UiS Business School
Do Temporary Demand Shocks Have Long-Term Effects for Startups?
Date: Wednesday, 3 November 2021 Time: 12:15–13:15 Location: UiS Business School, EOJ house Room: EOJ276
Using procurement auctions and register data, we find that temporary demand shocks have long-term effects on startup outcomes. Startups that win a procurement auction are more than 20% larger in terms of sales and employment than startups that narrowly lose an auction, even several years after the contract work has ended. The effects are unique to startups and economically large; about 50% of the contract value is transmitted into long run sales. The analysis suggests learning-by-doing from contract work as a plausible mechanism. Overall, our results point to the importance of path dependence in shaping the long-term outcomes of startups.
Hans Hvide is a professor of Economics and Finance at the University of Bergen and he is also affiliated with CEPR and University of Aberdeen. His main research interests are young firms (entrepreneurship) and behavioural finance. His work has been featured in Science, New York Times, and Wall Street Journal.
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