Thinking about Entry of Firms: A Theoretical Discussion

Abstract

This paper analyses the factors that play a role in determining entry of new firms into markets from a theoretical point of view. We analyse the traditional interpretation of entry as a mechanism of re-equilibrating profits towards their long-run level. Then, we concentrate on other theoretical approaches, showing how the characteristics of technological innovation, the endowment of skills and competencies of the entrants, the role of information signals, the phases of the industry life cycle, the sociological concepts of legitimization and competition, and the psychological aspects might play fundamental roles in explaining new entry. The paper debates possible cross-fertilizations among theories: The discussion results in some fruitful intertwinements among the different relevant features about entry and spawns new collaborative and interdisciplinary research to create additional knowledge about entry. Insights about international entrepreneurship (IE) are also discussed.

Behind the emergence of clusters: spinoffs and social ties. The case of an Italian industrial district

“…These processes contribute to generating the critical mass of firms in the initial phase of cluster evolution, which subsequently may start external pecuniary and non-pecuniary effects in an agglomerated area. Spinoffs also contribute to cluster growth because of the trial-and-error experiences (typical in the primordial stages when uncertainty is high) they explore (Garavaglia, 2016), offering in this way a local learning mechanism that contributes to easing subsequent entrepreneurship and adapting to external shocks, innovation and change, as occurred in Hsinchu (Parker, 2010). When a critical mass of firms is reached, then, a selfsustaining process of agglomeration emerges, where the so-called external economies play a reinforcing role (e.g., in the Oleggio case, through the creation of consortium, the extension of infrastructures, the birth of related industries and the development of bank services).…”