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Entrepreneurial Firms: With Whom Do They Compete, and Where?

Abstract

Many different theories that have attempted to explain why smaller entrepreneurial firms exist. Surprisingly, very little empirical work has tested the obvious questions, such as: Are small firm’s price-takers in highly competitive markets? Who do they compete against? What if they try to raise prices? Does innovation offer niche market protection? Using a large UK data set our key findings are that less than 5% of entrepreneurial firms operate in markets where they effectively have no competition and a quarter of all small firms would lose at least a third of their sales if they raised prices by 10%.

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Correspondence to Marc Cowling.

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Appendix 1: Variable Descriptive Statistics

Appendix 1: Variable Descriptive Statistics

  Mean SD Low High
Firm characteristics     
 Size class     
  Micro 64.58    
  Small 28.83    
  Medium 6.05    
  Large 0.54    
  100.0    
  Firm age 4.12 6.09 0 208
  High-Tech 30.31   0 1
 Innovation     
  None 71.98    
  Incremental 10.48    
  Radical 17.54    
  100.0    
  Labour productivity £s 96,252.74 166,977.20 5714.29 330,000.00
 Industry     
  Primary—manufacturing 19.15    
  Construction 5.58    
  Services 75.27    
  100.0    
Entrepreneurial characteristics     
Board size 2.17 3.95 1 135
NED 15.00   0 1
 Years business experience     
  None 4.57    
  < 1 year 2.05    
  1–3 years 13.52    
  4-6 years 18.43    
  7–9 years 10.38    
  10–15 years 19.25    
  > 15 years 31.81    
  100.0    
 Spatial markets     
  Local 54.01    
  Regional 14.21    
  National 26.44    
  EU 2.32    
  World 3.02    
  100.0    

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Cowling, M., Nadeem, S.P. Entrepreneurial Firms: With Whom Do They Compete, and Where?. Rev Ind Organ 57, 559–577 (2020). https://doi.org/10.1007/s11151-020-09782-y

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Keywords

  • Competition
  • Entrepreneurship
  • Market structure
  • Market niches
  • Small business