Citation

Discussion Paper Details

Please find the details for DP14131 in an easy to copy and paste format below:

Full Details

Title: Do Temporary Demand Shocks have Long-Term Effects for Startups?

Author(s): Hans K Hvide and Tom Meling

Publication Date: November 2019

Keyword(s): entrepreneurship, Investments and Startups

Programme Area(s): Financial Economics, Industrial Organization, Labour Economics, Macroeconomics and Growth and Public Economics

Abstract: Recent work shows that firms born in cohorts with weak job creation are persistently smaller, even when the aggregate economy recovers. As both demand-side and supply-side factors vary with the business cycle, it is challenging to establish what drives these patterns from aggregate data. We use comprehensive procurement auctions and register data from Norway to study the effect of cross-sectional variation in transient demand shocks on long-run outcomes for startups. Auction winners have more than 20% higher sales and employment than runners-up several years after the auction. They are also more profitable. Investment effects, broadly interpreted, appear important to understand the results.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14131

Bibliographic Reference

Hvide, H and Meling, T. 2019. 'Do Temporary Demand Shocks have Long-Term Effects for Startups?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14131