Article

Regional Patterns and Determinants of Birth and Survival of New Firms in Western Germany

July 2007
Entrepreneurship and Regional Development 19(4):293-312

DOI:10.1080/08985620701275510

Authors:

Although there is a large body of literature on the determinants of regional variation in new firm formation little is known on the spatial differences in new firm survival. The often-stated positive relationship between entry and exit suggests a negative correlation between entry and survival. On the other hand it seems convincing that regions with high birth rates should also have high survival rates, because a favourable environment for the founding of new firms should also stimulate the development of these firms. However, our analysis reveals an overall negative relationship. In detail the spatial pattern of a combination of both rates is complex, and all types of possible relationships exist. We analyse the factors that influence regional birth and survival rates of new firms for 74 West German regions over a 10-year period. It is shown that in the service sector most variables literally work in opposite directions in the birth and survival rates models. The spatial structures which promote the formation of new service firms are detrimental to the survival of these firms. This does not hold for the manufacturing sector where we find evidence for the ‘supportive environment thesis’. Obviously both industries have different requirements for their ‘seed bed’ but not for their survival.

Determinants of new firm survival across Russian manufacturing industry

Article

Jun 2024

Alexey Zazdravnykh

FINANCIAL FACTORSOF FORMING NEW ENTERPRISES: MODEL OF RUSSIAN REGIONS

Article

May 2024

A.V. ZAZDRAVNYKH

In the current geopolitical and economic situation, the relevance of developing domestic segment of entrepreneurs is increasing due to the accelerated formation of new enterprises capable of ensuring economic stability in the Russian regions. One of the most important factors determining the prospects for such formation is the financial conditions for starting an activity. The analysis of this problem is still poorly presented in domestic scientific literature, there are no systematic studies of it. This article eliminates this gap and aims to study the impact of bank lending volume, together with attracted funds of the population as a source of financing new entrepreneurship, on the dynamics of new entries. For the period of 2012–2021, the author reveals multidirectional trends of such dynamics in the segments of commercial companies and individual entrepreneurs in the Russian regions. A significant interregional differentiation has been established both in terms of the parameters forming new enterprises and regional financial conditions. The development of negative trends in the field of SME lending is stated. A model is proposed that substantiates a significant influence of financial factors on the dynamics of business entries in the segments of commercial companies and sole proprietors. This dynamics is also influenced by a number of other economic conditions – the state of regional labor markets, the population and its real incomes, the number of economic entities, etc. Against the background of negative expectations in the economy and a decline in business activity, a sharp deterioration in the financial security of new enterprises is viewed as possible. Regional policy should stimulate the development of entrepreneurship through simplifying the access of entrepreneurs to sources of financing, reducing the cost of borrowed funds. Anti-crisis government policies of 2022 also have a certain potential to solve the problems of financing new enterprises.

Understanding the Impact of Intangible Capital on Entrepreneurship at the Regional Level

Article

Full-text available

Oct 2023

Mercedes Gumbau-Albert

This paper uses new data for the Spanish case on investment in intangible assets broken down by regions and by type of assets to calibrate the importance of intangible capital for entrepreneurship as a main concern but also to understand which region-specific factors drive entrepreneurship. These new data allow to fill a gap in the literature and contribute to the field of technological entrepreneurial intent by linking entrepreneurship to digitalization and intangible assets of the economy. To this end, the paper presents an index obtained by Principal Component Analysis to measure the regional endowment of intangible capital and analyzes whether the determinants of regional entrepreneurship are driven differently in large and small firms. Using different econometric approaches, the paper finds that for small firms, entrepreneurship is directly related to a prosperity-pull context and the expectation of economic gain. For large firms, the rate of entrepreneurship is also explained by the resources available to firms, such as endowment of intangible capital, stage of technological development, and human capital, as well as the demographic composition of each region.

The drivers of the circular economy: Theory vs practice

Article

Full-text available

Jun 2023

The circular economy has become a model that is able to respond, with rather high economic efficiency, to the challenges that a society faces. The principles of a circular economy do not expand rapidly, though. Our study deals with the key drivers for closed-loop cycle production, including innovation, investment, digitalization, new business ecosystems, and institutional framework. To quantify the effects of circular economy, we used three indicators: production and consumption waste; GRP energy intensity; GRP water intensity. Given these indicators, the regions of Russia were clustered. Further, the hypothesis was tested that the innovative activity of organizations, investment in fixed assets, and digital technologies used by business, are among the key drivers towards a circular economy. Since this research is an exploratory one, we apply the method of General Regression Models (GRM). Our findings did not confirm that the identified factors serve as the drivers for transitioning to a circular economy. We attribute the discrepancy between the results of literature review and empirical findings to the lack of reliable data, difficulties in measurement, the latent nature of related drivers, as well as the relatively short period of transition towards a more circular economy.

Market entry in Russian regions: The impact of unemployment

Article

Jun 2023

Alexey Zazdravnykh

Urbanisation, concentration and diversification as determinants of firm births and deaths

Article

Full-text available

May 2023

This paper examines the impact of urbanisation, concentration and diversification on firm births and firm deaths across European regions while uniquely accounting for the role of firm interrelationships, regional factors and national fixed effects. A 3SLS model on firm births and deaths is estimated across 196 regions and 16 European countries from 2008 to 2017. We find that density positively influences firm births and negatively influences firm deaths. Related variety positively impacts firm deaths and negatively affects firm births. Significant national variations are also observed. Multiplier effects are identified within and across regions as firm births positively influence future firm births and negatively influence future firm deaths.

Co-Worker complementarities and new firm survival

Article

Full-text available

Aug 2022

In the present paper, we analyse the association between the skill composition of young firms and the firms’ subsequent survival. This is made possible by means of a matched employer-employee dataset from Statistics Sweden on a cohort of firms that started between 2001 and 2003. Our findings show that, compared to firms that exit, the firms that survive at least until 2012 have teams with higher complementarity at the start, and successively increase their skill complementarity over time. Subsequent discrete time hazard models, controlling for several well-known determinants of firm longevity, show that complementarity plays a crucial role for firm survival. Higher skill synergy within firms, as compared to high degrees of substitutability, is associated with a lower conditional probability of failing. The role of skill complementarity is stable across different specifications and outweighs many other determinants of firm survival, such as starting size and experience of the founder.

Embracing Crisis: What Change in Business Resilience and Growth Strategy After Pandemic

Preprint

Full-text available

Feb 2022

This paper aims to elaborate changing in business resilience and growth as basic reaction of crisis. By making a proposed model for business sustainability after crisis, this study detailed resilience and growth to stages to explain both processes. The model can also assist entrepreneurs to deal with crisis in term of what to do and what condition will they face. This qualitative study used purposive sampling and 13 case studies were included to build line-in-line coding and shape a proposed model by conducting semi-structured interview and FGD. Basically, this study reveals resilience and growth steps to help entrepreneurs to avoid misleading strategy. To complete the findings, we found that digital imperatives can faster both processes to reach sustainability. This paper draws on organisational resilience theory by using stages and deliver a bridge to achieve business sustainability and provides more practical steps to deal with crisis and gain business sustainability.

Entrepreneurship and Regional Economic Development Master Thesis 2015

Thesis

Full-text available

Sep 2015

İsmail Demirdağ

After the 1970s crisis, economies of scale lost its importance and large firms faced with serious economic difficulties. Globalization and advancements in information and communication technology (ICT), which considerably reduced the transaction cost of information and capital, led the competitive advantage to move from large establishments to smaller and more innovative firms. Since the mid-1970s, share of small and innovative firms has begun to increase in almost all industries and in the economy as a whole. Especially, with the seminal work of Birch (1987) pointed out that small and medium sized enterprises are important vehicles for creating new jobs, the interest on SMEs and entrepreneurship has begun to gradually raise. Meanwhile, increasing evidence on the positive contribution of entrepreneurship on regional economic development and growth has led researchers and policy makers to pay a special attention to the links between entrepreneurship and economic development process. In that sense, in recent decades, entrepreneurship has been new phenomena in regional science and economic development theories as well as in various different policy documents. The mainstream of the entrepreneurship literature point out that entrepreneurship play a key role in the generation of new jobs, creation of employment, innovations, and dissemination of new knowledge that ultimately lead to economic development and growth. The main objective of this thesis is to investigate the relationship between entrepreneurship and regional economic development and growth in the context of NUTS II regions of Turkey for the periods of 1990, 2000, and 2011. Based on this objective and the recent regional economic development models, the study firstly examines the contribution of entrepreneurship on regional economic development and growth. Secondly, the thesis investigates the reasons behind the diverse impacts of entrepreneurship on regional economic development. In that sense, the study examines the relationship between the level of regional entrepreneurial activity, represented as firm birth rates and self-employment rate, and the stages of regional economic development. Lastly, the thesis investigates the effects of the certain regional characteristics on regional entrepreneurial activity. For the empirical analysis, two analyses are used: multiple regression analysis and one-way ANOVA. The results of the study on the contribution of entrepreneurship on economic development and growth indicate that firm births and self-employment are positively related to the economic development and growth of NUTS II regions of Turkey. However, it is observed that firm birth rate has more pronounced impact on economic development and growth than self-employment rate. In addition, firm death is found to negatively associate with economic development and growth. Furthermore, the empirical findings on the relationship between the level of entrepreneurship and the stages of economic development demonstrate that there is a U-shaped relationship between firm birth rate and regional economic development level. However, the findings also show that there is an inverse U-shaped relationship between self-employment rate and the level of regional economic development. The thesis also contributes to the knowledge about the impacts of regional economic, demographic, institutional, and cultural factors on the regional entrepreneurial activity. The results support the arguments that regional characteristics have substantial effects on regional entrepreneurial activity.

