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New Business Formation and Incumbents’ Perception of Competitive Pressure

  • Javier Changoluisa
  • Michael FritschEmail author
Article
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Abstract

We investigate the relationship between new business formation and the level of competitive pressure that is perceived by manufacturing incumbent establishments. The perceived pressure of competition is stronger when entry in the respective industry is higher. This relationship holds not only for start-ups that are located in the same region of the incumbent, but also for start-ups across all regions of Germany. Additionally, we find that particularly small, low-productivity incumbents—as well as incumbents that are located in highly populated regions—are more likely to associate new business formation with high levels of competitive pressure. We also identify other incumbent characteristics that influence the overall level of perceived competitive pressure.

Keywords

New business formation Competitive pressure Regional competition Incumbent firms Manufacturing industries 

JEL Classification

L26 L60 D20 O12 R11 

Notes

Acknowledgements

The authors are grateful to the Research Data Center of the Institute for Employment Research (IAB) in Nuremberg, Germany, for hospitality and assistance during research visits. We are indebted to Florian Noseleit, Michael Wyrwich and Moritz Zoellner for valuable comment on earlier versions. Comments from two anonymous referees and from the Editor of this journal helped us to considerably improve this paper. Financial support from the German Science Foundation (DFG RTG 1411) is gratefully acknowledged.

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Friedrich Schiller University JenaJenaGermany
  2. 2.ESAI Business SchoolUniversidad Espíritu SantoGuayaquilEcuador

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