Small Business Economics

, Volume 36, Issue 3, pp 249–270 | Cite as

Turbulence in growing and declining industries



Turbulence over the industry life cycle is examined for the case of Portugal using the lowest possible level of industry aggregation, thus allowing for the use of panel data to study the evolution of product markets. Replacement of exiting firms by subsequent entrants plays a primary role in generating turbulence in high growth markets, while displacement of incumbents by recent entrants is the main selection force in declining markets. As the industry life cycle progresses, trial-and-error entry and entry mistakes decrease, and turbulence subsides.


Displacement Entry Entry mistakes Exit Industry life cycle Selection Replacement Turbulence 

JEL Classifications

L11 M13 O52 L26 



We thank participants in: the Max Planck Institute of Economics Workshop on Exit and Serial Entrepreneurship in Jena; seminars held at CESPRI, Bocconi University, Milan and the Catholic Universities of Milan and Piacenza; the Academy of Management Annual Meeting in Atlanta, August 2006; and the 2006 EARIE Conference in Amsterdam, August, 2006. We are indebted to the ‘Ministério do Trabalho e da Solidariedade Social’ (Portuguese Ministry of Labor and Social Solidarity) for allowing us access to the data used in this paper. Murat Karaöz gratefully acknowledges support from the ‘Fundação para a Ciência e Tecnologia’ (Portuguese Foundation for Science and Technology).


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© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.IN+ Center for Innovation, Technology and Policy Research, Instituto Superior TécnicoTechnical University of LisbonLisbonPortugal
  2. 2.Department of Engineering and Management, Instituto Superior TécnicoTechnical University of LisbonLisbonPortugal
  3. 3.Department of Econometrics, Faculty of Economics and Administrative SciencesAkdeniz UniversityAntalyaTurkey

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