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The effects of new firm formation on regional development over time: The case of Great Britain

Author

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  • André van Stel
  • David Storey
  • Pamela Mueller

Abstract

This paper re-examines the link between new firm formation and subsequent employment growth. It investigates whether it is possible to have the 'wrong type of entrepreneurship' defined as new firm formation which leads to zero or even negative subsequent employment growth. It uses a very similar approach to that of Fritsch and Mueller (2004), confirming their findings that the employment impact of new firm formation is in three discrete phases. Then, using data for Great Britain, the paper shows the employment impact of new firm formation is significantly positive in England, but zero in Scotland where formation rates are much lower. It also shows that, in the low enterprise counties of GB, new firm formation has a negative effect on employment, implying that we find that the 'wrong type of entrepreneurship' is possible.

Suggested Citation

  • André van Stel & David Storey & Pamela Mueller, 2006. "The effects of new firm formation on regional development over time: The case of Great Britain," Scales Research Reports H200618, EIM Business and Policy Research.
    • Handle: RePEc:eim:papers:h200618
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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