Evolution, Organization and Economic Behavior

Evolution, Organization and Economic Behavior

Edited by Guido Buenstorf

This new and original collection of papers focuses on the intersection of three strands of research: evolutionary economics, behavioral economics, and management studies. Combining theoretical and empirical contributions, the expert contributors demonstrate that the intersection of these fields provides a rich source of opportunities enabling researchers to find more satisfactory answers to questions that (not only evolutionary) economists have long been tackling. Topics discussed include individual agents and their interactions; the behavior and development of firm organizations; and evolving firms and their broader implications for the development of regions and entire economies.

Chapter 10: Spin-off Growth and Job Creation: Evidence on Denmark

Pernille Gjerløv-Juel and Michael S. Dahl

Subjects: economics and finance, behavioural and experimental economics, evolutionary economics

Extract

Pernille Gjerløv-Juel and Michael S. Dahl* 1 INTRODUCTION It is well established that entrepreneurial spin-offs are distinct performers in several industries. Firms founded by former employees from incumbent firms in the same industry tend to outperform other new entrants and sometimes even incumbent firms as well (see Klepper, 2001a, 2009 for reviews of this literature). This fact has sparked considerable interest among politicians and civil servants, since future industrial and entrepreneurial policy might gain by looking more closely at this. Most of the existing studies focus on the life cycle of single industries and on survival as a key performance indicator. Spin-offs have been found to be key entrants at specific stages of the life cycle, but are spin-offs universally the best entrants? To answer this question, we need to add studies of firms from a variety of industries, across different stages of the life cycle and with other performance measures as well. Dahl and Reichstein (2007a) and Dahl et al. (2009) have established that spin-offs are relatively more successful entrants across industries in terms of survival. The question is more open when it comes to other performance measures. This chapter adds to this discussion by studying in greater detail the performance differences between spin-offs and other entrants in terms of employment growth and job creation. We use a comprehensive dataset covering all entrants in the Danish economy from 1995 to 2004. We find that spin-offs are not only surviving longer, as the existing literature suggests, but they are...

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