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The Persistence of Regional New Business Formation-Activity over Time - Assessing the Potential of Policy Promotion Programs

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  • Michael Fritsch
  • Pamela Mueller

Abstract

We investigate regional differences in the level and the development of regional new business formation activity. There is a pronounced variance of start-up rates across the regions. The level of regional new firm formation is rather path-dependent so that changes are relatively small. The main factors determining the level of regional start-ups are innovation and entrepreneurship. These factors also seem to be responsible for changes in the level of regional new business formation. In addition, unemployment plays a role. Steering innovation and creating an entrepreneurial atmosphere could be an appropriate starting point for policy measures that try to promote start-ups. Our empirical evidence strongly suggests that such measures may have significant effect only in the long run.

Suggested Citation

  • Michael Fritsch & Pamela Mueller, 2005. "The Persistence of Regional New Business Formation-Activity over Time - Assessing the Potential of Policy Promotion Programs," Papers on Entrepreneurship, Growth and Public Policy 2005-02, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    • Handle: RePEc:esi:egpdis:2005-02
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    1. Michael Fritsch & Oliver Falck, 2007. "New Business Formation by Industry over Space and Time: A Multidimensional Analysis," Regional Studies, Taylor & Francis Journals, vol. 41(2), pages 157-172.
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    11. Michael Fritsch & Udo Brixy & Oliver Falck, 2006. "The Effect of Industry, Region, and Time on New Business Survival – A Multi-Dimensional Analysis," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 28(3), pages 285-306, May.
    12. Michael Fritsch & Juergen Schmude (ed.), 2006. "Entrepreneurship in the Region," International Studies in Entrepreneurship, Springer, number 978-0-387-28376-0, December.
    13. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 10(3), pages 639-674, September.
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    15. Beesley, M E & Hamilton, R T, 1984. "Small Firms' Seedbed Role and the Concept of Turbulence," Journal of Industrial Economics, Wiley Blackwell, vol. 33(2), pages 217-231, December.
    16. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
    17. Joachim Wagner & Rolf Sternberg, 2004. "Start-up activities, individual characteristics, and the regional milieu: Lessons for entrepreneurship support policies from German micro data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(2), pages 219-240, June.
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    More about this item

    Keywords

    New businesses; entrepreneurship; growth regimes; time lags;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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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