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Does local technological specialisation, diversity and dynamic competition enhance firm creation?

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  • Kim, Jungho
  • Kollmann, Trevor
  • Palangkaraya, Alfons
  • Webster, Elizabeth

Abstract

Does the presence of specialist technological expertise, diversity across industries and the intensity of competition among existing firms in a location affect the rate at which new firms are attracted to an agglomeration? We construct three measures of these explanators including a novel measure of competitive dynamics and estimate a region-industry panel fixed-effects model using data on a national census of firms over a 15-year period. This extensive panel dataset of firms and regions, enables us to move beyond the comparative static analysis which has dominated the agglomeration literature for so long. We find local competitive intensity has a large positive effect on firm creation. Competition attracts, not repels. Technological specialisation is a moderate attractee, but diversity may merely lead to local congestion.

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  • Kim, Jungho & Kollmann, Trevor & Palangkaraya, Alfons & Webster, Elizabeth, 2022. "Does local technological specialisation, diversity and dynamic competition enhance firm creation?," Research Policy, Elsevier, vol. 51(7).
    • Handle: RePEc:eee:respol:v:51:y:2022:i:7:s0048733322000816
    DOI: 10.1016/j.respol.2022.104557
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    15. Vera Barinova & Denis Burkov & Stepan Zemtsov & Vladimir Eremkin, 2016. "Uncovering Regional Clustering of high technology SMEs: Russian Case," Working Papers 147, Gaidar Institute for Economic Policy, revised 2016.
    16. Giulio Cainelli & Sandro Montresor & Giuseppe Vittucci Marzetti, 2014. "Spatial agglomeration and firm exit: a spatial dynamic analysis for Italian provinces," Small Business Economics, Springer, vol. 43(1), pages 213-228, June.
    17. Tavassoli, Sam & Jienwatcharamongkhol, Viroj & Arenius, Pia, 2021. "Colocation of Entrepreneurs and New Firm Survival: Role of New Firm Founder’s Experiential Relatedness to Local Entrepreneurs," Papers in Innovation Studies 2021/13, Lund University, CIRCLE - Centre for Innovation Research.
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    21. Dirk Dohse & Sascha Walter, 2012. "Knowledge context and entrepreneurial intentions among students," Small Business Economics, Springer, vol. 39(4), pages 877-895, November.
    22. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.

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