Culture, Entrepreneurship and Economic Development. An Empirical Approach

Article

Full-text available

Sep 2019

This paper investigates the influence of culture on the level of entrepreneurship and the possible moderating role of the level of economic development upon this relationship. For our purpose, an initial sample of 125 countries (43 high-income and 82 low-income countries) is used, over the 2006–2016 time period. At first, we use a panel analysis of the reduced sample which is furthermore completed by a hierarchical regression analysis. Our main results provide clear evidence that culture represents an important predictor of the level of entrepreneurship. Among the dimensions of culture, uncertainty avoidance and indulgence versus restraint are found to have the highest influence upon the level of entrepreneurship. Moreover, our empirical findings reveal that the relationship between culture and entrepreneurship is moderated differently by economic development. Thus, high-income countries face a three times higher rate of entrepreneurship than low-income countries. Our findings suggest that culture is more valued in high-income countries offering a higher social support in entrepreneurial activities than in low-income countries. We also find that some cultural patterns such as individualism, femininity, low uncertainly avoidance, short-term orientation or restrain may stimulate entrepreneurship in high-income countries but may be very dysfunctional in low-income countries. Our findings are also useful for policy makers to acknowledge the relationship between the cultural values of a country and its entrepreneurial activities, in order to adjust their policy measures for a better stimulation of the business environment.

Regional Variation in Courage and Entrepreneurship: The Contrasting Role of Courage for the Emergence and Survival of Start-Ups in the US

Article

Full-text available

Jan 2019
J PERS

Objective: There is growing evidence that certain regional personality differences function as important drivers and shapers of regional economic development (e.g., via effects on entrepreneurship and innovation activity). The present investigation examines the impact that regional variation in the trait courage has on entrepreneurship. Method: Using data from a new large-scale internet-based study, we provide the first psychological map of courage across the US (N = 390,341 respondents from 283 US metropolitan regions). We apply regression analyses to relate regional courage scores to archival data on the emergence and survival of start-ups across American regions. Results: Our mapping approach reveals comparatively high levels of regional courage in the Eastern and Southern regions of the US. Regional courage scores were positively related to entrepreneurial activity, but negatively related to start-up survival - even when controlling for a wide variety of standard economic predictors. Several robustness checks confirmed these results. Finally, regional differences in economic risk-taking accounted for significant proportions of variance in the link between regional courage and entrepreneurship. Conclusion: Our results suggest that regional courage may contribute to a pattern of enterprising but also risky economic behavior, which can lead to high levels of entrepreneurial activity but also shorter start-up survival.

Regional and individual determinants of entrepreneurial growth aspirations

Article

Full-text available

May 2018

This paper investigates the unique and joint effects of population density and early-stage entrepreneurs’ human capital endowments (higher education, entrepreneurship training and owner-manager experience) on entrepreneurial growth aspirations. We test a number of hypotheses using data that combine individual and province level information in Spain over the period 2008-2010. We argue that growth aspirations of early-stage entrepreneurs are higher in more densely populated regions, but that such environmental influence is stronger for individuals with greater human capital. This is because they will be more aware that denser regions offer more favorable conditions for new businesses and also requires greater firm growth to compensate for a higher risk of business failure. Consistent with our view, we find that the growth aspirations of entrepreneurs with higher education are higher in densely populated provinces.

The Emergence of Innovative Entrepreneurship: Beyond the Intention — Investigating the Participants in an Academic SUC

Article

Full-text available

Apr 2017
Int J Innovat Tech Manag

To stem the increasing competitiveness of many newcomer countries, managerial and business literature underlines the necessity to favor entrepreneurship in high tech and innovative sectors. From this perspective, an increasingly important role in the generation of innovative entrepreneurship is carried out by the universities, which are natural incubators of borderline and cutting-edge technologies. With this in mind, the present study explores the entrepreneurial intention among a population of academics participating at a start-up competition (SUC) that view entrepreneurship as an opportunity-driven choice to give value to their researches. Two variables affecting the entrepreneurial intention among these participants are specifically examined: the perception of external environment and the perception of subjective competencies. To test the intention, the paper refers to the widespread Theory of Planned Behaviour, currently recognised as one of the most influential theoretical model. The results of the present research show that the considered variables have a strong effect on intent through entrepreneurial attitudes and personal behaviour control. Consistently with other leading articles, the findings confirm the importance of the external environment and knowledge in favouring or discouraging the entrepreneurial choice even among academics participating at the SUC.

The role of agglomerations in the emerging performance and the early development of new establishments: evidence from Germany

Article

Full-text available

May 2023
J EVOL ECON

Javier Changoluisa

This paper analyzes the emerging performance and early development of new establishments considering the role of agglomerations. It creates distinctions between the most commonly observed types of new businesses, namely startups, spinoffs, and new establishments that result from a change in proprietorship. The empirical analysis reveals that new establishments with higher productivity emerge in regions with higher population density, regardless of the foundation type. While at the end of the time period analyzed, new establishments in more densely populated regions still show higher productivity levels than those in less densely populated regions, an agglomeration’s role depends on the foundation type. Indeed, while spinoffs in more densely populated regions tend to reflect the higher productivity levels shown in the first time period, the productivity premium of startups in agglomerations diminishes over time. This analysis emphasizes the relevance of location for the setup and early development of new ventures and, more importantly, the varying role of agglomerations conditioned by the characteristics of new businesses.

Impact of Consumer Awareness and Behavior on Business Exits in the Hospitality, Tourism, Entertainment, and Culture Industries under the COVID-19 Pandemic

Article

Full-text available

Nov 2022

Empirical studies on small business survival and exits focus on endogenous firms and top manager characteristics, whereas few studies consider exogenous demand shocks and local consumer awareness and behavior, which are especially important for local hospitality industries. Therefore, this study addresses this research gap by targeting the COVID-19 pandemic and anti-contagion policies as a local demand shock for service industries. We empirically investigate the causal effects of changing local consumer awareness and behavior under COVID-19 on business exits at the prefecture-industry level. Based on a panel fixed-effect estimation using a longitudinal dataset of 32 service industries in 47 prefectures over 10 months in Japan, we demonstrate that an increase in consumers’ risk aversion and sympathy for self-restraint from going out, and a decrease in going out with family members, significantly increase the exit ratio in specific service industries in the same prefecture. Moreover, we find that these effects vary by consumer type depending on factors such as gender, age, income level, and household structure.

Survivors: A tentative mapping of centenarian firms around the world

Article

Jan 2022

Despite the relevance that the business longevity topic has taken in managerial studies over the last years, there is a lack of cross-country and cross-industry studies on business survival. Namely, there have not been concrete attempts to map long-lived companies still in operation on a global scale. In this direction, this paper aims to census firms that survived over at least 100 years worldwide, whatever their size or branch of industry. The research allowed the authors to discover the countries and the industries in which centenarian firms are most concentrated and to investigate their characteristics, such as their size or the year of their foundation. This research is the first step of a more complex and ambitious project directed to shed light on key factors of business longevity and explain the survival capacity of long-lived firms in response to rapid change in markets and society

Colocation of Entrepreneurs and New Firm Survival: Role of New Firm Founder's Experiential Relatedness to Local Entrepreneurs

Article

Full-text available

Aug 2022
ENTREP THEORY PRACT

Geographical clustering (colocation) influences new firm survival; however, not all new firms within a cluster are impacted equally. In this paper, we elaborate on how the colocation of local entrepreneurs may have different influences on new firm founder's learning depending on his/her fit, in terms of his/her experiential relatedness, to that of local entrepreneurs. We then associate such founder's learning with the higher survival of his/her new firm. We test our hypotheses using a matched founder-firm dataset that covers the population of the knowledge-intensive business service sector in Sweden during 2001-2012. We find support for our propositions concerning the relatedness of new firm founders' experiential background to that of local entrepreneurs. Specifically, we find that high level of relatedness to local entrepreneurs enhances the survival rate of a new firm started by a novice founder, whereas intermediate level of relatedness suits better for a new firm started by an experienced founder.

Green Entrepreneurship: Should Legislators Invest in the Formation of Sustainable Hubs?

