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Regional Patterns and Determinants of the Success of New Firms in Western Germany

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  • Reinhold Grotz

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  • Udo Brixy

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Abstract

There exists a large body of literature on the determinants of regional variation in new firm formation. In contrast there are only a few articles on the spatial differences of new firm survival. Using panel data we analyse both items for 74 West-German regions of a ten years period. Our aim is to focus on the relationship of both rates. It seems convincing that regions with high birth-rates should also have high survival-rates, because a favourable environment for the founding of new firms should also be encouraging for the development of these firms. But already a descriptive analysis of both rates reveals the existence of a negative relationship in general. This means that in regions with high birth-rates the survival rates are lower than the average. But despite this correlation in general it is shown that the spatial pattern of a combination of both rates is complex and there exist all types of possible relationships. With a multivariate panel analysis we study the factors that influence regional birth-rates and survival-rates in a similar way, that means with the same method and the same set of independent variables. It is shown that in the service sector most variables are literally working in opposite direction in birth-rates and survival-rates models. But this holds not for the producing industry. Here, the above mentioned thesis is true. The reason for this is a complete different outcome of the estimated birth-rates models for both industry-sectors, whereas there are only minor differences in the estimated survival-rate-models. We can deduce therefore, first that both industries have different requirements of their “seed bed” but not for their further successful development. Second, that the spatial structures that increase the number of newly founded businesses in the service sector are adverse to the survival-rates of newly founded firms.

Suggested Citation

  • Reinhold Grotz & Udo Brixy, 2003. "Regional Patterns and Determinants of the Success of New Firms in Western Germany," ERSA conference papers ersa03p270, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa03p270
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    File URL: http://www-sre.wu.ac.at/ersa/ersaconfs/ersa03/cdrom/papers/270.pdf
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    References listed on IDEAS

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    1. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
    2. Catherine Armington & Zoltan Acs, 2002. "The Determinants of Regional Variation in New Firm Formation," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 33-45.
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    Cited by:

    1. Schanne, Norbert & Weyh, Antje, 2009. "What makes start-ups out of unemployment different?," IAB Discussion Paper 200904, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    2. Martin Carree & Ingrid Verheul & Enrico Santarelli, 2011. "Sectoral patterns of firm exit in Italian provinces," Journal of Evolutionary Economics, Springer, vol. 21(3), pages 499-517, August.
    3. Koen Frenken & Elena Cefis & Erik Stam, 2015. "Industrial Dynamics and Clusters: A Survey," Regional Studies, Taylor & Francis Journals, vol. 49(1), pages 10-27, January.
    4. Sven-Olov Daunfeldt & Niklas Elert & Niklas Rudholm, 2013. "Start-ups and firm in-migration: evidence from the Swedish wholesale industry," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 51(2), pages 479-494, October.
    5. Hans Lööf & Pardis Nabavi, 2014. "Survival, productivity and growth of new ventures across locations," Small Business Economics, Springer, vol. 43(2), pages 477-491, August.
    6. Anders Bornhäll & Sven-Olov Daunfeldt & Niklas Rudholm, 2013. "Sleeping Gazelles: High profits but no growth," SPRU Working Paper Series 2013-10, SPRU - Science and Technology Policy Research, University of Sussex.
    7. Malevergne, Y. & Saichev, A. & Sornette, D., 2013. "Zipf's law and maximum sustainable growth," Journal of Economic Dynamics and Control, Elsevier, vol. 37(6), pages 1195-1212.
    8. Michaela Fuchs, 2011. "The determinants of local employment dynamics in Western Germany," Empirical Economics, Springer, vol. 40(1), pages 177-203, February.
    9. Brixy, Udo & Sternberg, Rolf & Stüber, Heiko, 2008. "From potential to real entrepreneurship," IAB Discussion Paper 200832, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    10. Enrico Santarelli & Hien Thu Tran, 2012. "Growth of Incumbent Firms and Entrepreneurship in V ietnam," Growth and Change, Wiley Blackwell, vol. 43(4), pages 638-666, December.

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