How do successful exits impact regional development? Longitudinal evidence from European cities

Aaron Defort (), Michael Fröhlich, Paul Neuroth and Isabell Welpe
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Aaron Defort: Center for Digital Technology and Management (CDTM) at Ludwig Maximilian University of Munich (LMU) and Technical University of Munich (TUM)
Michael Fröhlich: Center for Digital Technology and Management (CDTM) at Ludwig Maximilian University of Munich (LMU) and Technical University of Munich (TUM)
Paul Neuroth: Technical University of Munich (TUM)
Isabell Welpe: Technical University of Munich (TUM)

Small Business Economics, 2025, vol. 65, issue 3, No 16, 1593 pages

Abstract: Abstract This paper investigates the impact of different types of successful start-up exits on the development of entrepreneurial ecosystems (EEs). With a panel data analysis covering 45 European cities over 20 years, the study examines how acquisitions and IPOs influence subsequent individual investment activity and new venture creation. The results reveal that acquisitions significantly and positively influence investment activity and new venture creation in the following years. In contrast, IPOs show smaller and marginally significant effects. These findings provide nuanced insights into how entrepreneurial recycling occurs within EEs after exit events, contributing to our understanding of the evolutionary nature of entrepreneurial ecosystems. The study underscores the importance of exit routes and the legitimacy of ecosystem actors in fostering entrepreneurship and regional development.

Keywords: Entrepreneurial ecosystems; Start-up exits; Entrepreneurship; Acquisitions; Initial Public Offerings (IPOs); New venture creation; Investment activity; Angel investing (search for similar items in EconPapers)
JEL-codes: L26 M13 O31 R11 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-025-01039-w

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