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Regional patterns and determinants of new firm formation and survival in western Germany

Author

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  • Brixy, Udo

    () (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Grotz, Reinhold

Abstract

"There is a large body of literature on the determinants of regional variation in new firm formation. In contrast there are few articles on the spatial differences in new firm survival. Using panel data we analyse both items for 74 western German regions over a ten-year period. The positive relationship between entry and exit which is often stated suggests a negative correlation between entry and survival. On the other hand, however, it seems convincing that regions with high birth rates should also have high survival rates, because a favourable environment for the founding of new firms should also be encouraging for the development of these firms. However, an analysis of both rates for 74 western German regions over a ten-year period reveals the existence of a negative relationship in general. This means that the survival rates are below average in regions with high birth rates. Despite this overall correlation, however, it is shown that the spatial pattern of a combination of both rates is complex, and all types of possible relationships exist. With a multivariate panel analysis we study the factors that influence regional birth and survival rates using the same set of independent variables. It is shown that in the service sector most variables literally work in opposite directions in the birth and survival rates models. But this does not hold for the manufacturing sector. This can be rated as evidence for the 'supportive environment thesis'. The reason for this is a completely different outcome of the estimated birth rates models for both industry sectors, whereas there are only minor differences in the estimated survival rate models. We can therefore deduce firstly that the two industries have different requirements for their 'seed bed' but not for their further successful development; and secondly, that the spatial structures which increase the number of newly founded businesses in the service sector are detrimental to the survival rates of newly founded firms." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Brixy, Udo & Grotz, Reinhold, 2006. "Regional patterns and determinants of new firm formation and survival in western Germany," IAB Discussion Paper 200605, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  • Handle: RePEc:iab:iabdpa:200605
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    References listed on IDEAS

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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.
    2. Fritsch, Michael & Falck, Oliver, . "New firm formation by industry over space and time: a multi-level analysis for Germany," Chapters in Economics, University of Munich, Department of Economics.
    3. Veronique A.J.M. Schutjens & Egbert Wever, 2000. "Determinants of new firm success," Papers in Regional Science, Springer;Regional Science Association International, vol. 79(2), pages 135-153.
    4. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
    5. Michael Fritsch & Oliver Falck, 2003. "New Firm Formation by Industry over Space and Time: A Multi-Level Analysis," Discussion Papers of DIW Berlin 322, DIW Berlin, German Institute for Economic Research.
    6. Vinod Sutaria & Donald A. Hicks, 2004. "New firm formation: Dynamics and determinants," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 38(2), pages 241-262, June.
    7. Elisabet Berglund & Kurt Brännäs, 2001. "Plants' entry and exit in Swedish municipalities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 35(3), pages 431-448.
    8. Catherine Armington & Zoltan Acs, 2002. "The Determinants of Regional Variation in New Firm Formation," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 33-45.
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    Citations

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    Cited by:

    1. Bruder, Jana & Räthke-Döppner, Solvig, 2008. "Ethnic minority self-employment in Germany: Geographical distribution and determinants of regional variation," Thuenen-Series of Applied Economic Theory 100, University of Rostock, Institute of Economics.
    2. Anne Otto, 2006. "The Role of New Firms for the Development of Clusters," ERSA conference papers ersa06p275, European Regional Science Association.
    3. Anne Otto & Dirk Fornahl, 2009. "Cohesion Policy:Methodology And Indicators Towards Common Approach," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 3(1), pages 1-35, JUNE.
    4. Daniela Rother, 2007. "Zukunft des Studienplatzangebots ostdeutscher Hochschulen," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(01), pages 37-40, 02.
    5. Elsa Morais Sarmento & Alcina Nunes, 2010. "Análise comparativa de sobrevivência empresarial: o caso da região Norte de Portugal," GEE Papers 0028, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Dec 2010.
    6. Elsa Sarmento & Alcina Nunes, 2010. "Comparative Survival Analysis of Firms: the case of the Portuguese North region," Working Papers de Economia (Economics Working Papers) 53, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro.
    7. Michael Berlemann & Jane Tilgner, 2006. "Determinanten der Standortwahl von Unternehmen : ein Literaturüberblick," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 13(06), pages 14-24, December.
    8. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    9. Otto, Anne & Fornahl, Dirk, 2008. "Long-term growth determinants of young businesses in Germany : effects of regional concentration and specialisation," IAB Discussion Paper 200813, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Marco Caliendo & Steffen Künn, 2014. "Regional Effect Heterogeneity of Start-up Subsidies for the Unemployed," Regional Studies, Taylor & Francis Journals, vol. 48(6), pages 1108-1134, June.
    11. Michael Berlemann & Sabine Engelmann & Matthias Göthel & Beate Henschel & Carsten Pohl & Joachim Ragnitz & Heinz Schmalholz, 2008. "Die neuen Bundesländer im internationalen Standortvergleich," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 43.
    12. Laura Romeu Gordo, 2011. "Compression of morbidity and the labour supply of older people," Applied Economics, Taylor & Francis Journals, vol. 43(4), pages 503-513.
    13. Hohendanner, Christian, 2007. "Verdrängen Ein-Euro-Jobs sozialversicherungspflichtige Beschäftigung in den Betrieben?," IAB Discussion Paper 200708, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    14. Kruppe, Thomas, 2006. "Die Förderung beruflicher Weiterbildung : eine mikroökonometrische Evaluation der Ergänzung durch das ESF-BA-Programm," IAB Discussion Paper 200621, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Raimund Krumm & Harald Strotmann, 2013. "The impact of regional location factors on job creation, job destruction and employment growth in manufacturing," Review of Regional Research: Jahrbuch für Regionalwissenschaft, Springer;Gesellschaft für Regionalforschung (GfR), vol. 33(1), pages 23-48, February.
    16. Raimund Krumm & Harald Strotmann, 2010. "The Impact of Regional Supply and Demand Conditions on Job Creation and Destruction," IAW Discussion Papers 61, Institut für Angewandte Wirtschaftsforschung (IAW).
    17. Eckey, Hans-Friedrich & Schwengler, Barbara & Türck, Matthias, 2007. "Vergleich von deutschen Arbeitsmarktregionen," IAB Discussion Paper 200703, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    18. Blien, Uwe & Kirchhof, Kai & Ludewig, Oliver, 2006. "Agglomeration effects on labour demand," IAB Discussion Paper 200628, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    19. Amend, Elke & Herbst, Patrick, 2008. "Labor market pooling and human capital investment decisions," IAB Discussion Paper 200804, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

    More about this item

    Keywords

    Unternehmensgründung; regionale Disparität; Unternehmenserfolg; Wirtschaftszweige; Westdeutschland; Bundesrepublik Deutschland;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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