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The Localization of Entrepreneurship Capital - Evidence from Germany

Author

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  • David B. Audretsch

    (Max Planck Institute of Economics, Jena, Germany; Indiana University, USA)

  • Max Keilbach

    (Max Planck Institute of Economics, Jena, Germany)

Abstract

Whereas initially physical capital and later, knowledge capital were viewed as crucial for growth, more recently a very different factor, entrepreneurship capital, has emerged as a driving force of economic growth. In this paper, we define a region's capacity to create new firms start-ups as the region's entrepreneurship capital. We then investigate the local embeddedness of this variable and which variables have an impact on this variable. Using data for Germany, we find that knowledge-based entrepreneurship capital is driven by local levels of knowledge creation and the acceptance of new ideas, indicating that local knowledge flows play an important role. Low-tech entrepreneurship capital is rather increased by regional unemployment and driven by direct incentives such as subsidies. All three measures are locally clustered, indicating that indeed, entrepreneurship capital is a phenomenon that is driven by local culture, and is therefore locally bounded.

Suggested Citation

  • David B. Audretsch & Max Keilbach, 2007. "The Localization of Entrepreneurship Capital - Evidence from Germany," Jena Economics Research Papers 2007-029, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2007-029
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    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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