Recruitment-based competition between industries: a community ecology

Because entrepreneurs often must recruit labor in order to launch their ventures, the labor market is a potential source of constraint in the entrepreneurial process. Moreover, competition in the labor market likely does not end at the boundaries of the product market, as industries overlap in their needs for labor. I use an organizational ecology framework to examine how founding rates in an industry vary with the degree of competition with other industries for labor, and thereby provides evidence of recruitment-based competition between industries in a community ecology. The extent of recruitment-based overlap between industries is inferred from data on flows of employees within and between industries. Analyses of founding rates in eighty-four industries in Denmark over the period 1980--1991 suggest that new firms are less likely to appear in industries that occupy crowded regions of the labor market. Copyright 2004, Oxford University Press.

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