Article

Full-text available

Jun 2022

This study explores which local factors affect the creation of sustainable or green startups in a geographical area. The analysis aims to help regional legislators get a more nuanced view of regional economic and sustainable policymaking and to promote a transition toward a greener economy. Building on knowledge spillover theory, results from 4301 companies across Europe show that the driving factors for the emergence of green startups go beyond funding opportunities. Knowledge exchange and industry networks are equally if not more important in attracting green entrepreneurs. Results also reveal that green startups are more likely than non-green startups to change their location. Of those who change their location, green founders prefer large cities and have a negative inclination to establish their companies in small cities. Companies in the sustainable information technology (IT) industry are less likely to change their location, whereas green manufacturing companies are more likely to change. In summation, results indicate that the location choices and resulting evolution of clusters for green startups are based on a number of variables, including local knowledge stock and spillovers, company density, availability of educated talent, and industry affiliations.

Spatiotemporal Evolution of Entrepreneurial Activities and Its Driving Factors in the Yangtze River Delta, China

Article

Full-text available

Jan 2022

The purpose of this paper is to reveal the spatiotemporal evolution of entrepreneurial activities in the local municipalities of the Yangtze River Delta at long timescales from a geographic perspective and to reveal the underlying factors driving such evolution. The ontology of entrepreneurial activities—startups—was chosen as the object of this study, and the developmental characteristics of entrepreneurial activities in the region since 2001 were explored in two dimensions: time series changes and spatial evolution. The driving mechanism was further explored using the geographical detector. The results showed that: (1) Intensive entrepreneurial activities have been underway in the Yangtze River Delta since the beginning of the 21st century. The entrepreneurial process has undergone a stable period of slow growth (2001–2013), as well as one of rapid growth (2014–2018). The number of startups increased during this period, from 241,700 in 2001 to 1,959,600 in 2018. (2) The density of entrepreneurial activities in the Yangtze River Delta has increased since 2001. The agglomerative patterns showed developmental trends of both concentration and diffusion, forming a dotted pattern of agglomeration centered on the provincial capitals of Nanjing, Hangzhou, and Hefei and a belt of agglomeration centered on Shanghai-Suzhou-Wuxi-Changzhou. (3) High-value agglomeration of entrepreneurial activities was found to be relatively stable, and low-value agglomeration steadily weakened. Shanghai, Suzhou, and Nantong have long been part of H-H clusters, while Chizhou, Wuhu, Bozhou, Huaibei, and Huainan in Anhui have become areas of depressed entrepreneurial activities. (4) Financial strength, degree of informationization, economic foundation, innovative vitality, openness, and market demand are the main factors affecting entrepreneurial activities in the Yangtze River Delta. Entrepreneurial activities have significant spatial correlation, and areas with high entrepreneurial vitality radiate their effect to the entrepreneurial activities in the surrounding areas. The factors affecting entrepreneurial activities have multiple characteristics, and policy makers should promote entrepreneurial activities with a comprehensive vision and multi-channel efforts. The findings of this study add to the understanding of the spatial proximity characteristics of long time series of entrepreneurial activities at the municipal scale in developing countries and reveal the characteristics of the multi-factor combinations affecting them.

Entrepreneurship Recovery in Romania after the Great Recession. A Dynamic Spatial Panel Approach

Article

Full-text available

Sep 2021

Entrepreneurship plays a key role in transforming the economy and society by stimulating economic development, testing innovative ideas, creating new jobs, and by enriching the quality of life and human existence. Entrepreneurship dynamics depend upon a series of local and national economic factors, but are also affected by the international environment, such as the current COVID-19 pandemic. Statistical data show that new businesses are created at a slower rate during an economic crisis, when the economic climate is harsh, and business opportunities are scarce. Nevertheless, there are local differences in the reaction to crises, and new business formation tends to decline with variable intensity from one region to another, even in the same country. The crises are acting as a trigger for some opportunity-driven entrepreneurs, and resilient regions can thrive even in times of crisis or recover faster after a depression. To capture spatial interactions, as well as spatial short- and long-term effects, the method employed in our analysis relies on the estimation of dynamic spatial panel models. We tested the potential impact of a large variety of social and economic indicators on the creation of new firms and found that the most consequential factors of influence are the economic crisis (expressed through a binary variable), GDP per capita, FDI per capita, inflation, unemployment, and education. Our results convey a powerful policy message for both national and regional decision makers. We believe that, while putting entrepreneurial initiative to the test, the current COVID-19 crisis might act as a catalyst that leads to innovation and reshapes the economy and society.

The lingering living dead phenomenon: Distorting venture survival studies?

Article

May 2021

Despite the increased attention dedicated to research on the antecedents and determinants of new venture survival in entrepreneurship, defining and capturing survival as an outcome represents a challenge in quantitative studies. This paper creates awareness for ventures being inactive while still classified as surviving based on the data available. We describe this as the 'living dead' phenomenon, arguing that it yields potential effects on the empirical results of survival studies. Based on a systematic literature review, we find that this issue of inactivity has not been sufficiently considered in previous new venture survival studies. Based on a sample of 501 New Technology-Based Firms, we empirically illustrate that the classification of living dead ventures into either survived or failed can impact the factors determining survival. On this basis, we contribute to an understanding of the issue by defining the 'living dead' phenomenon and by proposing recommendations for research practice to solve this issue in survival studies, taking the data source, the period under investigation and the sample size into account.

Determinants of manufacturing micro firms’ productivity in Ecuador. Do industry and canton where they operate matter?

Article

Feb 2021

Carolina Guevara

This study aims to identify the productivity determinants of manufacturing micro firms, emphasizing on regional and industrial factors. A cross‐classified multilevel model is employed using the Economic Census of 2010 from Ecuador. Results evidence that the heterogeneity of the total factor productivity of micro formal firms of the manufacturing sector is mainly due to differences across firms in 90.1%. The remaining variation of the TFP is explained to a larger extent by the industrial context (5.8%) than the geographical context (4.1%). Among firm characteristics, information and communication technologies, credit and training are important drivers of productivity. Despite of this, very few micro firms use internet, have credit access or engage in training in Ecuador. Moreover, micro firms benefit from agglomeration economies derived from specialization, diversity and density that they themselves generate.

Dynamické podniky služieb -gazely

Book

Full-text available

Jan 2015

Monografia sa zaoberá súčasným fenoménom inovatívneho ekonomického prostredia – podnikmi „gazelami“. Sú to mladé dynamické podniky, ktoré dosahujú nadpriemerný ekonomický rast. Predstavujú tak akcelerátor lokálnej ekonomiky. Dielo sa koncentruje na pôsobenie gaziel v prostredí produkcie služieb, pričom skúma účinnosť vybraných determinantov ich dynamizácie. Výsledky štúdie sa opierajú predovšetkým o dáta z primárneho výskumu, ktorý bol realizovaný v podmienkach slovenskej ekonomiky a sústreďuje pozornosť na rozdiely v pôsobení gaziel vzhľadom na poznatkovú intenzitu produkcie. Objektmi skúmania sú preto obchodno-podnikateľské služby (predstavitelia poznatkovo-intenzívnej produkcie) a podniky cestovného ruchu (predstavitelia produkcie služieb s nízkou poznatkovou intenzitou). Konštrukcia slovenskej ekonomiky vytvára podmienky na vznik gaziel v službách, ich ďalšia existencia však závisí od podmienok, ktoré podporia ich ďalšiu inovatívnosť v širokom rozsahu vrátane rozvoja spolupráce.

Regional Path Breaking: The Role of Industry Switching, Industry Diversity, and New Knowledge in New Venture Exit

Article

Oct 2020
ENTREP THEORY PRACT

Regions with spatial concentrations of businesses create conditions that spawn new firms, but also undercut new venture survival. Localized competition puts pressure on new firms to exit. Adding to this pressure to exit is regional path dependence, which limits the ability of firms to respond strategically to hostile local conditions. We investigate the extent to which the pressure to exit created by localized competition is moderated by three “path breaking” factors—new knowledge, industry diversity, and industry switching. We test and find broad support for our hypotheses using data from 355 metropolitan statistical areas in the United States spanning 2002 to 2010.

Les missions des associations constitutives des écosystèmes entrepreneuriaux

Article

Full-text available

Aug 2020

Gaël Gueguen

La question des écosystèmes entrepreneuriaux revêt une place de plus en plus grande dans la littérature en entrepreneuriat. Ces travaux identifient les acteurs constitutifs et mettent à jour leurs missions. Parmi ces acteurs, des associations (non profit/sans but lucratif) en lien avec l’entrepreneuriat sont mentionnées comme acteurs des écosystèmes entrepreneuriaux. Toutefois, il n’existe pas de recherches qui caractérisent leurs missions et essayent de comprendre comment la spécificité de l’écosystème entrepreneurial conditionne leur apparition. Nous cherchons donc à identifier les missions poursuivies par les associations qui s’intéressent à l’entrepreneuriat et la création d’entreprise. Nous cherchons également à comprendre leur contexte d’apparition. Nos résultats concernent les associations, mais peuvent être mobilisés pour comprendre l’émergence d’acteurs au sein d’un écosystème entrepreneurial. S’il existe une diversité des missions, nous émettons la thèse que les caractéristiques du territoire tout comme la dimension temporelle conditionnent les missions. Sur la base de la population des associations loi 1901 françaises, qui ont déclaré dans leur objet les termes « création d’entreprise » ou « entrepreneuriat » (sur la période 1997-2016), et grâce à une démarche méthodologique reposant sur une analyse lexicale automatisée, nous avons pu identifier cinq classes de missions : échange entrepreneurial, aide à la gestion, accompagnement du projet, préoccupations sociales, entrepreneuriat étudiant. La taille, le capital humain ou le chômage qui caractérisent un territoire ont un impact sur le type de mission. Les dernières périodes indiquent un accroissement des associations, dont la mission porte sur l’échange entrepreneurial et l’entrepreneuriat étudiant.

