Introduction: Entrepreneurship and Industrial Organization
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Introduction: Entrepreneurship and Industrial Organization David B. Audretsch1 · Albert N. Link2 · Erik E. Lehmann3
© Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract The purpose of this paper is to introduce the special issue of the Review of Industrial Organization on “Entrepreneurship and Industrial Organization” by highlighting the important ways that the literatures of industrial organization and entrepreneur‑ ship are highly intertwined. The paper concludes that the two literatures are indeed closely related and complementary. Keywords Entrepreneurship · Innovation · Market entry
1 Introduction At first glance it would seem that the literatures of industrial organization and entre‑ preneurship are not only distinct but have very little overlap or even relevance to each other. The purpose of this special issue is to argue that this is not the case and that, in fact, the literatures of industrial organization and entrepreneurship are highly intertwined. In the second section of this paper, three main themes that link the literatures of industrial organization and entrepreneurship are explicitly identified and explained. In particular, these themes involve entry, innovation, and competition. In the third section of the paper, how each of the individual contributions to the special issue are related to at least one of these themes is explicitly identified and explained. Finally, in the last section of the paper, a summary and conclusion are provided.
* Albert N. Link [email protected] David B. Audretsch [email protected] Erik E. Lehmann [email protected]‑augsburg.de 1
Indiana University, Bloomington, USA
2
University of North Carolina at Greensboro, Greensboro, USA
3
University of Augsburg, Augsburg, Germany
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In particular, this paper finds that because of the central role that is played by the themes of entry, innovation, and competition, the fields of industrial organization and entrepreneurship are not just interrelated but are also highly complementary.
2 Linking Entrepreneurship to Industrial Organization There are at least three important ways that entrepreneurship intersects with indus‑ trial organization: entry, innovation, and competition. Entry is central to industrial organization because it provides the mechanism that restores markets to zero-profit equilibrium. Dating back at least to the seminal work of Bain (1956), entry was viewed in the literature of industrial organization as the key mechanism that would increase output to levels that are consistent with zero profits in long-run equilib‑ rium. In the absence of barriers to entry, positive economic profits would be eroded through the increase in output that is provided by the entrants, restoring long-run equilibrium in the market (Sutton 1991). The notion of entry into markets does not specify who or which type of firm actu‑ ally constitutes that entrant. Entrants could take the form of incumbents that expand production into new product or geographi
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