New Technology and Business Dynamics

We examine business dynamics following a natural experiment: the staggered roll-out of a new technology, broadband internet, throughout Norway. The new technology led to a large, almost 25% increase in per-capita startup rates. Quality measures for these startups did not decline. In contrast, we do not find effects on the survival, employment or assets of established firms. Applications to literatures on business dynamics, entrepreneurship, and technology adoption are discussed. Overall, our findings support ideas from Schumpeter (1934) and Arrow (1962) that startups play an important role in adapting the economy to new technology