Explaining regional differences in firm formation rates: how far are government policies important for entrepreneurship?

Article

Full-text available

Feb 2021

Purpose The growing number of studies shows that government policies and measures are critical in determining entrepreneurship levels of regions. Any changes in the government policies and measures are, therefore, expected to bring significant changes at the entrepreneurship levels. This paper aims to explore the importance of the government policies and measures, along with supply and demand-side determinants in regional entrepreneurship in Turkey and explains the convergence of entrepreneurship among two distinct periods corresponding to changes in the government policies and measures concerning entrepreneurship. Design/methodology/approach Looking at a study on 81 NUTS-III regions of Turkey, this paper focusses on regional determinants important in the separation of regions with different entrepreneurship trajectories (based on the initial level and the rate of increase in entrepreneurship). Using discriminant function analysis, this paper tries to show how far government policies are important in distinguishing regions with different entrepreneurship levels. Findings The outcomes of the analysis show that certain policies and measures recently introduced have become instrumental in triggering higher entrepreneurship levels in regions with already higher levels of entrepreneurship, but not in regions with initially lower levels of entrepreneurship. Originality/value This study contributes to the existing regional entrepreneurship literature through introducing the research findings on the importance of government policies and institutions on regional entrepreneurship, besides the role of regional capacities and assets.

Understanding the stakeholders’ role in a business failure situation: An empirical boosting approach

Article

Full-text available

Jan 2020

We investigate the stakeholders’ role in a business failure situation. In particular, we analyse which primary stakeholders have an impact on the business failure, and how. This work also proposes an order of prioritization of primary stakeholders with the purpose of showing business managers useful information which guides their decisions to reduce the emergence of conflicts of interest that may affect the sustainability of firms long-term in financial crisis situations. We have taken a sample of 2,352 Spanish SMEs, 1,176 non-failed firms matched with 1,176 failed firms, from which economic and financial data are been extracted from their financial reporting. In this vein, logistic regression and boosting methodologies have been applied. The findings indicate that the primary stakeholders have a statistically significant effect on the likelihood of business failure. Furthermore, the results present a ranking of primary stakeholders related to their impact on the likelihood of business failure in contexts of financial crisis. Thus, our study provides a useful guide to managers seeking to understand the primary stakeholders’ roles and their relative priority in business failure.

Stakeholders and Long-Term Sustainability of SMEs. Who Really Matters in Crisis Contexts, and When

Article

Full-text available

Nov 2019

The impact of crises on the long-term sustainability of small and medium-sized enterprises (SMEs) has been attracting growing interest in the literature and from governments due to the significance of such companies with respect to economic growth, innovation, and employment. Although failure prediction models have been proposed based on accounting and other qualitative information, little is known regarding the influence of stakeholders on the failure process of SMEs. From the perspective of long-term sustainability, this article analyzes the role of the financial influence of stakeholders on the likelihood of business failure. An empirical study was carried out on a sample of 2352 Spanish SMEs, examining the differences between failed and non-failed SMEs and using a classification tree methodology to investigate the role played by each type of stakeholder in overcoming crisis events. The study provides empirical evidence regarding the relative importance of stakeholders to SMEs under conditions of financial distress, and proposes their categorization on the basis of their control over firms’ financial resources. Specifically, the analysis reveals that the capacity of the firm to generate sustainable wealth over time and to overcome critical situations is dependent on the most critical stakeholders. Workers, customers, and suppliers are the most important in ensuring the long-term sustainability of SMEs during the first stages of a crisis. Following the initial operational problems, other creditors (financial institutions) become relevant. In this sense, the results of this study encourage firms and governments to develop cooperation strategies with stakeholders (co-responsibility) in line with the proposed conceptual models of business sustainability.

ECOSSISTEMAS DE INOVAÇÃO: PROPOSTA DE UM MODELO DE GOVERNANÇA PARA O EXÉRCITO BRASILEIRO

Article

Full-text available

May 2019

Neste artigo propõe-se um modelo estrutural de governança para o Exército Brasileiro, sob a perspectiva da Tríplice Hélice, com a premissa de que os parques tecnológicos existentes nas sedes das regiões militares, inseridos nos ecossistemas de inovação, são habitats capazes de comporem núcleos de inovação tecnológica do Exército Brasileiro. O problema decorre da necessidade da instituição de implantar uma estrutura de governança que promova o desenvolvimento de inovações, de forma descentralizada, em proveito da presença do Exército em todas as regiões do país. Para tanto, metodologicamente, optou-se por se realizar uma pesquisa com abordagem exploratória, qualitativa e descritiva, e o estudo do caso do Exército Brasileiro. Foi possível concluir que a implantação de núcleos de governança de inovação do Exército Brasileiro, inseridos em Parques Tecnológicos, possibilitará a interação da Tríplice-Hélice (governo-indústria-academia), de forma colaborativa, a fim de reforçar a expressão científico-tecnológica dos atores envolvidos e impulsionar o desenvolvimento nas dimensões social e econômica conforme as potencialidades regionais.

Sectoral and regional determinants of firm dynamics in developing countries: Evidence for low-, medium- and high-tech manufacturing in Argentina

Article

Full-text available

Oct 2018
CEPAL REV

Carla Daniela Calá

Dynamické podniky služieb-gazely

Book

Full-text available

Oct 2018

Viera Kubickova

Factores sectoriales y regionales que determinan la dinámica empresarial en los países en desarrollo: Evidencia sobre las actividades manufactureras de tecnología baja, media y alta en la Argentina

Article

Full-text available

Apr 2018
CEPAL REV

Carla Daniela Calá

Anne Põder DO2017

Thesis

Full-text available

May 2018

Anne Põder

Spatial Drivers of firm Birth in Iran

Conference Paper

Jul 2018

Entrepreneurial decisions on location choice are determined by a wide range of regional factors. Given the importance of regional characteristics, this paper investigates the determinants of new firm birth in the 30 Iranian regions, considering four different sizes: Micro (1-10 employees), Small (11-49 employees), medium (50-99 employees) and Large (100 and more employees) over 2000-2013. The main innovation of the paper is to analyze regional differences in the decision to start a new firm on a size basis. Using a new and unique database, we estimate panel non-spatial random effect and panel spatial autoregressive models. We find that regional variations explain firm dynamics, but the kind of the impacts is not homogeneous across firms with different size. We also find that all types of the firms are influenced by the negative effect of economic sanctions during the sample period. Furthermore, direct government intervention seems to be a key driver of new firms’ birth in the Iranian economy.

New firm survival: the interdependence between regional externalities and innovativeness

Article

Full-text available

Jun 2019
SMALL BUS ECON

Many studies have shown that regional externalities play a crucial role for the survival prospects of newly founded companies. However, recent research provides evidence that not all businesses are affected by these externalities in the same way. Relying on new and representative panel survey data containing information about 6776 newly founded firms from almost all economic sectors in Germany, this paper suggests that the effects of regional externalities on survival are contingent upon the start-up’s innovative behavior. First, we show that introducing market novelties is not necessarily beneficial for newly founded firms and might even endanger their survival. Second, we find that being located in spatial proximity to similar firms is important for start-ups in non-high-tech environments and has a positive influence on survival only for less innovative companies. In contrast, high-tech start-ups are more likely to be affected by a diverse economic structure. We thus suggest that the recombination of knowledge from diverse sources can lead to overly complex innovation projects with detrimental effects on the start-up’s survival prospects.

Migration, ethnic concentration and firm entry: evidence from Italian regions

Article

Feb 2018

There is a growing body of literature highlighting the positive contributions of migration and diasporas to economic growth, innovation and productivity. One of the channels facilitating these effects is entrepreneurship. This paper provides novel empirical evidence concerning the link between migration and firm entry across Italian regions during the period 2004–14, and it explores the role of ethnic concentration in this context. The results show that the stock of foreign population is positively correlated with firm entry. Furthermore, this relationship varies across business sectors and firms’ legal status, and it benefits from the existence of local networks within diaspora communities in the host region.

Põder, Anne (2017). The socio-economic determinants of entrepreneurship in Estonian rural municipalities. Doctoral thesis. Supervisor prof. Rando Värnik. Estonian University of Life Sciences, Institute of Economy and Social Sciences; Tartu

Thesis

Full-text available

Jan 2018

Anne Põder

The social status of entrepreneurs: Contrasting German perspectives

Article

Full-text available

May 2017

The German economy is praised for its stability, creating a seemingly strong economic environment in which entrepreneurship should thrive. Our research problem is that, in spite of the strong economy, new venture creation rates are substantially lower than in other comparable economies. We employ a social constructivist approach and find that the way entrepreneurs are valued offers an explanation for this apparent inconsistency. We found strong evidence that, far from the heroic figure often attributed to entrepreneurs, German entrepreneurial identity is characterized as reckless and not sufficiently serious. Our findings have implications for understanding entrepreneurship as a career choice in Germany. More broadly, they show nuanced national differences in meaning and applications of enterprise cultures.

