The Dynamics of Firm and Industry Growth : The Swedish Computing and Communications Industry

The growth of the Swedish Computing and Communications industry is studied in this thesis. Growth is seen as a dynamic process moved by the entry, expansion, contraction and exit of firms.The analysis is founded on the theory of the Experimentally Organised Economy, which views the economy as an experimental process. The entire thesis is organised around the problem of resource allocation and the issue of growth through the introduction of new combinations into the economic system, using the terminology of Schumpeter (1911). Competence blocs determine the efficiency of the economic process, ie, the extent to which it leads to sustained economic growth rather than stagnation. Change is a fundamental feature of the economic process, firms have to be flexible to survive and the economic system must promote flexibility to grow. Many trials, or experiments, are required to discover and select “winning” firms and technologies. Hence, the turnover (ie, entry and exit) of firms is supposed to have positive effects on growth. Theory, furthermore, predicts that new and small firms are more entrepreneurial and innovative and that they, therefore, will grow faster than old and large firms