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Does Persistence in Start-up Activity Reflect Persistence in Social Capital?

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  • Michael Fritsch

    () (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

  • Michael Wyrwich

    () (School of Economics and Business Administration, Friedrich-Schiller-University Jena)

Abstract

Emerging literature shows that spatial differences in entrepreneurship tend to persist over longer periods of time. A potential mechanism underlying this pronounced persistence is that high levels of start-up activity lead to the emergence of a regional culture and a supporting environment in favor of entrepreneurship that particularly involves social capital. This chapter summarizes the available empirical evidence on the regional persistence of entrepreneurship and elaborates in detail how different elements of such a culture, such as social capital, can exert an influence on the level of new business formation and self-employment. As a demonstration for the relevance of a regional entrepreneurship culture for new business formation, we highlight the case of Germany where we find pronounced persistence of start-up activity despite radical structural and institutional shocks over the course of the 20th century. The German case suggests that there is a long-lasting local culture of entrepreneurship that can survive disruptive changes. We discuss the relationship between place-specific social capital and a regional culture of entrepreneurship and draw policy conclusions.

Suggested Citation

  • Michael Fritsch & Michael Wyrwich, 2015. "Does Persistence in Start-up Activity Reflect Persistence in Social Capital?," Jena Economic Research Papers 2015-009, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2015-009
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    References listed on IDEAS

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    Cited by:

    1. Michael Fritsch & Michael Wyrwich, 2017. "Persistence of Regional Entrepreneurship: Causes, Effects, and Directions for Future Research," Jena Economic Research Papers 2017-003, Friedrich-Schiller-University Jena.

    More about this item

    Keywords

    Entrepreneurship; social capital; economic development; self-employment; new business formation; entrepreneurship culture; institutions;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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