The Dynamics of European Startup Hubs - A Comparative Perspective of Berlin, London and Paris

Thesis

Full-text available

Aug 2016

Luzia Marie George

Constantly growing attention goes to Europe’s mega-city regions which are endowed with constantly growing startup scenes. Researchers are arguing that certain institutional and natural pre/-conditions favor the development of a positive labor market dynamic. Deeper understandings of possible success factors which affect a prosperous entrepreneurial environment have been determined. By analyzing the attributes of the three leading European startup hubs - in detail London, Berlin and Paris - possible conclusions have been derived. Empirical findings confirm the theoretical claims that a greater access to early-stage venture capital investment, an encouraging national culture and a higher appearance of the creative class drives a higher chance towards the development of a fruitful startup hub.

Complete Land Property Rights and Rural Entrepreneurship: Evidence from China’s Rural Construction Land Reform

Article

Jan 2024

I will survive…but at what (opportunity) cost?: A spatial analysis of business survival and Jacobian externalities

Article

Jan 2023

Using insights gained from Jacobian externalities, we consider how a more diverse economic industrial base relates to business survival rates. While a low survival rate is often perceived negatively among policy‐makers, evidence suggests that business exit is part of a dynamic and robust economy. The high opportunity cost of continuing with a struggling business in a more diversified economy may ultimately sway entrepreneurs with less competitive ventures to exit leading to lower survival rates. We model average 5‐year survival rates at the county level annually from 1990 to 2012 employing a spatial panel Durbin specification. The data support the central hypothesis that more diversified economies increase the opportunity costs of operating an underperforming new business, thereby lowering survival rates.

Local Context and Post‐Crisis Social Venture Creation

Article

Nov 2022

Research summary We investigate the effects of local market and government failure on the creation of social ventures in the context of post‐crisis recovery during the period following the dot‐com crisis and ending before the housing bubble burst across all Ohio counties. Drawing on social embeddedness theory, we posit that social venture creation rates vary across local contexts and are higher in communities characterized by market and government failures. Longitudinal contextual data from 88 Ohio counties indicates that situations characterized by failures of both types are especially conducive to the creation of local social enterprises. We address the shortage of longitudinal quantitative studies focused on the emergence of social entrepreneurship and identify conditions where the relationship between local context and social venture creation is important. Managerial summary The purpose of this article is to examine how local context affects the rate of social venture creation in the United States. We study these rates in every county in Ohio in the aftermath of a crisis and find that local government responses and local market conditions singly and in combination lead to increased rates of local social venture creation. Fewer social ventures emerge when transfer (welfare) payments are high. However, rates rise in response to high unemployment, even when welfare payments are high, and are greater when welfare payments are low. This means the extent and type of local market and government failures influence the rate of local social venture creation. Findings advance the study of domestic social entrepreneurship in the aftermath of crises.

Emprendimiento en ciudades intermedias en Chile: Sus vínculos con el empleo y la sustentabilidad urbana

Article

Full-text available

May 2021

Entrepreneurship has been understood as an important driver of new employment, and of economic well-being, and therefore many public policy programs have focused on it. Drawing on conceptual proposals that underpin this supposed relationship, it is argued here that the central point for an assessment from a sustainability perspective lies in the employment generated. The paper analyzes quantitatively the recent development of entrepreneurship in ten medium-sized cities in Chile and the associated employment. It becomes evident that, although entrepreneurship has a similar temporality in the analyzed cities, there are different spatial patterns, highlighting the greater dynamism in northern cities. Both, the policy of encouraging entrepreneurship and the existence of financial liquidity, are offered as an explanation. However, this is not creating new jobs in a similar manner, and the created workplaces show structural weaknesses, evidencing that the expected contribution is not generated - at least not from a sustainable urban development perspective.

What makes new firms resilient? A spatial analysis for Romania

Article

Oct 2020

Zizi Goschin

Resilient regions seem to be able to retain a higher level of entrepreneurial activity in times of crisis, when the capacity of new firms to survive and thrive is severely put to test. Aiming to find which regional characteristics sustain entrepreneurship resilience, this paper explores the impact of the recent economic and financial crisis on the survival of new firms, using Romania as an exponent of post‐communist countries in Central and Eastern Europe. After testing a wide range of potential explicative factors, we found that the most consequential ones are the foreign direct investments, population growth and the agglomeration of active firms. A custom‐made economic crisis variable differentiated the recession time span for each county, according to its individual response to crisis, and allowed us to find how the economic crisis changes the spatial influence of the variables. The spatial panel framework used for this analysis showed that location matters for the survival of newly born firms.

What Sustains Large Firms in China?

Chapter

Mar 2019

Reflecting the importance of firm dynamics, a large body of literature has examined the determinants focusing on firm, industry, and regional factors using data from developed economies, including firm size, age, ownership, innovation, and agglomeration economies (Siegfried and Evans 1994; Audretsch et al. 2000; Fotopoulos and Spence 2001; Acs et al. 2007; Neffke et al. 2012; Silva and McComb 2012). In the existing literature, large firms are found to have more chance of sustaining. However, firms operate in rather different business environments in transitional economies (Estrin and Prevezer 2010; Mocnik 2010). A number of features are likely to challenge sustaining chance of businesses, such as a limited market for goods, weak infrastructure, weak legal systems, and contract enforcement (Tybout 2000). The transitional economies are undergoing economic transformation from planned economies to market-oriented economies with constant institutional development. Transitional economies therefore provide a unique opportunity to broaden the investigation of business dynamics by incorporating institutional and geographical factors.

From economic development theories to strategies

Chapter

Aug 2020

Understanding Local Economic Development

Book

Full-text available

Aug 2020

This book offers insights into the process and the practice of local economic development. Bridging the gap between theory and practice it demonstrates the relevance of theory to inform local strategic planning in the context of widespread disparities in regional economic performance. The book summarizes the core theories of economic development, applies each of these to professional practice, and provides detailed commentary on them. This updated second edition includes more recent contributions - regional innovation, agglomeration and dynamic theories - and presents the major ideas that inform economic development strategic planning, particularly in the United States and Canada. The text offers theoretical insights that help explain why some regions thrive while others languish and why metropolitan economies often rise and fall over time. Without theory, economic developers can only do what is politically feasible. This text, however, provides them with a logical tool for thinking about development and establishing an independent basis from which to build the local consensus needed for evidence-based action undertaken in the public interest. Offering valuable perspectives on both the process and the practice of local and regional economic development, this book will be useful for both current and future economic developers to think more profoundly and confidently about their local economy. © 2021 Emil Malizia, Edward Feser, Henry Renski, and Joshua Drucker. All right reserved.

Does Location Matter for Micro Shops Resilience? Evidence from Uganda

Article

Jun 2020
INT REGIONAL SCI REV

This article analyzes the relationship between location and resilience of micro shops in Uganda. We use a unique city-level data set and consider the longevity of business as a proxy for resilience. After controlling for a set of relevant variables, our findings suggest positive correlation between longevity and proximity to Kampala, the capital city and vibrant commercial center of Uganda. We also find that entrepreneurship-related factors and natural events are further significant elements. We stress the importance to strengthen the integration between core and lagging areas as opposed to the current territorial development pattern. This calls for development models where the creation of satellite hubs and commercial platforms may positively influence the resilience of micro business.

New Venture Survival: A Review and Extension

Article

May 2020

This paper provides an evaluative overview of the new venture survival literature. Since Stinchcombe's primary attempt to explain the mortality rates of new ventures, different research fields, including entrepreneurship, management and sociology, have devoted considerable attention to the antecedents of new venture survival. Despite this lively research commitment, a comprehensive review of the literature on new venture survival – as one of the most essential performance measures for new ventures – is missing. Covering 54 years of research, this paper provides an overview of the factors affecting new venture survival and highlights important methodological aspects in this research field. The review concludes by discussing opportunities for future research.

How does distance to urban centres influence necessity and opportunity-based firm start-ups?: Distance to urban centres and firm start-ups

Article

Mar 2017
PAP REG SCI

Niclas Lavesson

This paper seeks to understand how distance to urban centres influences necessity and opportunity‐based firm start‐ups. The results show that closeness to urban centres is not necessarily beneficial for firm start‐ups. On the contrary, regions further away from urban centres of any size experience more firm start‐ups. One explanation of this result is that regions experience spatial protection from urban competition. However, regions located further away from larger‐sized urban centres experience less firm start‐ups due to such remoteness. One explanation of this finding is that remote regions cannot access the agglomeration benefits that larger cities offer. This supports the view that rural regions draw on urban resources but only on those from larger agglomerations.

