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The Apple Doesn't Fall Far From the Tree: Location of Start-Ups Relative to Incumbents

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Author Info
Oliver Falck () (Ifo Institute for Economic Research)
Michael Fritsch () (University of Jena, School of Economics and Business Administration, Max Planck Institute of Economics, and German Institute for Economic Research (DIW))
Stephan Heblich () (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy Group)

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Abstract

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically bounded location factors based on data from 103 manufacturing industries across 327 West German and 111 East German districts. Our micro-geographic analysis reveals that the two parts of the country vary in their pattern of new firm location. In East Germany, only 5 percent of the industries reveal start-up localization patterns beyond what natural advantages would suggest compared to 40 percent in West Germany.

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Publisher Info
Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek in its series Jena Economic Research Papers in Economics with number 2008-082.

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Date of creation: 03 Nov 2008
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Handle: RePEc:jrp:jrpwrp:2008-082

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Related research
Keywords: Entrepreneurship; Location Decision; Natural Advantages; Local Knowledge Spillovers;

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Find related papers by JEL classification:
L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses

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  2. Peter Thompson & Steven Klepper, 2005. "Spinoff Entry in High-tech Industries: Motives and Consequences," Working Papers 0503, Florida International University, Department of Economics. [Downloadable!]
  3. Feldman, Maryann P, 2001. "The Entrepreneurial Event Revisited: Firm Formation in a Regional Context," Industrial and Corporate Change, Oxford University Press, vol. 10(4), pages 861-91, December.
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    Other versions:
  5. Bruce Fallick & Charles A Fleischman & James B Rebitzer, 2006. "Job-Hopping in Silicon Valley: Some Evidence Concerning the Microfoundations of a High-Technology Cluster," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 472-481, 09. [Downloadable!] (restricted)
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  6. John Armour & Douglas Cumming, 2006. "The legislative road to Silicon Valley," Oxford Economic Papers, Oxford University Press, vol. 58(4), pages 596-635, October. [Downloadable!] (restricted)
  7. Michael Fritsch, 2004. "Entrepreneurship, Entry and Performance of New Businesses Compared in two Growth Regimes: East and West Germany," Papers on Entrepreneurship, Growth and Public Policy 2004-41, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
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  8. Claudio Michelacci & Olmo Silva, 2007. "Why So Many Local Entrepreneurs?," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 615-633, 07. [Downloadable!] (restricted)
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  9. Markus Mobius & Adam Szeidl, 2007. "Trust and Social Collateral," NBER Working Papers 13126, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Masahisa Fujita & Jacques-François Thisse, 2003. "Does Geographical Agglomeration Foster Economic Growth? And Who Gains and Loses from It?," The Japanese Economic Review, Japanese Economic Association, vol. 54(2), pages 121-145. [Downloadable!] (restricted)
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  11. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
    Other versions:
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