Advanced Search
MyIDEAS: Login

Entrepreneurship Diversification, Skill Relatedness and Regional Economic Evolution

Contents:

Author Info

  • Frank Neffke

    ()

  • Martin Henning

    ()

Abstract

The literature in economic geography has recently shown a growing interest in the path dependent transformation of regional economies. According to evolutionary accounts, the development of regional economies can be regarded as a result of technological branching processes, where the development of the past conditions the future opportunity space of regions. In this paper, we provide a specific explanation as to why the present structure of regional economies conditions their future development. We maintain that regions are more likely to diversify into industries that are related to their existing production portfolio, than into industries that are not related. Within such a setting, entrepreneurship can be viewed as one of the main channels for regional diversification. We specifically investigate how relatedness structures and regional entrepreneurship processes interact to provide vital understanding about the mechanisms behind regional economic evolution. A novel method, “skill relatedness”, is used to define which industries are more related than others. The method defines relatedness between industries in terms of the extent to which the industries depend on similar human capital. We establish the skill-relatedness among different industries by investigating labor flows. This allows us to conceptualize the entire economy, manufacturing as well as services, as a network of industries that are connected to one another in terms of similarities in the human capital they use. In the empirical investigations, we use Swedish employer linked data on all 4.7 million individuals on the Swedish labor market 2004-2007. Using the skill-relatedness information and distinguishing between local diversification due to entrepreneurial activity, due to the expansion of local firms, or due to the expansion of non-local firms, we find that the probability that a new industry enters a Swedish region in any of these ways is strongly dependent on whether the industry is skill-related to many of the region’s core industries. Local economies are most likely to add industries to their portfolios that are skill-related to their industrial cores. The results suggest that skill relatedness is a fruitful tool to investigate not only the workings of regional path dependency, but also how existing skill bases are used by diversifying entrepreneurs.

Download Info

If 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.
File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa10/ERSA2010finalpaper937.pdf
Download Restriction: no

Bibliographic Info

Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa10p937.

as in new window
Length:
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:wiw:wiwrsa:ersa10p937

Contact details of provider:
Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page: http://www.ersa.org

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Teece, David J. & Rumelt, Richard & Dosi, Giovanni & Winter, Sidney, 1994. "Understanding corporate coherence : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 23(1), pages 1-30, January.
  2. Koen Frenken & Frank Van Oort & Thijs Verburg, 2007. "Related Variety, Unrelated Variety and Regional Economic Growth," Regional Studies, Taylor & Francis Journals, vol. 41(5), pages 685-697.
  3. Vernon Henderson, 2001. "Marshall's Scale Economies," Working Papers 01-17, Center for Economic Studies, U.S. Census Bureau.
  4. Koen Frenken & Ron A. Boschma, 2007. "A theoretical framework for evolutionary economic geography: industrial dynamics and urban growth as a branching process," Journal of Economic Geography, Oxford University Press, vol. 7(5), pages 635-649, September.
  5. Ron Martin, 2010. "Roepke Lecture in Economic Geography-Rethinking Regional Path Dependence: Beyond Lock-in to Evolution," Economic Geography, Clark University, vol. 86(1), pages 1-27, 01.
  6. Andrea Bassanini & Giovanni Dosi, 1999. "When and How Chance and Human Will Can Twist the Arms of Clio," LEM Papers Series 1999/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  7. Frank Neffke & Martin Svensson Henning & Ron Boschma, 2008. "Surviving in agglomerations: Plant evolution and the changing benefits of the local environment," Papers in Evolutionary Economic Geography (PEEG) 0820, Utrecht University, Section of Economic Geography, revised Dec 2008.
  8. Ron Martin & Peter Sunley, 2006. "Path dependence and regional economic evolution," Journal of Economic Geography, Oxford University Press, vol. 6(4), pages 395-437, August.
  9. Maxim Poletaev & Chris Robinson, 2008. "Human Capital Specificity: Evidence from the Dictionary of Occupational Titles and Displaced Worker Surveys 1984-2000," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20083, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
  10. Paul A. David, 2007. "Path dependence: a foundational concept for historical social science," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 1(2), pages 91-114, July.
  11. David, Paul A, 1985. "Clio and the Economics of QWERTY," American Economic Review, American Economic Association, vol. 75(2), pages 332-37, May.
  12. Frank Neffke & Martin Henning & Ron Boschma, 2011. "How Do Regions Diversify over Time? Industry Relatedness and the Development of New Growth Paths in Regions," Economic Geography, Clark University, vol. 87(3), pages 237-265, 07.
  13. Frank Neffke & Martin Svensson Henning, 2009. "Skill-relatedness and firm diversification," Papers on Economics and Evolution 2009-06, Max Planck Institute of Economics, Evolutionary Economics Group, revised Oct 2010.
  14. C. A. Hidalgo & B. Klinger & A. -L. Barabasi & R. Hausmann, 2007. "The Product Space Conditions the Development of Nations," Papers 0708.2090, arXiv.org.
  15. Arthur, W Brian, 1989. "Competing Technologies, Increasing Returns, and Lock-In by Historical Events," Economic Journal, Royal Economic Society, vol. 99(394), pages 116-31, March.
  16. David Bryce & Sidney Winter, 2006. "A General Inter-Industry Relatedness Index," Working Papers 06-31, Center for Economic Studies, U.S. Census Bureau.
  17. Christina Gathmann & Uta Schönberg, 2010. "How General Is Human Capital? A Task-Based Approach," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 1-49, 01.
  18. Edward L. Glaeser, 2005. "Reinventing Boston: 1630--2003," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 119-153, April.
  19. Ingram, Beth F. & Neumann, George R., 2006. "The returns to skill," Labour Economics, Elsevier, vol. 13(1), pages 35-59, February.
  20. Ron A. Boschma & Rik Wenting, 2007. "The spatial evolution of the British automobile industry: Does location matter?," Industrial and Corporate Change, Oxford University Press, vol. 16(2), pages 213-238, April.
Full references (including those not matched with items on IDEAS)

Citations

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa10p937. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gunther Maier).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.