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The Distribution of Firm Start-Up Size Across Geographic Space

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  • Audretsch, David B
  • Tamvada, Jagannadha Pawan

Abstract

A growing body of literature shows that geographic location plays an important role in influencing economic phenomena. Despite the renewed interest in economic geography, the existing literature on the firm size distribution (FSD) has ignored the impact of geographic location. A wave of recent studies has examined the determinants and evolution of FSD (Cabral and Mata, 2003; Angelini and Generale 2008, AER) and a component of this literature has focused on the size of the new firm start-ups. However, while the impact of firm-specific and industry-specific characteristics on size of new firms has been analyzed, the role of geographic location has been largely neglected. Using Bayesian semi-parametric geoadditive models, we estimate geographic location as a micro-determinant of firm start-up size. The estimations based on a comprehensive database of firm start-ups in India suggest that the size distribution of new firms exhibits distinct regional patterns, even after controlling for firm and industry characteristics. These residual spatial patterns are found to be attributable, to some extent, to the level of economic and financial development in the regions.

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  • Audretsch, David B & Tamvada, Jagannadha Pawan, 2008. "The Distribution of Firm Start-Up Size Across Geographic Space," CEPR Discussion Papers 6846, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:6846
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    2. Alexander Coad & Jagannadha Pawan Tamvada, 2008. "The Growth and Decline of Small firms In Developing Countries," Papers on Economics and Evolution 2008-08, Philipps University Marburg, Department of Geography.
    3. Murat ATAN & Emre BOZDAĞ, 2011. "Avrupa Karbonatlı İçecekler Piyasasında Firma Büyüklüğü Ve Büyüklük Genişleme Oranı İlişkisi," Ekonomik Yaklasim, Ekonomik Yaklasim Association, vol. 22(80), pages 19-38.
    4. Klaesson , Johan & Karlsson, Charlie, 2014. "Market potential, start-up size and the survival of new firms," Working Paper Series in Economics and Institutions of Innovation 384, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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    More about this item

    Keywords

    Bayesian Methods; Developing Countries; Firm Size Distribution; Geoadditive Models; Geography; Start-Up Size;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - 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)

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