The Weakness of Strong Ties: The Lock-in of Regional Development in the Ruhr Area

Chapter

Full-text available

Jan 1993

Gernot Grabher

On the Measure of Entry Rates

Article

Full-text available

Feb 1994
Empirica

The purpose of this paper is to explicitly examine the impact that two distinct methods used to measure entry have on identifying the determinants of entry. The two approaches can be termed as the ecological approach and the labor market approach. Based on new business startups in 75 regional markets in West Germany, we find that the two different methods for measuring entry yield disparate results. Most strikingly, we find that the ecological approach yields a positive relationship between unemployment and startup activity, while the labor market approach points to a negative impact of unemployment on the startup of new firms. By decomposing these two measures we offer a reconciliation of what appears to be a measurement contradiction.

Localized Competition and Organizational Failure in the Manhattan Hotel Industry, 1898-1990

Article

Full-text available

Dec 1992

This study examines the impact of localized competition on rates of failure in the Manhattan hotel industry from 1898 to 1990. The study investigates whether the organizations in a population with more similar resource requirements compete more intensely. This approach builds on existing density-based models of interorganizational competition by including variation at the organizational level directly in both the model and measures of competition. A dynamic analysis shows that hotels located in densely populated regions of the distributions of organizational size, geographic location, and price experienced significantly higher failure rates. The findings show how an ecological approach to competition that incorporates intrapopulation variation can provide a more detailed understanding of the competitive dynamics and evolution of organizational populations.

Direct and indirect effects of new business formation on regional employment

Article

Full-text available

Jul 2005

The impact of new business formation on regional employment has been investigated. The main effects occur after a considerable time lag. Obviously, a large part of the effect is not due to job creation by the newcomers but rather is of indirect nature. This implies that a large part of the debate about job creation by new business so far has been misleading.

Growth Regimes Over Time and Space

Article

Full-text available

Feb 2002

This paper seeks to shed new light on the policy debate about whether regional economic development policy should be targeted towards fostering new firm start-ups or nurturing large, incumbent enterprises. We extend the concept of technological regimes for innovative activity in the industrial economics literature to develop a concept of growth regimes for the unit of observation of regions. Based on data for 74 regions in West Germany over a two-decade period, we identify the existence of four distinct growth regimes: the entrepreneurial regime; the routinized regime; the revolving door regime; and the declining regime. The empirical evidence suggests that no single type of regime accounts for growth. Rather, regional growth can result in regions focusing on large enterprises or new enterprises. Thus, we conclude that diverse growth regimes exist across both time and space.

The Geography of Firm Birth in Germany

Article

Full-text available

Feb 1994

The linkages between the extent to which increasing returns to production exist within a spatial unit of observation and the tendency towards increased concentration of economic activity, measured in terms of the birth of new firms, is the focus of this paper. Based on 75 regions in west Germany, we find considerable evidence suggesting that birth rates are greater in regions exhibiting characteristics reflecting convexities in production. This provides support for the theory that the location of new economic activity tends to occur in the geographic space where such production convexities are the greatest.

Regional Differences in New Firm Formation: Evidence from West Germany

Article

Full-text available

Feb 1992

Michael Fritsch

The paper presents results of an empirical investigation into regional differences in the formation of new firms in West Germany. Some of the findings are quite consistent with the results of similar analyses undertaken for other countries. There is a large positive correlation between the rate at which new firms are founded and the share of the regional labour force that is employed in small companies. Many founders seem to have had experience working in small firms and seem to have developed an above-average level of skill. A high unemployment rate does not promote a rise in the formation of new firms in West Germany. On the contrary, a regional environment conducive to start-ups is characterized by low unemployment, high earnings and a well-trained labour force.

Plants' entry and exit in Swedish municipalities

Article

Full-text available

Dec 2001
ANN REGIONAL SCI

Plants' entry and exit behaviour in Swedish municipalities are studied within a fixed-effect, integer-valued autoregressive model. Based on eight industrial sectors, 1985-1993, and all municipalities, models are estimated by a generalized method of moment estimator. Influences on entry and exit are systematic and spatially as well as temporally variable. Responses to explanatory variables differ between sectors. Average income, local unemployment and higher education are found to be important determinants of both entry and exit across sectors.

How Large are the Direct Employment Effects of New Businesses? An Empirical Investigation for West Germany

Article

Full-text available

Feb 2006
SMALL BUS ECON

We analyze the development of employment in start-up cohorts, which is the direct gross employment effect of the new businesses. The data is for West Germany and covers the 1984–2002 period. While total employment in the cohorts remains above the initial level in manufacturing, we find a pronounced decline of employment below this level in the service sector. Only a small fraction of the firms create a considerable amount of jobs. The contribution that the start-up cohorts of the 1984–2002 period made to total employment in 2002 is nearly three times as high in services as in manufacturing. Copyright Springer 2006

Location and Survival of New Entry

Article

Full-text available

Jun 2000
SMALL BUS ECON

Drawing from two different strands of literature, industrial ecology and spatial analysis, the paper attempts to examine the role that location plays in determining firm survival. A time-varying covariates hazard model is used on Greek firms, which enter manufacturing in the early 1980s and are followed up to 1992. Location in Greater Athens vs. the rest of the country affects survival positively, especially when smaller firms are concerned. Other firm variables such as current size, profitability, leverage and capital together with growth and industry contestability are also found to affect survival, which becomes more difficult for firms established closer to recessions. Copyright 2000 by Kluwer Academic Publishers

The Effect of Industry, Region, and Time on New Business Survival – A Multi-Dimensional Analysis

Article

Full-text available

Feb 2006
REV IND ORGAN

We analyze the effect of industry, region, and time on new business survival rates by means of a multi-dimensional approach. The data relate to West German districts in the 1983–2000 period. The survival chances of start-ups tend to be relatively low in industries characterized by a high minimum efficient size and high numbers of entries. We find that regional characteristics play a rather important role and that introducing the regional dimension leads to considerable improvements of the estimation results. The significance of the regional dimension is also reflected in a remarkably high level of neighborhood effects. Copyright Springer 2006

Determinanten der Überlebenschancen neugegründeter Kleinbetriebe

Article

Full-text available

Jan 1991

"Mit Blick auf ihr Potential zur Schaffung neuer Arbeitsplätze gelten neugegründete Kleinbetriebe vielfach als Hoffnungsträger der Beschäftigungspolitik. Grund zur Hoffnung kann es allerdings nur für diejenigen Betriebe geben, die tatsächlich über einen längeren Zeitraum hinweg bestehen können. Auf der Basis einer empirischen Studie, in der Anfang 1990 rund 1.850 Unternehmensgründer der Jahre 1985/86 in München und Oberbayern interviewt wurden, untersucht der Beitrag Determinanten der Überlebenschancen neugegründeter Kleinbetriebe. Theoretische Perspektiven für die Auswahl möglicher Bestimmungsfaktoren der Überlebenschancen sind zum einen die Humankapitaltheorie und zum anderen der organisationsökologische Ansatz. Für die statistische Auswertung des Datenmaterials werden Methoden der Ereignisdatenanalyse verwendet. Wichtige Ergebnisse sind: Die Humankapitalressourcen des Unternehmensgründers (allgemeines Humankapital in Form von Bildung und Berufserfahrung sowie spezifisches Humankapital in Form von vorheriger Branchenerfahrung) und die Anfangsgröße eines Betriebes (Startkapital, Zahl der Beschäftigten zum Zeitpunkt der Gründung) sind die bedeutsamsten Einflußfaktoren der Überlebenschancen einer Neugründung. Für zahlreiche andere Faktoren (z.B. Geschlecht und Nationalität des Gründers, Einzel- versus Partnergründung, Standort) ergeben sich in der multivariaten Analyse keine signifikanten Effekte. Das Risiko einer Betriebsauflösung steigt im ersten Jahr an, erreicht nach neun bis zwölf Monaten ein Maximum und sinkt dann kontinuierlich ab." (Autorenreferat)

The Geographic Concentration of New Firm Formation and Human Capital: Evidence from the Cities

Article

Full-text available

Mar 2003

The role of education and human capital externalities is a key variable in theories of economic growth. However, the mechanism by which these externalities are realized has not been fully investigated. We examine the relationship between area differences in the levels of human capital and subsequent differences in new firm start-up rates. Firm start-ups are usually based on an innovation (in product, process, or market) that derives from utilization of new knowledge. We find that the new firm start-up rates in areas that function as integrated labor and consumer markets (city plus surrounding commuter area) are (1) positively related to the share of adults with college degrees, and also (2) positively related to higher levels of existing establishments in the same industry and area sector. The finding that higher concentrations of existing establishments in the same industry segment were strongly associated with higher startup rates suggests that spillover of relevant knowledge from other local business owners/managers and researchers within each industry contributes to greater innovation and growth in the area.

The Dynamics of New Firm Formation

Book

Nov 2017

Vinod Sutaria

Selbständigkeit als ein Reflex auf Arbeitslosigkeit?

