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

  • André van Stel
  • David Storey
  • Pamela Mueller

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.

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File URL: http://www.entrepreneurship-sme.eu/pdf-ez/H200618.pdf
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Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H200618.

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Length: 25 pages
Date of creation: 20 Nov 2006
Date of revision:
Handle: RePEc:eim:papers:h200618
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  1. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
  2. Adriaan Van Stel & David Storey, 2004. "The Link between Firm Births and Job Creation: Is there a Upas Tree Effect?," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 893-909.
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