Uncovering Creative Destruction brought about by New Firm Formation: A New Method and Data Source

Abstract

Atherton (2006) has noted that the current policy preoccupation with increasing start-up levels has been justified in terms of the ‘creative destruction’ it is expected to bring about. However, this article shows that the most commonly employed measures of start-up, and the most common dataset on which they are employed, are inadequate for assessing start-up policy justified in these terms. A new dataset and method is introduced that is better able to uncover creative destruction taking place in the business stock.

Notes

¹ Although Schumpeter (1934, 1942) was himself much more wary of drawing such biological analogies (Foster, 2006).