity of ﬁrm populations, and to consider if heterogeneity seems to increase or decrease over time. We argue that in a dynamic, evolutionary setting, the maintenance and reproduction of heterogeneity are necessary if incentives for change and growth are to be preserved. The work refers to previous analyses of persistent diﬀerences between industries and ﬁrms over time, for instance Schmalensee (1989) on intraindustry diﬀerences in proﬁtability, or Jensen and McGuckin (1997) who utilize micro data to study heterogeneity at ﬁrm and plant level, doing away with the commonly used representative ﬁrm. The results show persistent diﬀerences in average proﬁtability over time between industries, but with even larger diﬀerences between ﬁrms within industries. Schmalensee’s empirical observations challenged the dominant neo-classical general equilibrium theory, and contributed to paving the way for alternative approaches such as disequilibrium theories and evolutionary reasoning. The current analysis attempts to apply an evolutionary perspective, and...
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