Papers in Innovation Studies, CIRCLE, Center for Innovation, Research and Competences in the Learning Economy, Lund University
Survival of Entrepreneurial Firms: The Role of Agglomeration Externalities
() and Viroj Jienwatcharamongkhol
Abstract: This paper analyzes the role of various types of
agglomeration externalities on the survival rate of entrepreneurial firms.
In particular, we trace the population cohort of newly-established and
self-employed Swedish firms in the Knowledge-Intensive Business Service
(KIBS) sector in 1997 up to 2012 and investigate the role of Marshallian
and Jacobian externalities on the survival of these firms. We find that
only Jacobian externalities (diversity) is positively associated with the
survival of entrepreneurial firms. Not all Jacobian externalities matter
though. Only the higher the “related variety” of the region in which an
entrepreneurial firm is founded, the higher will be the survival chance of
the firm, while “unrelated variety” barely has any significant correlation.
The result is robust after controlling for extensive firm characteristics
and individual characteristics of the founders. The main message here is:
for a newly-established entrepreneurial firm, not only it matters who you
are, but also where you are.
Keywords: Entrepreneurial firms; region; agglomeration externalities; survival analysis; related variety; unrelated variety; (follow links to similar papers)
JEL-Codes: J24; L26; R12; (follow links to similar papers)
33 pages, October 19, 2016
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