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Exit And Entry Over The Product Life Cycle: Evidence From The Swedish Manufacturing Industry

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  • Blom, Kristina
  • Karlsson, Charlie

Abstract

In this paper the process of exit and entry of firms in the Swedish manufacturing industry is investigated within the framework of the product life cycle. The product life cycle theory explains how the high degree of uncertainty, as regards product designs and production methods, which is connected to the early stages of the product life cycle requires a high level of knowledge-intensity. Since uncertainty decrease over the product life cycle, less knowledge is needed in production during later stages of the product life cycle. This implies that knowledge-intensity differs for firms that exit and enter in different stages of the product life cycle. Four hypotheses regarding these relationships are stated and empirically tested in this paper, using data at the 5-digit SIC-level for the Swedish manufacturing industry during 1990-1996. The empirical results show that entrants in the early stages of the product life cycle are more knowledge-intensive than incumbent firms. It is also found that firms exiting in early stages of the product life cycle are more knowledge-intensive than firms exiting in later stages. Copyright 2003 by Kluwer Academic Publishers
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  • Blom, Kristina & Karlsson, Charlie, 2000. "Exit And Entry Over The Product Life Cycle: Evidence From The Swedish Manufacturing Industry," ERSA conference papers ersa00p83, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa00p83
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    References listed on IDEAS

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    1. Utterback, James M & Abernathy, William J, 1975. "A dynamic model of process and product innovation," Omega, Elsevier, vol. 3(6), pages 639-656, December.
    2. Klepper, Steven, 1996. "Entry, Exit, Growth, and Innovation over the Product Life Cycle," American Economic Review, American Economic Association, vol. 86(3), pages 562-583, June.
    3. Agarwal, Rajshree & Gort, Michael, 1996. "The Evolution of Markets and Entry, Exit and Survival of Firms," The Review of Economics and Statistics, MIT Press, vol. 78(3), pages 489-498, August.
    4. Pavitt, K. & Rothwell, R., 1976. "A comment on "a dynamic model of process and product innovation"," Omega, Elsevier, vol. 4(4), pages 375-377.
    5. Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-653, September.
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    Cited by:

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    4. Tavassoli, Sam, 2015. "Innovation determinants over industry life cycle," Technological Forecasting and Social Change, Elsevier, vol. 91(C), pages 18-32.
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    9. Sierdjan Koster & Shailendra Kumar Rai, 2008. "Entrepreneurship and Economic Development in a Developing Country," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 17(2), pages 117-137, September.
    10. Harald Strotmann, 2007. "Entrepreneurial Survival," Small Business Economics, Springer, vol. 28(1), pages 87-104, January.
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    12. Srinivasan, Sunderasan, 2007. "The Indian solar photovoltaic industry: a life cycle analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 11(1), pages 133-147, January.

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