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The Apple Doesn't Fall Far From the Tree: Location of Start-Ups Relative to Incumbents

  • Oliver Falck

    ()

    (Ifo Institute for Economic Research)

  • Michael Fritsch

    ()

    (University of Jena, School of Economics and Business Administration, Max Planck Institute of Economics, and German Institute for Economic Research (DIW))

  • Stephan Heblich

    ()

    (Max Planck Institute of Economics, Entrepreneurship, Growth, and Public Policy Group)

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically bounded location factors based on data from 103 manufacturing industries across 327 West German and 111 East German districts. Our micro-geographic analysis reveals that the two parts of the country vary in their pattern of new firm location. In East Germany, only 5 percent of the industries reveal start-up localization patterns beyond what natural advantages would suggest compared to 40 percent in West Germany.

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Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2008-082.

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Date of creation: 03 Nov 2008
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Handle: RePEc:jrp:jrpwrp:2008-082
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