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Growth determinants of start-ups in Eastern Germany: a comparison between innovative and non-innovative firms


  • Almus, Matthias
  • Nerlinger, Eric A.
  • Steil, Fabian


This empirical analysis deals with the determinants of growth and the explanation of variations in the growth between innovative and non-innovative start-ups. Based on theoretical models explaining the growth of firms, hypotheses on potential determinants are formulated. The regression results indicate strong correlations between the growth rate on the one side and firmspecific, founder-specific as well as external factors on the other side. These factors influence the growth rates of innovative and non-innovative young firms in different ways. It becomes obvious that large and mature firms have smaller growth rates than small and young innovative as well as non-innovative firms. Moreover, other firm-specific characteristics like legal form and formal links to other firms from Western industrialised countries have an impact on the development of start-ups. With respect to founder-specific characteristics, positive effects can be derived from the human capital of the founder(s). This holds especially for technological disciplines whereas business knowledge plays a minor role. In addition to firm and founder characteristics, locationspecific factors controlling for agglomeration effects and the industry structure in the Eastern German counties have an impact on growth. Comparing annual growth rates of start-ups, innovative start-ups grow on average faster than non-innovative start-ups.

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  • Almus, Matthias & Nerlinger, Eric A. & Steil, Fabian, 1999. "Growth determinants of start-ups in Eastern Germany: a comparison between innovative and non-innovative firms," ZEW Discussion Papers 99-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  • Handle: RePEc:zbw:zewdip:5220

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    References listed on IDEAS

    1. Harhoff, Dietmar & Stahl, Konrad O., 1992. "Firm dynamics in East Germany: first empirical results," ZEW Discussion Papers 92-05, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Evans, David S, 1987. "Tests of Alternative Theories of Firm Growth," Journal of Political Economy, University of Chicago Press, vol. 95(4), pages 657-674, August.
    3. Trabert, Lioba, 1997. "Verdeckte Arbeitslosigkeit in West- und Ostdeutschland: Die Bedeutung der stillen Reserve," Wirtschaft im Wandel, Halle Institute for Economic Research (IWH), vol. 3(1), pages 3-8.
    4. Jaffe, Adam B, 1989. "Real Effects of Academic Research," American Economic Review, American Economic Association, vol. 79(5), pages 957-970, December.
    5. Gronau, Reuben, 1974. "Wage Comparisons-A Selectivity Bias," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1119-1143, Nov.-Dec..
    6. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-670, May.
    7. Harhoff, Dietmar & Stahl, Konrad & Woywode, Michael, 1998. "Legal Form, Growth and Exit of West German Firms--Empirical Results for Manufacturing, Construction, Trade and Service Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 453-488, December.
    8. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
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    Cited by:

    1. Liliya Oxtorp, 2014. "Dynamic managerial capability of technology-based international new ventures—a basis for their long-term competitive advantage," Journal of International Entrepreneurship, Springer, vol. 12(4), pages 389-420, December.
    2. Astrid Romain & Ant Bozkaya & Bruno Van Pottelsberghe, 2003. "Surveying technology-based small firms: a perspective from Belgium," Working Papers CEB 04-020.RS, ULB -- Universite Libre de Bruxelles.

    More about this item


    New Technology-based Firms; Employment Growth; Determinants of Growth;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms


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