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Creating firms for a new century: Determinants of firm creation around 1900

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  • Baten, Joerg

Abstract

A rapidly growing literature in industrial economics and regional economics uses data sets of individual firms or regional firm creation rates to answer the central question: what makes entrepreneurs? Which factors encourage some people to set up their own business and create jobs, and what prevents potential entrepreneurs from doing so? This contribution explores the determinants of regional differences in firm creation rates by using a new data set of 4,036 individual firms from Southwest Germany around 1900. Agglomeration effects and earlier firm creations stimulate current firm creation. In addition, a small and medium firm environment allows the formation of specific human capital – another favourable factor for a dynamic firm creation process in some regions.

Suggested Citation

  • Baten, Joerg, 2003. "Creating firms for a new century: Determinants of firm creation around 1900," European Review of Economic History, Cambridge University Press, vol. 7(3), pages 301-329, December.
    • Handle: RePEc:cup:ereveh:v:7:y:2003:i:03:p:301-329_00
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    JEL classification:

    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • N63 - Economic History - - Manufacturing and Construction - - - Europe: Pre-1913

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