Survival of Entrepreneurial Firms: The Role of Agglomeration Externalities

Sam Tavassoli and Viroj Jienwatcharamongkhol ()
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Viroj Jienwatcharamongkhol: Department of Economics, Lund University, Postal: Sweden

No 2016/28, Papers in Innovation Studies from Lund University, CIRCLE - Centre for Innovation Research

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 (search for similar items in EconPapers)
JEL-codes: J24 L26 R12 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2016-10-19
New Economics Papers: this item is included in nep-bec, nep-cse, nep-ent, nep-eur, nep-geo, nep-ino, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Related works:
Journal Article: Survival of entrepreneurial firms: the role of agglomeration externalities (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:lucirc:2016_028

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