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Long-term effects of new firm formation by type of start-up

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  • Rui Baptista
  • Miguel Torres Preto

Abstract

We examine the regional effects of new business formation on subsequent employment growth, observing in particular the effects of different kinds of start-ups on employment change, and the lag structure of these effects. We differentiate new firms according to three criteria: 1) size; 2) presence of foreign capital; 3) incorporation of knowledge/technology. In all cases, results suggest that effects on new firm formation on subsequent employment change are significantly different according to the type of start-up. Start-ups that are larger, foreign-owned, and knowledge-based have considerably stronger effects on industrial re-structuring and employment change, whether due to market selection processes or supply-side spillovers. The results therefore suggest that recognising the types of entrants that generate greater impacts on employment growth is of foremost importance for the design of public policies towards entrepreneurship.

Suggested Citation

  • Rui Baptista & Miguel Torres Preto, 2010. "Long-term effects of new firm formation by type of start-up," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 11(4), pages 382-402.
    • Handle: RePEc:ids:ijesbu:v:11:y:2010:i:4:p:382-402
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    Citations

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    Cited by:

    1. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
    2. Fritsch, Michael, 2013. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(3), pages 249-364, February.
    3. Michael Fritsch, 2011. "The effect of new business formation on regional development - Empirical evidence, interpretation, and avenues for further research," Jena Economics Research Papers 2011-006, Friedrich-Schiller-University Jena.
    4. Michael Fritsch & Florian Noseleit, 2013. "Indirect employment effects of new business formation across regions: The role of local market conditions," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 361-382, June.
    5. Thomas Neumann, 2021. "The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review," Management Review Quarterly, Springer, vol. 71(3), pages 553-584, July.

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