The determinants of regional differences in new firm formation in West-Germany
Differences in the spatial patters of the intensity of new firm formation have attracted the intrest of researchers for a long time. Usally birth-rates or sometimes count-data is used to explain the spatial pattern with a variety of independend variables. Starting from a Shift-Share-analysis we examine the regional share of the number of newly founded firms in 74 West-German planning regions between 1987 and 1997. The regional share has the advantage that effects of different regional industry-structures as well as different size-structures are excluded. Therefore, by analysing the regional share, the factors determing the number of newly founded firms apart from industry-structure and regional size can be examined very clearly. The structure of the data allows us to apply a panel-regression appraoch with fixed effects. There are four main results of our estimations. First agglomeration-effects are of great importance for the number of newly founded firms. Regions with a high density of population provide a better environment for entrepreneurs. Furthermore, agglomeration-effects shape the correlation between the regional share and other regional characteristics, too. Usually a high share of employees working in SMEs and especially a high proportion of R&D in SME are rated as signs for the existence of a ”seed-bed” for entrepreneurs. But in our analysis these variables show a negative influence on the number of newly founded firms. Our conclusion is that this is because these variables indicate missing agglomeration-effects. SMEs are typical for rural and peripheral locations. Secondly, there is a tendency that the properties that are favourable for starting new businesses are less favourable for the survival of newly founded firms. We are the opinion that this is at least partially the result of a high degree of competition between newly founded firms. Thirdly, high rates of unemployment and growing numbers of unemployed result in growing numbers of newly founded firms. Because of missing alternatives on the labour market, people tend to start their own businesses more easily than in regions with a lesser degree of unemployment. Fourthly, we found a high degree of spatial autocorrelation. ”Neighbouring regions have much in common” that result in similar values of the regional share. But it could be shown that this is not due to common factors that are missing in our analysis.
|Date of creation:||Aug 2003|
|Date of revision:|
|Contact details of provider:|| Postal: Welthandelsplatz 1, 1020 Vienna, Austria|
Web page: http://www.ersa.org
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
- 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.
When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa03p268. 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: (Gunther Maier)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.