Sectoral and cross-sectoral effects of retailing firm demographies

Abstract.

Firm births and deaths are interrelated. Johnson and Parker (1994) have summarized the various causality relationships according to three different effects: (1) the Multiplier, (2) the Competition and (3) the Marshall effect. This article proposes an enlarged analytical framework by introducing the sectoral and cross-sectoral dimensions of firm demography. The expected interrelationships between firm births and deaths are different when studied within a single industry, or between different industries. In the first case, Competition effects should prevail while, in the second case, Multiplier effects are more probable. The discussion suggests, however, that even for firms with similar activities, complementarities and Multiplier effects may occur. An econometric model that allows for (cross-)sectoral and spatial interactions is specified and tested using Belgian data. Results lead to the conclusion that sectoral and cross-sectoral dimensions in firm demography are relevant. It is also clear that these issues definitely deserve further attention in firm demographic research.