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A cross-section empirical analysis examining the entry behavior of small firms is provided in this paper. While the authors find that certain traditional market structure characteristics and entry barriers have a strong impact on small-firm entry behavior, the reliance upon innovative strategy by small firms also explains a significant amount of the variation in the pattern of entry by small firms. They conclude that small-firm entry is at least partially determined by entry barriers, industry-specific characteristics facilitating retaliatory conduct by incumbent firms, and the reliance upon innovative strategy by small firms.
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Ács et al. (1989) studied this question.
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