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A Historical Examination of Creative Destruction, Turnover Rate, and New Technology Based Firms in the Context of the Financial Times US 500 List
Ryan, James M.
Ryan, James M.
Abstract
This paper will investigate the prevalence of modern day creative destruction in the context of the firms and sectors of the Financial Times 500 United States rankings from 1996-2015. The Financial Times 500 list, which ranks companies by market capitalization, will function as a new data source and a new framework for investigating creative destruction and growth in the US. Few, if any, previous studies have used the Financial Times dataset as a macroeconomic analytical tool. I also aim to discuss the following questions regarding rapid firm value changes: Do firms grow faster today than they have historically, and what traits are crucial for their successful growth? Do new technology based firms grow faster than non-technology based firms? I will present recent evidence of Joseph Schumpeter’s concept of creative destruction at work within several sectors of the US economy. The first two sections of this paper address the creative destruction and growth theories along with previous empirical works utilizing US corporate ranking indices. Part three discusses the methodology of the Financial Times lists and data collection/manipulation. The empirical segments of this paper begin with part four and progressively increase in specificity of creative destruction from general macroeconomic turbulence to individual firm growth. Part four examines the turnover rate of the Financial Times US 500 as a proxy variable for turbulence amongst the most valuable US companies. Part five delves into sector specific net changes in rankings and valuation on the FT US 500. Part six singles out the growth rates of new technology based firms and is followed by further discussion and conclusion.
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2016-05-01
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Economics