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A Schumpeterian approach to entry barrier and firm profitability: cycle time of technology
Cited 1 time in
Web of Science
Cited 1 time in Scopus
- Authors
- Issue Date
- 2022-05
- Publisher
- Routledge
- Citation
- Economics of Innovation and New Technology
- Abstract
- Entry barrier has long been considered as a major determinant of firm profitability. Although a less competitive market structure has been commonly known as an indicator of an entry barrier, pieces of past empirical evidence are mixed. Moreover, technological factors, such as R&D intensity, have also been considered. However, no satisfactory empirical analysis has been made, mostly due to the lack of a suitable proxy variable that can reflect the technological environment of a sector. This study addresses this problem by trying a new proxy variable, cycle time of technologies (CTT), and shows, using the US firm data, that firms in a sector with a long CTT tend to enjoy higher profitability and values than others. A long CTT of a sector presents a high entry barrier against any entrant because in such sectors, an existing stock of knowledge tends to be important for a longer period of time, making new innovation continuously rely on old knowledge owned by incumbents and protected by patent rights.
- ISSN
- 1043-8599
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