https://orcid.org/0000-0002-0165-6330
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ABSTRACT
We study the emergence of a new population of firms and show that legitimation is a local phenomenon and stimulates entry. However, legitimation is offset by competition as the number of firms increases. We provide evidence that the legitimation and competition effects within the municipality dominate the effects in a larger area. We also give a methodological contribution and show that the magnitude of the legitimation and competition effects is weaker than what is predicted by the conventional regressions. Finally, legitimation and competition do not act ‘symmetrically’: legitimation is stronger and acts more quickly than the competitive effect.
ACKNOWLEDGEMENTS
The authors thank the editors and anonymous reviewers for their useful suggestions.
DISCLOSURE STATEMENT
No potential conflict of interest was reported by the authors.
Notes
1. For brevity, the estimates of the coefficients in the two models are not reported here. We find that the variables (other than Dens) behave similarly in the two models: coefficient signs and statistical significances are similar.