Schumpeterian 'Creative Destruction' and Strengthening the Business Stock Through Firm Formation
Atherton (2006) has noted that the current policy preoccupation with increasing start-up levels is often justified in terms of Schumpeterian creative destruction which facilitates evolutionary strengthening in the business stock. This article seeks to consider the validity of this justification. Beyond this, this article shows that the most commonly employed measures of firm formation, the ‘business stock’ and ‘labour market’ approaches, and the most commonly employed dataset, the VAT data, are inadequate for assessing policy couched in Schumpeterian terms as they are unable to account for the evolution of the business stock. A new dataset employing new measures better able to account for the challenge to the business stock brought about by formation is introduced.
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