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New Technology and Business Dynamics

Author

Listed:
  • Hvide, Hans K.

    (U of Bergen and U of Aberdeen)

  • Meling, Tom

    (Ohio State U)

Abstract

How does the economy adapt to new technologies? While existing literature focuses on the response by established firms, we highlight the response by entrepreneurs. The context is a natural experiment: the staggered rollout of broadband internet in Norway. We find that the new technology had small effects on the survival, employment, and asset growth of established firms, but led to a sustained 25% increase in startup rates. Startup quality did not decline. Our findings support ideas from Schumpeter (1934) and Arrow (1962) that startups play an important role in adapting the economy to new technologies.

Suggested Citation

  • Hvide, Hans K. & Meling, Tom, 2023. "New Technology and Business Dynamics," Working Paper Series 2023-19, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
    • Handle: RePEc:ecl:ohidic:2023-19
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    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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