Article

Jan 1990
KOLNER Z SOZIOL SOZ

Researching start-ups - The importance of space and the implications for economic geography

Article

Jan 2001

Rolf Sternberg

Start-ups are one of the most relevant current subjects in wide sections of academia, business and, in particular, in politics. This is due to many factors, some of which relate to new technological developments and their economic implications, to a general structural change and to the increasing importance, despite globalisation, of very small enterprises. This paper sets forth arguments sustaining the thesis that the determinants for the establishment of start-ups are not neutral in spatial terms. Rather, spatial differentiation can be identified, systematised and, in principle, quantified with regard to the causes as well as the economic effects of start-ups. Economic geography in particular as an academic discipline is confronted with numerous new research tasks in the areas of theory, empirical research and policy. Economic geography has comparative strengths over other disciplines who also explore start-ups, which should be emphasised more emphatically and with more self-confidence than to date.

Plants' Entry and Exit in Swedish Municipalities

Article

Oct 2001

Plants' entry and exit behaviour in Swedish municipalities are studied within a fixed-effect, integer-valued autoregressive model. Based on eight industrial sectors, 1985--1993, and all municipalities, models are estimated by a generalized method of moment estimator. Influences on entry and exit are systematic and spatially variable. Responses to explanatory variables differ between sectors. Average income, local unemployment and higher education are found to be important determinants of both entry and exit.

The Liability of Newness: Age Dependence in Organizational Death Rates

Article

Oct 1983

Age dependence in organizational death rates is studied using data on three populations of organizations: national labor unions, semiconductor electronics manufacturers, and newspaper publishing companies. There is a liability of newness in each of these populations but it differs depending on whether death occurs through dissolution or by absorption through merger. Liabilities of smallness and bigness are also identified but controlling for them does not eliminate age dependence.

The Competitiveness of Business Services and Regional Development: Evidence from Scotland and the South East of England

Article

Dec 1993

This paper presents a matched-pairs analysis of the competitive performance of business service companies in Scotland and the South East of England. Value added per person is one-quarter higher in the English firms and a significantly higher proportion of them (49 per cent) have introduced a new service during the previous five years compared with 34 per cent of Scottish businesses. The latter were also more likely to function as multi-service companies reflecting the greater demand in Scotland for a more generalised service offering. The English service businesses also achieved a much greater degree of export orientation. The paper reviews various supply- and demand-side causes of the performance differences and the implications of potential policy responses are considered.

Regional Differences in Small Firm Entry in Manufacturing Industries: Lower Saxony, 1979–1991

Article

Jan 1994

This paper is an empirical study of inter-regional and inter-temporal variations in entry of new firms using longitudinal data covering all manufacturing establishments in Lower Saxony between 1979 and 1991. Patterns of entry are reported for sixteen regions based on gross rates of entry (number of new firms) and entry intensities (shares of employees). An empirical model is applied to detect regional characteristics that are highly correlated with entry. Pooling of cross-section and time-series data allows for control of influences of varying macroeconomic conditions and unobserved regional characteristics that turned out to be important. Small firm entry tends to be positively related to high overall economic growth, and to be higher in regions where both the small firm employment share and the level of wealth are high while the wage rate is low. We find no evidence for a negative impact of the business tax rate or for a positive effect of regional subsidies.

Innovation and Small Firms

Book

Jan 1990

Utilizing a unique data set, Zoltan Acs and David Audretsch provide a rich empirical analysis of the increased importance of small firms in generating technological innovations and their growing contribution to the U.S. economy. They identify the contributions made by both small and large firms to the innovative process and the manner in which market structure, and the firm-size distribution in particular, responds to technological change. The authors' analysis relies on traditional theories of industrial organization and tests existing hypotheses, many of them previously untested due to data constraints. Innovation and Small Firms brings together two large data bases recently released by the U. S. Small Business Administration - one directly measuring innovative activity for large and small firms, the other providing a detailed census of economic activity for all manufacturing firms and plants across a broad spectrum of industries. Acs and Audretsch describe and evaluate the data bases in the context of the literature on innovation, market structure, and firm size. They present their findings on the presence of small firms, small-firm entry in manufacturing, small-firm growth and flexible technology, and mobility and firm size. They compare static and dynamic measures of small-firm viability and address the relationships between R&D, innovation, and productivity, and analyze the interaction between technological regimes and the role of government in innovation.

Direct Employment Effects of New Firms

Chapter

Dec 2006

Recent published studies suggest a positive relationship between new business formation and economic development (Audretsch and Fritsch, 2003; Audretsch and Keilbach, 2004; Fritsch and Mueller, 2004). Regions are, however, heterogeneous units and differ with respect to determinants of growth.1 These determinants also affect firm formation and firm growth, and one may, therefore, expect remarkable regional differences in the employment contribution of new firms. For example, Brixy and Grotz (2004) show that the cohort employment of Eastem German start-ups increased more than that of Western German start-ups in mature stages. Related to this discussion, particularly firms occupying market niches and entering into formative stages of new industries are seen as driving forces for positive employment effects in the long run. New or better products, processes, and services increase the technological competitiveness of an economy and, hence, its economic growth. Technology orientation and knowledge intensity are major characteristics of firms occupying market niches forcing its performance and survival (see Almus et al., 1999; Almus, 2001; Agarwal and Audretsch, 2001).

New Firm Formation: Dynamics and Determinants

Article

Jun 2004

Empirical studies of determinants of new firm formation to date have tended to yield diverse and even contradictory results. Three primary reasons for this have been advanced: (1) the paucity of suitable micro-level data (2) the failure to control for amorphous time- and place-specific influences that defy specification, and (3) the use of estimation techniques that do not handle adequately the effects of heteroscedasticity. This paper addresses all of these shortcomings by employing a unique data set composed of annual data on localized firm entry, exit and a variety of predictor variables that has been analyzed to yield heteroscedasticity-corrected estimates while controlling for unspecified place- and period-specific influences. We test a variety of models seeking to explain patterns of new firm formation in terms of macroeconomic, demographic, and labor market processes, patterns of industrial restructuring, availability of local financial capital, and local public sector spending. Our results suggest that regional patterns of new firm formation can be explained by variation in unemployment change rates, mean establishment size, prior firm entry and exit dynamics, and the availability of local financial capital. We find no evidence of influence attributable to population or income dynamics, unemployment level, or local government spending.

The determinants of variations in exit rates

Article

Feb 1996

James H. Love

A conceptual model of the determinants of exit across spatial areas is presented and empirically tested. The relative merits of two different methods of calculating exit rates are discussed, and results compared. In the empirical estimation, entry is found to be the dominant determinant of exit. However, other factors also have a systematic effect: among these are local income, the rate of change of unemployment, relevant managerial skills, and population density. Making allowance for variations in industrial structure across areas has some effect on the results, but does not eliminate the effect of variables other than entry.

What Characterizes Successful Start-Up Cohorts?

Chapter

Oct 2007

Antje Weyh

Much is expected from newly founded firms. They should advance structural economic change, create new jobs, and promote innovations. However, it was often shown that many of the newly founded firms do not survive long. To track cohorts of newly founded firms over time is an important way for assessing the long run effects of new businesses. Because these long run effects may differ considerably over time as well as across industries and regions, these dimensions should be taken into account in such an analysis.

Schumpeterian Competition in Alternative Technological Regimes

Article

Feb 1984
J ECON BEHAV ORGAN

Sidney Winter

This paper presents an extension of the Nelson-Winter model of Schumpeterian competition that focuses on certain features of the ‘historical’ shape of industry evolution, particularly on the relative importance of entrants and established firms as sources of innovation.

The Geography of Opportunity: Spatial Heterogeneity in Founding Rates and the Performance of Biotechnology Firms

Article

Feb 2003
RES POLICY

One of the most commonly observed features of the organization of markets is that similar business enterprises cluster in physical space. In this paper, we develop an explanation for firm co-location in high-technology industries that draws upon a relational account of new venture creation. We argue that industries cluster because entrepreneurs find it difficult to leverage the social ties necessary to mobilize essential resources when they reside far from those resources. Therefore, opportunities for high tech entrepreneurship mirror the distribution of critical resources. The same factors that enable high tech entrepreneurship, however, do not necessary promote firm performance. In the empirical analyses, we investigate the effects of geographic proximity to established biotechnology firms, sources of biotechnology expertise (highly-skilled labor), and venture capitalists on the location-specific founding rates and performance of biotechnology firms. The paper finds that the local conditions that promote new venture creation differ from those that maximize the performance of recently established companies.

Determinants of Regional Entrepreneurship Dynamics in Contemporary Germany: A Conceptual and Empirical Analysis

Article

Feb 2006

Christine Tamásy

The importance of entrepreneurship for the development of national and regional economies is widely recognized. Although politicians in Germany are aware of entrepreneurship, their practices cannot rely on a generally accepted theory of entrepreneurship. The paper develops a holistic conceptualization of regional entrepreneurship dynamics and investigates empirically determinants of start-up activities and new business success in selected German regions. It uses two primary data sets explicitly designed to analyse regional entrepreneurship dynamics in contemporary Germany. The research project 'Regional Entrepreneurship Monitor' focuses on determinants of start-up activities in the pre-entry phase of entrepreneurial processes, while the 'New Firm Survey' examines factors influencing post-entry firm success. The paper suggests holistic approaches in entrepreneurship research are necessary, because entrepreneur-associated factors, characteristics of the newly founded firm and the geographical environment influence entrepreneurial processes. These determinants can have direct or indirect influences on entrepreneurial processes. The results suggest that politicians and policy-makers need to pay special attention to entrepreneurial attitudes and behaviours if they wish to boost regional entrepreneurship dynamics in Germany.

