chapter  8
33 Pages

The nature of new firms in Ireland: empirical evidene and policy implications

Someresearchershaveidentifiedarelationship betweennationaleconomicperformanceandlevelsof firmformation'suchthatdownturnsintheeconomic cycleandr~s~ngunemploymentstimulate entrepreneurshipbyforcingpeopletosetuptheir ownbusinessfollowingorinanticipationof redundancy(BinksandCoyne1983,38).Conversely, GouldandKeeble(1984,183-184)observedthatno recentrecessionrelatedincreaseinfirmformation isapparentinEastAng1ia.Ourevidence corroboratesthatofGouldandKeeblewiththe recessionyearsof1974-75witnessingthelowest levelsofnewfirmformation;therateofentry roserapidlyinresponsetotherecoveryfrom1976 topeakin1978andthenfellbackslightlywith theonsetoftherecessionin1979-80(Table1). Consequently,itistheperiodsofupswinginthe economiccyclewhichhavestimulatedthehighest levelsofnewfirmformationinIrelandwhile troughshavedepressedentryrates.