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Local Clusters of Entrepreneurs -neighborhood peer effects in entrepreneurship?

Author

Listed:
  • Andersson, Martin

    (CIRCLE, Lund University, Sweden and Blekinge Institute of Technology)

  • Larsson , Johan P.

    (Centre for Entrepreneurship and Spatial Economics (CEnSE), Department of Economics, Finance and Statistics, Jönköping International Business School (JIBS), Jönköping)

Abstract

Entrepreneurial activity is significantly predicted by the presence of other entrepreneurs in the residential neighborhood. One plausible source of such spatial clustering is local peer effects, where individuals’ decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability than an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5 percentage point higher entrepreneurial intensity all else equal produces between 7 and 8 more entrepreneurs per square kilometer, each year. Local peer effects appear as important in explaining local clusters of entrepreneurs, and imply a local feedback-effect in which the presence of established entrepreneurs in a neighborhood breeds new local entrepreneurs

Suggested Citation

  • Andersson, Martin & Larsson , Johan P., 2013. "Local Clusters of Entrepreneurs -neighborhood peer effects in entrepreneurship?," Papers in Innovation Studies 2013/30, Lund University, CIRCLE - Centre for Innovation Research.
    • Handle: RePEc:hhs:lucirc:2013_030
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    File URL: http://wp.circle.lu.se/upload/CIRCLE/workingpapers/201330_Andersson_Larsson.pdf
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    Citations

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    Cited by:

    1. Martin G.A. Svensson, 2015. "When being wrong might be right: on overconfidence as an evolutionary mechanism of nascent entrepreneurs," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), Innovation and Entrepreneurship in the Global Economy, chapter 10, pages 237-258, Edward Elgar Publishing.
    2. Andersson, Martin & Henrekson, Magnus, 2014. "Local Competitiveness Fostered through Local Institutions for Entrepreneurship," Working Paper Series 1020, Research Institute of Industrial Economics.

    More about this item

    Keywords

    entrepreneurship; clusters; peer effects; local social interactions; role models; neighborhood; social network externalities; path dependence;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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