Does Unemployment Affect the Number of Establishments? A Regional Analysis for US States

Article

Jun 2002

Martin Carree

Empirical tests of the 'unemployment push' hypothesis that unemployed workers start up new enterprises to a greater extent than employed workers to escape unemployment have produced contradictory results. This is at least partially a consequence of studies neglecting the industrial organization of regions and not incorporating adequate variables to represent market opportunities. Using data of US establishments in retail and service industries with low entry barriers, we find little or no evidence for the 'unemployment push' hypothesis. US regions with relatively high unemployment rates do not show relatively strong subsequent increases in the number of establishments across a broad range of industries. Possible exceptions are used merchandise stores and automotive repair shops.

The Determinant in Regional Variation in New Firm Formation

Article

Feb 2002

While much of the literature on new firm formation in the 1980s was motivated by high levels of unemployment, much of the focus on new firm start-ups today is motivated by high technology. Using a new database we examine the role of human capital, training and education, and entrepreneurial environment on new firm formation. We find significant differences in new firm formation rates from industrial regions to technologically progressive regions. Variations in firm birth rates are explained by industrial density, population and income growth. These results are consistent with thick labour markets and localized knowledge spillovers.

Spatial Variations in New Manufacturing Plant Openings: Some Empirical Evidence from Greece

Article

Feb 1999

This research deals with the determinants of regional variation in new plant openings in Greek manufacturing industries over the period 1980-91. Key findings of this first detailed attempt to do so in a Greek context relate to the significant direct effects of regional specialization, the extent of local production links and investment in public infrastructure on new manufacturing activity. Confirming research findings in other countries, the results obtained here indicate small firm presence, the local supply of skilled labour, and wealth and labour productivity differentials across regions to be significant and positive influences on new firm formation.

New Firms, Small Firms and Dead Firms: Spatial Patterns and Determinants in the United Kingdom

Article

Feb 1994

The paper analyses marked county-level spatial variations in new enterprise formation, growth in numbers of small businesses, and business failures in the UK 1980-90 as measured by VAT business registration and deregistration statistics. Multivariate econometric models for different periods and sectors are used to identify a range of key determinants, chosen from previous theoretical and survey research, notably previous population growth, capital availability through housing wealth, professional expertise, firm size structures, urban agglomeration advantages and dis-economies, and growing market demand. Some evidence is found for local enterprise culture, local government expenditure and enterprise agency effects, but not for unemployment-push processes. Policy implications are discussed.

Determinants of New Firm Success

Article

Jun 2000

The differences between new firms, even the differences present right at the start, may affect their life course and success over time. This article addresses the determinants of success of Dutch start-ups from a longitudinal perspective. After an overview of the literature on both the definition of success and the success factors of new firms we test how new firm characteristics relate to firm growth in number of employees using a panel of nearly 2,000 firms. In addition to a large firm size right from the start, good preparation, having a business partner, and some years in salaried employment also enhance firm growth. Based on these success determinants we construct a typology of starters that may be used to predict future growth chances.

New Firm Formation: Dynamics and Determinants

Article

Feb 2004
ANN REGIONAL SCI

Start-Up Activities, Individual Characteristics, and the Regional Milieu: Lessons for Entrepreneurship Support Policies from German Micro Data

Article

Feb 2004
ANN REGIONAL SCI

This paper contributes to empirical research on the role of regional policy for entrepreneurship by focusing on the link between two stylized facts that emerged from a number of studies for Germany and other countries: Entry rates differ between regions, and the propensity to become an entrepreneur is influenced by socio-demographic variables and attitudes. We develop a theoretical framework to discuss this link, and we test whether for a person of a given age, degree of schooling, attitude towards risk etc. regional variables and, therefore, regional policies, do matter for the decision to start a new business ceteris paribus. Our econometric study is based on data for 10.000 persons from a recent representative survey of the population in ten German planning regions, the Regional Entrepreneurship Monitor (REM). We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We find that the propensity to step into self-employment is, among others, higher for males, unemployed, people with contacts to a role model, and with past entrepreneurial experience, who live in more densely populated and faster growing regions with higher rates of new firm formation, while risk aversion and high prices of land have the opposite impact. Interestingly, it does not matter whether the region has a “left” or “right” government. However, many implications for entrepreneurship supporting policies in German regions are discussed in the final section. Copyright Springer-Verlag 2004

The Influence of Location and Distance on the Supply of Business Advice

Article

Feb 2002

The authors examine the geographical relations between small business clients and their external suppliers of business advice. The analysis is based on the stratified random sample survey carried out by the ESRC Centre for Business Research in 1999. The analysis demonstrates the importance of localisation in a simplistic sense: a large percentage of advisors are drawn from within 10 km of the client, and almost all from within 50 km for most types of advisor. There are important differences between types of advisors, with public sector advisors, chambers of commerce, and enterprise agencies being the most localised. However, the high degree of localisation is shown to be chiefly dependent on the agglomeration benefits of the accessibility and size of centres in which advisors are located. The general pattern of client - advisor relations is demonstrated to be modelled accurately by a standard spatial interaction model. A key finding is that the spatial pattern of the location of the supply of advisors, particularly the size of the business centres in which they are located, is a key determinant of choice and must be taken into account simultaneously with any role of distance which influences demand, in order to explain the pattern of choice of business advisors. This suggests that small business support policies should be focused chiefly towards small and medium-sized enterprises that have difficulty in accessing major supply sources by virtue of their locations; that is, they should be focused on rural and more peripheral areas.

Unemployment and Business Formation Rates: Reconciling Time-Series and Cross-Section Evidence

Article

Feb 1989

Robert T. Hamilton

Time-series analyses generally show rates of business formation increasing with unemployment. In cross-section studies the areas with the highest rates of formation are generally those with the lowest levels of unemployment. In a study using both types of data, the negative cross-section relationship is confirmed but it is suggested that the time-series may be nonlinear, becoming negative at a critical unemployment level around 20%. The paper concludes with a reconciliation of these findings.

Interleukin-6 administration has no acute hemodynamic or hematologic effect in the dog

Article

Feb 1991

To investigate the possible hemodynamic effects of interleukin-6 (IL-6), a single dose of 15 mcg/kg of recombinant IL-6 isolated from Escherichia coli was injected intravenously in six pentobarbital-anesthetized dogs. After 30 min, saline infusion was performed to maintain the pulmonary artery balloon-occluded pressure at baseline level. The animals were observed for up to 5 hours. No other hemodynamic alteration was observed than a gradual decline in cardiac output attributed to anesthesia. Hematologic variables, blood glucose, and total serum proteins were also constant. IL-6 levels were markedly elevated in the blood, but no tumor necrosis factor activity was detected. Thus a primary role for IL-6 in the early cardiovascular alterations associated with septic shock seems unlikely.

Understanding the Business Failure Rate.

Article

Feb 1991
CONTEMP ECON POLICY

The rate of business failures is widely quoted but is little understood. This study reviews the availability and usefulness of data on business failures and discusses the major determinants of fluctuations in the business failure rate. It shows that the age distribution of the population of firms is the largest determinant of failures and that the rate of failure has only a small countercyclical fluctuation. The study documents a substantial decline in the rate of failures between 1962 and 1979 and a smaller increase after 1980. The evidence presented suggests that the long decline is caused by the fall in failure rates in certain states and that part of the increase during the 1980s is due to changes in Dun & Bradstreet's data collection procedures. Copyright 1991 by Oxford University Press.

Raü Vergleich der Datengrundlagen zum Gru¨ -und Stilllegungsgeschehen in Deutschland

Jan 2002
165-198

R Grotz
U Brixy
A Otto

Grotz, R., Brixy, U. and Otto, A. 2002 Raü Vergleich der Datengrundlagen zum Gru¨ -und Stilllegungsgeschehen in Deutschland, in Fritsch, M. and Grotz, R. (eds), Das Gru¨ndungsgeschehen in Deutschland. Darstellung und Vergleich der Datenquellen (Heidelberg: Physica) pp. 165–198.

Die Rolle von Betriebsgru¨ fu¨ Arbeitsplatzdynamik – Eine raü Analyse fu¨

Jan 1999

U Brixy

Brixy, U. 1999 Die Rolle von Betriebsgru¨ fu¨ Arbeitsplatzdynamik – Eine raü Analyse fu¨ -, Vol. 230 Betra¨ge zur Arbeitsmarkt-und Berufsforschung (Nu¨ : Institut fu¨ -und Berufsforschung).

Designing supportive contexts for emerging enterprises

Jan 1993
117-142

B Johannisson

Johannisson, B. 1993 Designing supportive contexts for emerging enterprises, in Karlsson, C., Johannisson, B. and Storey, D. (eds), Small Business Dynamics (London: Routledge) pp. 117–142.

Regional Patterns and Determinants of Birth and Survival of New Firms in Western Germany

Abstract

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Regional patterns and determinants of new firm formation and survival in Western Germany