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

  • Baten, Joerg

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 4036 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.

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Article provided by Cambridge University Press in its journal European Review of Economic History.

Volume (Year): 7 (2003)
Issue (Month): 03 (December)
Pages: 301-329

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Handle: RePEc:cup:ereveh:v:7:y:2003:i:03:p:301-329_00
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  1. Orr, Dale, 1974. "The Determinants of Entry: A Sudy of the Canadian Manufacturing Industries," The Review of Economics and Statistics, MIT Press, vol. 56(1), pages 58-66, February.
  2. David Audretsch & Michael Fritsch, 1999. "The Industry Component of Regional New Firm Formation Processes," Review of Industrial Organization, Springer, vol. 15(3), pages 239-252, November.
  3. Williamson, Jeffrey G., 1996. "Globalization, Convergence, and History," The Journal of Economic History, Cambridge University Press, vol. 56(02), pages 277-306, June.
  4. Paul Krugman, 1998. "Space: The Final Frontier," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 161-174, Spring.
  5. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
  6. de Vries, Jan, 1994. "The Industrial Revolution and the Industrious Revolution," The Journal of Economic History, Cambridge University Press, vol. 54(02), pages 249-270, June.
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