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Determinants of New Firm Formation in Taiwan


  • Su-wan Wang



The main objective of this paper is to explore the factors influencing new firm formation in Taiwan. The paper makes use of both cross-sectional and time-series data for the period 1986–2001, using the fixed effect model to try to determine the factors affecting new firm formation. The impacts of industry health, production costs, capital cost, number of employed persons, the unemployment rate, and the economic growth rate are found to be more or less as anticipated. However, only production costs, capital cost, and the unemployment rate are significant with confidence levels of 95% and 90%, respectively. The results also suggest that Taiwan currently is located at the unemployment borderline proposed by Hamilton, and thus a recession-push is already operating, while a prosperity-pull is starting to make itself felt. Copyright Springer 2006

Suggested Citation

  • Su-wan Wang, 2006. "Determinants of New Firm Formation in Taiwan," Small Business Economics, Springer, vol. 27(4), pages 313-321, December.
  • Handle: RePEc:kap:sbusec:v:27:y:2006:i:4:p:313-321
    DOI: 10.1007/s11187-005-8722-2

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    References listed on IDEAS

    1. David Audretsch & Michael Fritsch, 1999. "The Industry Component of Regional New Firm Formation Processes," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 15(3), pages 239-252, November.
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    Cited by:

    1. Carla Daniela Calá & Miguel Manjón-Antolín & Josep-Maria Arauzo-Carod, 2016. "Regional determinants of firm entry in a developing country," Papers in Regional Science, Wiley Blackwell, vol. 95(2), pages 259-279, June.
    2. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," World Bank Research Observer, World Bank Group, vol. 30(2), pages 277-305.
    3. Fragoso, Rui Manuel de Sousa, 2015. "Habitat Features and Strategies for the Sustainable Development in the Alentejo Region," Brazilian Journal of Rural Economy and Sociology (RESR), Sociedade Brasileira de Economia e Sociologia Rural, vol. 53.
    4. Schanne, Norbert & Weyh, Antje, 2009. "What makes start-ups out of unemployment different?," IAB Discussion Paper 200904, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    5. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Regional Economic Growth: Towards A General Theory of Start-Ups," WIDER Working Paper Series 070, World Institute for Development Economic Research (UNU-WIDER).
    6. Calá, Carla Daniela, 2015. "Firm dynamics in developing countries: a single policy for all regions?," Nülan. Deposited Documents 2650, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    7. Hugo Horta & Michele Meoli & Silvio Vismara, 2016. "Skilled unemployment and the creation of academic spin-offs: a recession-push hypothesis," The Journal of Technology Transfer, Springer, vol. 41(4), pages 798-817, August.
    8. Calá, Carla Daniela & Manjón-Antolín, Miguel & Arauzo-Carod, Josep-Maria, 2014. "The determinants of exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 1976, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    9. repec:spr:anresc:v:59:y:2017:i:1:d:10.1007_s00168-017-0819-4 is not listed on IDEAS
    10. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
    11. Calá, Carla Daniela & Arauzo-Carod, Josep-Maria & Manjón-Antolín, Miguel, 2015. "The determinants of entrepreneurship in developing countries," Nülan. Deposited Documents 2125, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    12. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    13. Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute for the Study of Labor (IZA).
    14. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    15. Chih-Cheng CHEN, 2015. "Industrial Agglomeration, Clusters, and Regional New Firm Formation: A Case Study of Taiwan’s Counties/Cities," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 15(1), pages 173-190.
    16. Carla Calá & Josep-Maria Arauzo-Carod & Miguel Manjón-Antolín, 2015. "The determinants of exit in a developing country: core and peripheral regions," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 927-944, May.
    17. Calá, Carla Daniela, 2018. "Sectorial and regional determinants of firm dynamics in developing countries: evidence for low, medium and high tech manufacturing in Argentina," Nülan. Deposited Documents 2587, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    18. Enrico Santarelli & Hien Thu Tran, 2012. "Growth of Incumbent Firms and Entrepreneurship in V ietnam," Growth and Change, Wiley Blackwell, vol. 43(4), pages 638-666, December.
    19. Calá, Carla Daniela, 2015. "Regional issues on firm entry and exit in Argentina: core and peripheral regions," Nülan. Deposited Documents 2649, Universidad Nacional de Mar del Plata, Facultad de Ciencias Económicas y Sociales, Centro de Documentación.
    20. Kim, Younghwan & Kim, Wonjoon & Yang, Taeyong, 2012. "The effect of the triple helix system and habitat on regional entrepreneurship: Empirical evidence from the U.S," Research Policy, Elsevier, vol. 41(1), pages 154-166.
    21. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
    22. Andrew Ross, 2011. "Regional Determinants of Entrepreneurship in a Small Economy: Panel Data Evidence from Scotland," ERSA conference papers ersa11p848, European Regional Science Association.


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