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Growth determinants of start-ups in Eastern Germany: a comparison between innovative and non-innovative firms

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  • Almus, Matthias
  • Nerlinger, Eric A.
  • Steil, Fabian
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    Abstract

    This empirical analysis deals with the determinants of growth and the explanation of variations in the growth between innovative and non-innovative start-ups. Based on theoretical models explaining the growth of firms, hypotheses on potential determinants are formulated. The regression results indicate strong correlations between the growth rate on the one side and firmspecific, founder-specific as well as external factors on the other side. These factors influence the growth rates of innovative and non-innovative young firms in different ways. It becomes obvious that large and mature firms have smaller growth rates than small and young innovative as well as non-innovative firms. Moreover, other firm-specific characteristics like legal form and formal links to other firms from Western industrialised countries have an impact on the development of start-ups. With respect to founder-specific characteristics, positive effects can be derived from the human capital of the founder(s). This holds especially for technological disciplines whereas business knowledge plays a minor role. In addition to firm and founder characteristics, locationspecific factors controlling for agglomeration effects and the industry structure in the Eastern German counties have an impact on growth. Comparing annual growth rates of start-ups, innovative start-ups grow on average faster than non-innovative start-ups. --

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    Bibliographic Info

    Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 99-05.

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    Date of creation: 1999
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    Handle: RePEc:zbw:zewdip:5220

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    Related research

    Keywords: New Technology-based Firms; Employment Growth; Determinants of Growth;

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    References

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    1. Harhoff, Dietmar & Stahl, Konrad O. & Woywode, Michael, 1996. "Legal Form, Growth and Exit of West German Firms - Empirical Results for Manufacturing, Construction, Trade and Service Industries," CEPR Discussion Papers 1401, C.E.P.R. Discussion Papers.
    2. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-74, August.
    3. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
    4. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-43, Nov.-Dec..
    5. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
    6. Lioba Trabert, 1997. "Verdeckte Arbeitslosigkeit in West- und Ostdeutschland: Die Bedeutung der stillen Reserve," Wirtschaft im Wandel, Halle Institute for Economic Research, vol. 3(1), pages 3-8.
    7. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-70, December.
    8. Harhoff, Dietmar & Stahl, Konrad O., 1992. "Firm dynamics in East Germany: first empirical results," ZEW Discussion Papers 92-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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    Cited by:
    1. Bozkaya, Ant & Romain, Astrid & Pottelsberghe de la Potterie, Bruno van, 2003. "Surveying Technology-Based Small Firms: A Perspective From Belgium," IIR Working Paper 03-23, Institute of Innovation Research, Hitotsubashi University.

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