Introduction Different processes contribute to the dynamics of intra-industry growth and decline. Firm turnover transfers resources from one group to another. The emergence of new firms causes some firms to exit and others to decline.
Greenfield entry and closedown exit is the process that changes the firm population in the most obvious way. When a firm enters by building new plant or when it leaves by closing plant, the effect on jobs and productive capacity is immediate.
Resources are also transferred as a result of ownership-control changes. Control is shifted from one group of owners to another in a variety of ways. One firm may purchase all of the shares or assets of another and subsume the acquired operations into its own; or it may maintain them as entirely separate entities. Control can also be shifted when only a controlling interest is acquired. In this case, control of the firm has changed hands, although the firm has not been entirely acquired.
Changes in control are often, though not invariably, associated with a merging of the interests of two companies. Control can be shifted without such a merging of two firms' interests – for example, when different factions of shareholders, who do not represent other firms' interests, rearrange the majority coalition that controls the company. But this situation is not common in this database. Thus, for all intents and purposes, changes in control that are examined here are those accomplished by mergers and acquisitions of some type.
It is ironic that greenfield entry and closedown exit, whose short-run impact is readily apparent, have received little attention. Mergers, on the other hand, have been the focus of many studies.