What factors inspire the high entry flow in Taiwan's manufacturing industries - A count entry model approach

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Abstract

Why is the entry flow of the manufacturing sector extremely high in Taiwan, and does it contribute to the prevailing entrepreneurship? This article aims to explore what factors inspire potential entrants to go into an industry. Based on a theoretical formulation of the Poisson probability entry model, a count data model is employed to investigate the determinants of entry flows. The empirical results reveal that traditional entry barriers indeed lower the entry flow. The entry incentives, including price cost margin and industry growth, play a lesser role at attracting new firms, while alternatively the market size acts as a better proxy of an entry incentive in explaining entry flows. Incumbents' responses to entry, R&D and advertising intensity are found to be associated with a significant negative impact on entry flows. This article also finds that there is a higher bound of covariate of entry, about 10%, that can be attributed to the immeasurable personality of entrepreneurs - entrepreneurship. Rather be the chicken's beak than be the cow's behind. The trade that might cause life hazard will be dealt, while the trade that might cause a loss will not be dealt. Two traditional Chinese proverbs.

Original languageEnglish
Pages (from-to)1817-1831
Number of pages15
JournalApplied Economics
Volume39
Issue number14
DOIs
StatePublished - Aug 2007

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