Marcus Box

Entrepreneurship, Innovation, and the Demography of Firms and Industries in Sweden over Two Centuries

There is a need for research that can investigate complementary explanations to entrepreneurship - e.g., innovation; economic cycles; structural transformation, or institutional change. The project studies the demography of firms and industries in Sweden 1800-2010. It uses new, unique (mainly unused) data that we have generated ourselves, and combines demographic methods with approaches and theories in current research. The project's aims are: 1) To study processes and driving forces of firms' entry, survival, growth and exit and of individual industries in the long term; 2) To contribute with methodological development. We measure, quantify and analyze entrepreneurship both quantitatively and qualitatively: as firm turnovers (e.g., survival, growth), and as innovation. In this, we use two different theoretical traditions: one (dominating) in which entrepreneurship is operationalized by firm turnovers (e.g., GEM), and one which is Schumpeterian (innovation). In total, we have long-term data on 45,000 Swedish firms over various periods, recorded at both the firm and the population levels with several indicators on firm performance and innovation. This material embraces two main groups of populations: one that is "heterogeneous", e.g., firm entries and exits in all types of industries over time, and one that is "homogenous", with populations of firms in several individual industries measured over long periods. The project is already now well-prepared, and our unique data makes it possible to test earlier hypotheses in entrepreneurship.
Final report

The aim of the project has been to study entrepreneurship, innovation and industrial development using a “firm demography” approach; its main focus has been the study of the entry and establishment of firms and industries, their survival, growth and innovation. A demographic, quantitative approach makes it possible to separate the unique from the general – irrespective of whether this is implied as individual companies, sectors and industries, economies, or specific time periods and events. The project distinguishes itself by the study of long processes, where both contemporary and historical perspectives are central, both empirically, methodologically and theoretically. For the completion of the project, we have used unique longitudinal and time-series data that describe business populations and industries in Sweden. I nearly all respects, the project’s aim has been maintained during the project period. There have been some slight “deviations” from the original purpose, but these cannot be judged to be outside the project’s main purpose; for instance, originally the project had not a specific purpose to study gender and entrepreneurship, or bankruptcy fraud (which a few publications within the project is about). However, these fields must be judged to be included in the project’s basic intent; the same kind of empirical data is used and the key research questions in the project are also utilized in these studies. In total, the project has generated six journal publications, four contributions in edited books, two working papers/discussion papers, and a number of conference contributions and presentations.
 
The project’s three main results can be summarized as follows: a first track that we have explored concerns the bankruptcy institute and the development of bankruptcies in Sweden from the 1800’s to the present day. The project has studied the general bankruptcy development at the aggregate level and has related this to macroeconomic fluctuations. Unlike established perceptions both inside and outside the academy, which state that bankruptcies are a business cycle indicator, our data and results cannot establish that to would be the case; no clear long-term relationship between the development of the bankruptcy rate and economic fluctuations could be found. Past results and conceptions are thus questioned. In addition, and perhaps more importantly, the project has – as far as we know – synthetized perspectives from quite different fields of research: criminology, economics and entrepreneurship. Over a period of almost two hundred years, we have studied the development of bankruptcy fraud and used aggregated statistics on bankruptcy frauds as an indicator of economic crime. Established perceptions in both economic research and criminology is that crimes have detrimental effects on both the societal, corporate and individual level. Our results show that fluctuations in bankruptcy frauds have effects on the development of the aggregate bankruptcy rate and thus on the economic system. A second result concerns entrepreneurship and self-employment over longer periods. It is nowadays almost an established axiom within both policy and research that entrepreneurship leads to, and drives, economic growth. By setting out from the established literature and research frontier, we study the development of entrepreneurship and self-employment in Sweden during 150 years and link it to business cycles and economic growth. Our results (where different analytical methods are used) differ from established perceptions and past results, and show rather that, in Sweden, it is economic growth that has a causal influence on variations in self-employment, not the other way around. A third result relates to industrial development over longer periods of time. The project has studied the rise and fall (and renaissance) of entire industries over very long periods. Here, innovation has been the key elements. It should be emphasized that innovation does not only have been considered quantitatively, but also qualitatively. An example is the study of medical tourism in historical setting. Furthermore, the Swedish brewing industry has been studied over the period c.1830-2012; similarly, long-term industry trends within the Swedish restaurant industry has been empirically studied with a distinct innovation perspective. The results from this third result of the project show that, and unlike the mainstream of research on business and industry development and entrepreneurship, a longer time perspective and unique data, generated from different source materials and databases, can generate new and different interpretations on the drivers of entrepreneurship and growth.
 
New research questions that have been generated are, among other things, whether the results for Sweden are unique or if it is possible to make future international comparisons, or whether other sectors and industries in Sweden reveal the same pattern of development in the long term. Other questions relate to what factors on both the demand and the supply sides of the economy that drive business creation and development (and whether these factors could possibly have different influence in different periods). Furthermore, issues relating to economic crime in general and, bankruptcy fraud, have evolved: what is the significance and scope of economic crime in entrepreneurial activity? How can it be measured and quantified?
 
The project has had a clear international approach, both concerning its publication strategy and in the way our own research relates to the contemporary, international research frontier. The participants have actively participated in international conferences and workshops. During the project period, furthermore, important international contacts have been established. In turn, these have also resulted in established collaborations, in particular with research groups in Austria, France and Italy. These contacts have given positive effects in collaboration in publications (including special issues in journals) and participation in joint conferences. The project participants organized themselves an international workshop in 2015 on the topic of firm demography (http://www.sh.se/p3/ext/content.nsf/aget? openagent & key = firmdemography_2015_1414420993315). Important networks were established at the conference and we still have active cooperation with some of the conference participants.
 
Research informative efforts outside the scientific community consists mainly of an established cooperation between the research group and Swedish researchers in the insolvency law which also has set up a magazine (Insolvensrättslig tidskrift), which is addressed towards both academia and practitioners. In addition, the project team had the cooperation and development related activities with Tillväxtverket.
 
The project’s two most important publications are Box (2017), ”Bring in the brewers. Business entry into the Swedish brewing industry, 1830-2012 ”, Business History, as well as Box, Lin and Gratzer (Bögenhold, D., 2016),” Linking entrepreneurship and economic growth in Sweden, 1850-2000 ”. Both publications distinctly relate to the contemporary, international research frontier and they both generate new and unique results on economic behavior and entrepreneurship Sweden, which has not been covered fully previously. In Box et al. (2016), and unlike the mainstream of research, we assume a more than hundred-year long time perspective and use a solid theoretical foundation. Box (2017) makes an empirical contribution to industry studies with the empirical mapping of the Swedish brewing industry’s entire development. Here, the industry is reconstructed and mapped at the firm level over more than two hundred years; theoretically and methodologically the study contributes to the international research debate on the driving forces to the rise and fall (and possible renaissance) of industries.
 
The project’s publishing strategy has been to publish open access as far as possible. In most cases, this goal has been achieved or is to be achieved (few publications is once this is typed in review or is accepted; in those cases, these studies will be published open access/parallel published). We have a publication in an anthology (Springer) in which the entire book project took a surprisingly long time (almost three years); unfortunately, it is still being investigated by the publisher on the possibility for parallel publishing (earlier versions are however freely available as a working paper and discussion series paper).

Grant administrator
Södertörn University
Reference number
P12-1122:1
Amount
SEK 6,352,000
Funding
RJ Projects
Subject
Economic History
Year
2012