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Regional patterns and determinants of birth and survival of new firms in Western Germany

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  • Udo Brixy
  • Reinhold Grotz

Abstract

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.

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File URL: http://hdl.handle.net/10.1080/08985620701275510
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Entrepreneurship & Regional Development.

Volume (Year): 19 (2007)
Issue (Month): 4 (July)
Pages: 293-312

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Handle: RePEc:taf:entreg:v:19:y:2007:i:4:p:293-312

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Cited by:
  1. Calá, Carla Daniela & Manjón-Antolín, Miguel & Arauzo-Carod, Josep-Maria, 2014. "The determinants of exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 1976, Centro de Documentación, Facultad de Ciencias Económicas y Sociales, Universidad Nacional de Mar del Plata.
  2. Malevergne, Y. & Saichev, A. & Sornette, D., 2013. "Zipf's law and maximum sustainable growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(6), pages 1195-1212.
  3. Klaesson, Johan & Larsson, Johan P, 2014. "Education and Self-employment Propensity," Working Paper Series in Economics and Institutions of Innovation 345, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  4. Fackler, Daniel, 2014. "Establishment survival in East and West Germany: A comparative analysis," Discussion Papers 90, Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  5. Koen Frenken & Elena Cefis & Erik Stam, 2013. "Industrial dynamics and clusters: a survey," Working Papers 13-11, Utrecht School of Economics.
  6. Stephan Brunow & Peter Nijkamp, 2013. "Firm Formation and Agglomeration under Monopolistic Competition," Tinbergen Institute Discussion Papers 13-134/VIII, Tinbergen Institute.

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