Are More Start-Ups Really Better? Quantity and Quality of New Businesses and Their Effect on Regional Development
AbstractEmpirical analyses suggest that the employment creating effect of start-ups is highest in regions with a low level of new business formation and that an increase in the regional start-up rate beyond a certain level may lead to negative employment effect. In explaining these results, we assume that the average quality of regional start-ups decreases with the number of start-ups, while the costs of the induced resource reallocation increase. Our model implies that it is not the number of start-ups but their quality that is decisive for their effect on economic development. Therefore, a policy aiming at stimulating economic growth through entrepreneurship should focus on high-quality start-ups.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-070.
Date of creation: 13 Aug 2009
Date of revision:
Entrepreneurship; new business formation; regional development; entrepreneurship policy;
Find related papers by JEL classification:
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
- R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-08-22 (All new papers)
- NEP-ENT-2009-08-22 (Entrepreneurship)
- NEP-GEO-2009-08-22 (Economic Geography)
- NEP-SBM-2009-08-22 (Small Business Management)
- NEP-URE-2009-08-22 (Urban & Real Estate Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Sarah Kösters, 2010. "Subsidizing Start-Ups: Policy Targeting and Policy Effectiveness," Journal of Industry, Competition and Trade, Springer, vol. 10(3), pages 199-225, September.
- Florian Noseleit, 2011.
"Entrepreneurship, Structural Change, and Economic Growth,"
ERSA conference papers
ersa11p427, European Regional Science Association.
- Florian Noseleit, 2013. "Entrepreneurship, structural change, and economic growth," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 735-766, September.
- Florian Noseleit, 2011. "Entrepreneurship, structural change, and economic growth," Papers in Evolutionary Economic Geography (PEEG) 1104, Utrecht University, Section of Economic Geography, revised Jan 2011.
- Michael Fritsch & Alexandra Schroeter, 2011.
"Does Quality Make a Difference?: Employment Effects of High- and Low-Quality Start-Ups,"
Discussion Papers of DIW Berlin
1128, DIW Berlin, German Institute for Economic Research.
- Michael Fritsch & Alexandra Schroeter, 2011. "Does Quality Make a Difference? Employment Effects of High- and Low-Quality Start-Ups," Jena Economic Research Papers 2011-001, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Michael Fritsch & Alexandra Schroeter, 2011. "Does Quality make a Difference? Employment Effects of High- and Low-Quality Start-ups," ERSA conference papers ersa10p1400, European Regional Science Association.
- Andersson, Martin & Baltzopoulos, Apostolos & Lööf, Hans, 2010.
"R&D Strategies and Entrepreneurial Spawning,"
Working Paper Series in Economics and Institutions of Innovation
228, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Michael Fritsch & Sebastian von Engelhardt, 2010. "Who Starts with Open Source? Institutional Choice of Start-Ups in the German ICT Sector," Jena Economic Research Papers 2010-049, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Markus Pasche).
If references are entirely missing, you can add them using this form.