Entrepreneurship, Competitiveness and Local Development

Entrepreneurship, Competitiveness and Local Development

Frontiers in European Entrepreneurship Research

Edited by Luca Iandoli, Hans Landström and Mario Raffa

This book draws together leading academics to provide a state-of-the-art overview of the key challenges to entrepreneurship in Europe.

Chapter 3: Do Entry Barriers, Perceived by SMEs, Affect Real Entry? Some Evidence from the Netherlands

S. Gerhard Dijkstra, Ron Kemp and Clemens Lutz

Subjects: business and management, entrepreneurship


3. Do entry barriers, perceived by SMEs, affect real entry? Some evidence from the Netherlands S. Gerhard Dijkstra, Ron Kemp and Clemens Lutz INTRODUCTION1 Entries of new firms into the market foster the dynamics in the economy. Entrants have an equilibrating function, as firms will enter the market if profits are above the long-run competitive level. Entrants are also considered as important agents of change, as new firms may introduce new products or production processes. The upshot is that entry contributes to allocative as well as dynamic efficiency in the market (Audretsch and Thurik, 2001). However, several mechanisms can prevent firms from entering the market and hamper the process of allocative and dynamic efficiency. Consequently, barriers to entry are one of the major issues in entrepreneurship and competition policy. In Blees et al. (2003) the results of a comprehensive literature study on entry barriers have been published: the theoretical background and the operating mechanisms are discussed. The report describes in total 37 structural and strategic barriers to entry and discusses the expected specific effects on small businesses. The literature study concludes that small entrants suffer more from barriers to entry than do large entrants (often existing companies active in another product or geographical market) and provides us with the argument to focus this study on small and medium-sized enterprises (SMEs). For example, it is argued that barriers related to advertising, brand name, capital requirements, cost of operating abroad, high wages, research and development...

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