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The Birth the Life and the Death of Firms – The Role of Entrepreneurship

PublicationBook
Ann-Charlotte Fridh, Åsa Eliasson, Clas Wihlborg, Dan Johansson, Entreprenörskap, Erol Taymaz, Företagandets villkor, Gunnar Eliasson, Institutionell ekonomi, Klas Buttwill, Kreativ förstörelse

Abstract

Business successes and failure are natural features in a growing and experimentally organized economy. The ongoing reorganisation of the global economy and changing competitive circumstances have short-ened the life cycle of firms and spelled crisis for several of Sweden’s large international companies. In The Birth, the Life and the Death of Firms, edited by professor Gunnar Eliasson, the enormous business opportunities and the ongoing industrial transformation are contrasted with the political and social problems the change is bringing, and the propensity of institutions to conserve existing structures rather than facilitate the introduction of new ones.The importance of firm’s exits and deaths and the releasing of resources that follows are studied in a regional perspective (Lake Mälar Region), where Pharmacia’s fate and Uppsala’s local economy have been chosen as a case study. There is also a comparison between the deaths of listed British and Swedish companies and of the similarly structured but much larger Bavaria/Baden-Württemberg regional economy in southern Germany with the Lake Mälar Region in Sweden.The regional study demonstrates the enormous complexity of the ongoing industrial dynamics and how easy it is to commit business mistakes. This indicates that risks have to be shared between firms and institutions if large industrial opportunities should not be lost. Furthermore, creative destruction has to destroy the institutions of society at least as much as it destroys physical production capital.

Eliasson, G. (Eds.) (2005). The Birth the Life and the Death of Firms – The Role of Entrepreneurship, Creative Destruction and Conservative Institutions in a Growing and Experimentally Organized Economy. Stockholm: Ratio.

Participating researchers and authors: Klas Buttwill, Gunnar Eliasson, Åsa Eliasson, Ann-Charlotte Fridh, Dan Johansson, Cliff Pratten, Erol Taymaz and Clas Wihlborg.

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Working Paper No. 119. Advanced Purchasing, Spillovers, Innovative Pricing and Serendipitous Discovery
Working paperPublication
Eliasson, G.
Publication year

2008

Abstract

Advanced products such as aircraft distinguish themselves by a number of characteristics. Products are complicated and produced under very complicated circumstances, but also have a very long life. The purchase price, therefore, is a small part of total user cost of the product. Product value, hence, increases the more of cost efficient maintenance that has been built into the product and the easier it is to service and modernize. Advanced products also distinguish themselves by featuring the additional collective characteristic of a “cloud of technology spillovers” available to external users in proportion to their competence to commercialize them. While the value of that cloud to society may be greater than that of the product itself the value to the user may be much smaller. The producer, therefore, faces a tricky pricing problem and the value he can capture depends on his ability to charge for the dual product. I discuss joint production of products with rich spillovers in the context of joint customership, i.e. public purchasing of both products and the collective value generated by spillovers. I demonstrate that a win-win situation might exist between the two that improves with the commercial ability of the local economy to capture the value of the spillovers. Industrial participation programs can be made part of a sale to support the receiver competence of local producers to capture the spillover rents. Part of marketing the product, therefore, involves the ability to present a credible case for the economic value to society of the spillovers and to design a method of charging for them (Innovative pricing). A well designed, mutually beneficial contract should make both parties to the trade winners. This latter form of innovative pricing should be particularly attractive for developing countries. The theoretical argument is illustrated with the case of downstream industrial business formation around Swedish Aircraft industry.

Working Paper No. 119. Advanced Purchasing, Spillovers, Innovative Pricing and Serendipitous Discovery
Working paperPublication
Eliasson, G.
Publication year

2008

Abstract

Advanced products such as aircraft distinguish themselves by a number of characteristics. Products are complicated and produced under very complicated circumstances, but also have a very long life. The purchase price, therefore, is a small part of total user cost of the product. Product value, hence, increases the more of cost efficient maintenance that has been built into the product and the easier it is to service and modernize. Advanced products also distinguish themselves by featuring the additional collective characteristic of a “cloud of technology spillovers” available to external users in proportion to their competence to commercialize them. While the value of that cloud to society may be greater than that of the product itself the value to the user may be much smaller. The producer, therefore, faces a tricky pricing problem and the value he can capture depends on his ability to charge for the dual product. I discuss joint production of products with rich spillovers in the context of joint customership, i.e. public purchasing of both products and the collective value generated by spillovers. I demonstrate that a win-win situation might exist between the two that improves with the commercial ability of the local economy to capture the value of the spillovers. Industrial participation programs can be made part of a sale to support the receiver competence of local producers to capture the spillover rents. Part of marketing the product, therefore, involves the ability to present a credible case for the economic value to society of the spillovers and to design a method of charging for them (Innovative pricing). A well designed, mutually beneficial contract should make both parties to the trade winners. This latter form of innovative pricing should be particularly attractive for developing countries. The theoretical argument is illustrated with the case of downstream industrial business formation around Swedish Aircraft industry.

From Employment to Entrepreneurship
Article (with peer review)Publication
Eliasson, G.
Publication year

2006

Abstract

Technology is making smaller scale, distributed production more economical, raising global competition and forcing change on traditional firms in mature markets. Change was gradual for decades but accelerated during the last ten or fifteen years as new computing and communications (C&C) technologies helped coordinate production flows, making firms break up and distribute their value chains over markets of subcontractors and changing the work environment of individuals. I investigate the consequences for individuals of the faster creative destruction process that is taking place through the turnover of firms rather than internally within firms. I conclude that labour market risks are changing such that entrepreneurial ability, intellectual flexibility and a capacity to learn efficiently from experience will become competitive advantages for individuals. I also conclude that efficient education may offer a way of countering the ongoing polarization of labour markets and I derive a platform theory of cumulative learning from experience that emphasizes the acquisition of basic skills during early school years. A varied and advanced job environment to learn from is probably the most important factor, sustaining the competitive advantage of the advanced industrial economies. A stylized comparison of the educational and labour market systems suggests that the European systems are at a disadvantage compared to that of the US.

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