IDEAS home Printed from
   My bibliography  Save this paper

Extending Shift-Share Decomposition through Cluster Analysis: an Application to New Firm Formation in British Counties


  • Maria Plotnikova

    (Department of Economics, University of Reading)

  • Nigel Wadeson
  • Brian Ashcroft

    (Department of Economics, University of Strathclyde)


Firm formation has been advocated by policy-makers and examined by researchers as a vehicle for job creation and economic development. Both industrial structures and the firm formation rates of individual industries vary regionally. For instance, Ashcroft et al (1991) showed that firm formation rates vary significantly between U.K. counties. While shift-share analysis has been used as a decomposition technique (Dunn, 1960) to account for these differences, a shortcoming is that the regional shift is affected by the level of regional employment in a given industry. Also, firm formation rates in each industry are likely to be partly determined by the industrial structure of a region. This paper extends the shift-share methodology developed by Johnson (1983) to incorporate a cluster analysis of the industrial structure of regional employment in order to further separate regional and sectoral components of firm formation in British counties in the1980s and 1990s. Firm formation is measured using VAT registration rates.

Suggested Citation

  • Maria Plotnikova & Nigel Wadeson & Brian Ashcroft, 2010. "Extending Shift-Share Decomposition through Cluster Analysis: an Application to New Firm Formation in British Counties," Economics Discussion Papers em-dp2010-06, Department of Economics, University of Reading.
  • Handle: RePEc:rdg:emxxdp:em-dp2010-06

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. David B. Audretsch & Max Keilbach, 2007. "The Theory of Knowledge Spillover Entrepreneurship," Journal of Management Studies, Wiley Blackwell, vol. 44(7), pages 1242-1254, November.
    2. Esteban-Marquillas, J. M., 1972. "I. A reinterpretation of shift-share analysis," Regional and Urban Economics, Elsevier, vol. 2(3), pages 249-255, October.
    3. Edgar S. Dunn, 1960. "A Statistical And Analytical Technique For Regional Analysis," Papers in Regional Science, Wiley Blackwell, vol. 6(1), pages 97-112, January.
    4. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:rdg:wpaper:em-dp2010-06 is not listed on IDEAS
    2. Saul Estrin & Julia Korosteleva & Tomasz Mickiewicz, 2022. "Schumpeterian Entry: Innovation, Exporting, and Growth Aspirations of Entrepreneurs," Entrepreneurship Theory and Practice, , vol. 46(2), pages 269-296, March.
    3. Duro, Juan Antonio & Esteban, Joan, 1998. "Factor decomposition of cross-country income inequality, 1960-1990," Economics Letters, Elsevier, vol. 60(3), pages 269-275, September.
    4. Chengguang Li & Rodrigo Isidor & Luis Alfonso Dau & Rudy Kabst, 2018. "The More the Merrier? Immigrant Share and Entrepreneurial Activities," Entrepreneurship Theory and Practice, , vol. 42(5), pages 698-733, September.
    5. Muhammad Naveed Iftikhar & Maha Ahmad & David B. Audretsch, 0. "The knowledge spillover theory of entrepreneurship: the developing country context," International Entrepreneurship and Management Journal, Springer, vol. 0, pages 1-20.
    6. Pilar Campoy-Muñoz & Manuel Alejandro Cardenete & M. Carmen Delgado, 2015. "Employment trends in the key sectors of the Andalusian economy," ERSA conference papers ersa15p91, European Regional Science Association.
    7. Florencia Garcia-Vicente & Daniel Garcia-Swartz & Martin Campbell-Kelly, 2017. "Information technology clusters and regional growth in America, 1970–1980," Small Business Economics, Springer, vol. 48(4), pages 1021-1046, April.
    8. João J. M. Ferreira & Cristina I. Fernandes & Sascha Kraus, 2019. "Entrepreneurship research: mapping intellectual structures and research trends," Review of Managerial Science, Springer, vol. 13(1), pages 181-205, February.
    9. Tsvetkova, Alexandra, 2016. "Do diversity, creativity and localized competition promote endogenous firm formation? Evidence from a high-tech US industry," MPRA Paper 72349, University Library of Munich, Germany.
    10. Peter-J. Jost, 2021. "Endogenous formation of entrepreneurial networks," Small Business Economics, Springer, vol. 56(1), pages 39-64, January.
    11. Roberta Capello & Camilla Lenzi, 2016. "Innovation modes and entrepreneurial behavioral characteristics in regional growth," Small Business Economics, Springer, vol. 47(4), pages 875-893, December.
    12. Valente J. Matlaba & Mark Holmes & Philip McCann & Jacques Poot, 2014. "Classic and Spatial Shift-Share Analysis of State-Level Employment Change in Brazil," Advances in Spatial Science, in: Karima Kourtit & Peter Nijkamp & Robert Stimson (ed.), Applied Regional Growth and Innovation Models, edition 127, chapter 0, pages 139-172, Springer.
    13. Andrea Bonaccorsi & Massimo Colombo & Massimiliano Guerini & Cristina Rossi-Lamastra, 2013. "University specialization and new firm creation across industries," Small Business Economics, Springer, vol. 41(4), pages 837-863, December.
    14. David B. Audretsch & Maksim Belitski, 2015. "Creativity spillover of entrepreneurship: evidence from European cities," Chapters, in: Charlie Karlsson & Urban Gråsjö & Sofia Wixe (ed.), Innovation and Entrepreneurship in the Global Economy, chapter 6, pages 141-161, Edward Elgar Publishing.
    15. Xuemei Zhou & Xiaodan Lin & Xiangfeng Ji & Jiahui Liang, 2021. "Effects of High-Speed Railway Construction and Operation on Related Industries in China," Sustainability, MDPI, vol. 13(11), pages 1-17, May.
    16. Alessandra Colombelli & Gianluca Orsatti & Francesco Quatraro, 2021. "Local knowledge composition and the emergence of entrepreneurial activities across industries: evidence from Italian NUTS-3 regions," Small Business Economics, Springer, vol. 56(2), pages 613-635, February.
    17. Rosa Caiazza & Maksim Belitski & David B. Audretsch, 2020. "From latent to emergent entrepreneurship: the knowledge spillover construction circle," The Journal of Technology Transfer, Springer, vol. 45(3), pages 694-704, June.
    18. David Audretsch, 2015. "Joseph Schumpeter and John Kenneth Galbraith: two sides of the same coin?," Journal of Evolutionary Economics, Springer, vol. 25(1), pages 197-214, January.
    19. Niccolò Ghio & Massimiliano Guerini & Erik Lehmann & Cristina Rossi-Lamastra, 2015. "The emergence of the knowledge spillover theory of entrepreneurship," Small Business Economics, Springer, vol. 44(1), pages 1-18, January.
    20. Till Proeger, 2020. "Knowledge Spillovers and Absorptive Capacity—Institutional Evidence from the “German Mittelstand”," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 11(1), pages 211-238, March.
    21. David Audretsch & Albert Link, 2012. "Entrepreneurship and innovation: public policy frameworks," The Journal of Technology Transfer, Springer, vol. 37(1), pages 1-17, February.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rdg:emxxdp:em-dp2010-06. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Alexander Mihailov (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.