Success breeds success locally: a tale of incubator firms
AbstractThis paper focuses on the pre-establishment period of start-ups in industrial districts. The industrial architecture is what I call a "rationed agglomeration" in which some entrepreneurs gather around an established firm while other entrepreneurs in the same business stand alone. In a rationed agglomeration, I analyze the e¤ects of relations between established firms, network entrepreneurs, and local financiers on the market prices of loans. I show that such relations improve the match of capital to ideas in the network even though the overall distribution of capital to ideas remains unchanged. This suggests that success breeds success in the networks of established firms. The existence of networks overturns the claim that there are no motives to engage in information gathering in a simple market regime with information asymmetries. In particular, I show that there are market incentives for established firms to decrease the information gap between network entrepreneurs and local financiers. --
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 ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 06-71.
Date of creation: 2006
Date of revision:
agglomeration; entrepreneur; dispersion; innovation; local financiers; networks; regional economies; project financing; signaling; start-up;
Find related papers by JEL classification:
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-14 (All new papers)
- NEP-BEC-2007-04-14 (Business Economics)
- NEP-ENT-2007-04-14 (Entrepreneurship)
- NEP-GEO-2007-04-14 (Economic Geography)
- NEP-HIS-2007-04-14 (Business, Economic & Financial History)
- NEP-PPM-2007-04-14 (Project, Program & Portfolio Management)
- NEP-URE-2007-04-14 (Urban & Real Estate Economics)
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.:
- Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992.
"Growth in Cities,"
3451309, Harvard University Department of Economics.
- Eren Inci, 2007.
"Occupational Choice and the Quality of Entrepreneurs,"
Boston College Working Papers in Economics
666, Boston College Department of Economics.
- Inci, Eren, 2013. "Occupational choice and the quality of entrepreneurs," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 1-21.
- Eren Inci, 2004. "A Model of R&D Tax Incentives," Boston College Working Papers in Economics 597, Boston College Department of Economics, revised 09 Oct 2006.
- Timothy Bates, 2002.
"Analysis of Young Small Firms That Have Closed: Delineating Successful from Unsuccessful Closures,"
02-24, Center for Economic Studies, U.S. Census Bureau.
- Bates, Timothy, 2005. "Analysis of young, small firms that have closed: delineating successful from unsuccessful closures," Journal of Business Venturing, Elsevier, vol. 20(3), pages 343-358, May.
- Nicola Brandt, 2004. "Business Dynamics and Policies," OECD Economic Studies, OECD Publishing, vol. 2004(1), pages 9-36.
- Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-90, March.
- Petersen, Mitchell A & Rajan, Raghuram G, 1994. " The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
- Krugman, Paul, 1991.
"Increasing Returns and Economic Geography,"
Journal of Political Economy,
University of Chicago Press, vol. 99(3), pages 483-99, June.
- Acs, Zoltán J & Audretsch, David B & Braunerhjelm, Pontus & Carlsson, Bo, 2006.
"Growth and Entrepreneurship: An Empirical Assessment,"
CEPR Discussion Papers
5409, C.E.P.R. Discussion Papers.
- Zoltan J. Acs & David B. Audretsch & Pontus Braunerhjelm & Bo Carlsson, 2005. "Growth and Entrepreneurship: An Empirial Assessment," Papers on Entrepreneurship, Growth and Public Policy 2005-32, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
- Venkatesh Bala & Sanjeev Goyal, 2000. "A Noncooperative Model of Network Formation," Econometrica, Econometric Society, vol. 68(5), pages 1181-1230, September.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Mehmet Bac & Eren Inci, 2010.
"The Old-Boy Network and the Quality of Entrepreneurs,"
CESifo Working Paper Series
3071, CESifo Group Munich.
- Mehmet Bac & Eren Inci, 2010. "The Old‐Boy Network and the Quality of Entrepreneurs," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(4), pages 889-918, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.