Firm & Industry Dynamics

In this section, we delve into what we know about institutions and environment, mergers and acquisitions (M&A), initial public offerings (IPOs), and productivity growth; all key pieces to understanding the nuances of how firms and industry sectors operate.

Institutions and Environment

With appropriate incentive structures, firms can direct activity towards the most productive purposes. Incentive structures include both formal (e.g., law and regulation) and informal (e.g., culture and norms) institutions, which largely dictate not only the allocation of entrepreneurial effort in society across activities, but also the aggregate supply of it.

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M&As and IPOs


Mergers and acquisitions (M&As) and initial public offerings (IPOs) are two main exit strategies that entrepreneurs, angel investors, and venture capitalists use to cash out their investments in a successful startup.

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Productivity Growth


Productivity is the efficiency with which firms convert inputs such as labor, capital, and materials into outputs.

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