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Emergence of Firms: A Sociogeographic Demand Side Perspective


  • Hellerstedt, Karin

    () (Jönköping International Business School)

  • Wennberg, Karl

    () (The Ratio Institute and Stockholm School of Economics)


This paper presents an analysis of regional start-up rates in the knowledge intensive services and high-tech industries. To supplement prevailing frameworks focusing mainly on supply-side economic factors, we integrate insights from economic geography and population ecology to the entrepreneurship literature as to present a theoretical framework that captures both supply-and demand-side factors, with a specific emphasis on the demand side. Using a rich multi-level data material on all knowledge intensive start-ups across the 286 Swedish municipalities between 1994 and 2002, the empirical analysis focuses on how characteristics of the economic milieu of regions influence firm births. We find that economically affluent regions dominate entrepreneurial activity in terms of firm births, yet a number of much smaller rural region revealed high levels of start ups. Both economic and sociological variables such as knowledge spillovers from universities and firm R&D, and the political regulatory regime within the municipality, exhibit strong influences on firm births. These patterns points to strong support for the notion that ‘the geographic connection’ is important for analyzing entrepreneurial processes.

Suggested Citation

  • Hellerstedt, Karin & Wennberg, Karl, 2010. "Emergence of Firms: A Sociogeographic Demand Side Perspective," Ratio Working Papers 156, The Ratio Institute.
  • Handle: RePEc:hhs:ratioi:0156

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    More about this item


    Firm birth; Geography; Entrepreneurship;

    JEL classification:

    • 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
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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