Are More Start-Ups Really Better? Quantity and Quality of New Businesses and Their Effect on Regional Development
نویسندگان
چکیده
Empirical analyses suggest that the employment creating effect of start-ups is highest in regions with a low level of new business formation and that an increase in the regional start-up rate beyond a certain level may lead to negative employment effect. In explaining these results, we assume that the average quality of regional start-ups decreases with the number of start-ups, while the costs of the induced resource reallocation increase. Our model implies that it is not the number of start-ups but their quality that is decisive for their effect on economic development. Therefore, a policy aiming at stimulating economic growth through entrepreneurship should focus on high-quality startups. JEL classification: L26, M13, O1, O18, R11
منابع مشابه
Determinants of New Firm Formation: Does Location Matter?
The link between location features and the propensity to start a new firm is a subject that did not get much attention in Iran until recently. This paper is the first attempt on this proposition and is concerned with deliberating the effect of demographical and industrial characteristics of location on start-up rates in Iranian manufacturing industries. To fulfill this aim, regional panel data ...
متن کاملStart-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth
We investigate the effects that regional start-up activity has on employment in new and in incumbent businesses. The analysis is performed for West German regions over the 1987-2002 period. It shows that the effects of new businesses on employment in the incumbents are significantly positive and that this indirect effect on incumbent employment leads to more jobs than what is created by the new...
متن کاملDoes Quality Make a Difference? Employment Effects of High- and Low-Quality Start-Ups
This paper investigates the impact of new firms’ quality on the magnitude of their employment effects. Our results clearly show that the quality of start-ups, measured by their affiliation with sectors and innovative industries, strongly influences the direct and the overall employment contribution of new firms. In particular, start-ups in manufacturing industries generate larger direct and ove...
متن کاملPresenting a model for the success of knowledge-based and technology-based start-ups in Iran by focusing on the appropriateness of the idea and team
Entrepreneurship in the field of knowledge has numerous problems due to dramatic changes and environmental uncertainty; However, these firms are considered as precursor, and substantial progress in knowledge, economics and employment cannot be achieved unbeknownst to them. The idea and team of such businesses are key elements for the success of these firms. The current study was carried out to ...
متن کاملRegional Integration in Asia and the Contribution of SMEs â a Review of the
Over the past decade the economies of East Asia and APEC more generally have been increasinglyopening up their markets, and in the process have achieved significant gains in exports and economicgrowth. In conjunction with this increased economic integration, there has been increased recognitionby regional governments of the potential for a substantial increase in the participation by smallbusin...
متن کامل