The Apple Doesn't Fall Far from the Tree: Location of Start-Ups Relative to Incumbents

36 Pages Posted: 8 Dec 2008

See all articles by Oliver Falck

Oliver Falck

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation

Michael Fritsch

University of Jena - School of Economics and Business Administration

Stephan Heblich

University of Stirling - Department of Economics

Date Written: December 2008

Abstract

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically bounded location factors based on data from 103 manufacturing industries across 327 West German and 111 East German districts. Our micro-geographic analysis reveals that the two parts of the country vary in their pattern of new firm location. In East ermany, only 5 percent of the industries reveal start-up localization patterns beyond what natural advantages would suggest compared to 40 percent in West Germany.

Keywords: entrepreneurship, location decision, natural advantages, local knowledge spillovers

JEL Classification: L26, R11, O18

Suggested Citation

Falck, Oliver and Fritsch, Michael and Heblich, Stephan, The Apple Doesn't Fall Far from the Tree: Location of Start-Ups Relative to Incumbents (December 2008). CESifo Working Paper Series No. 2486, Available at SSRN: https://ssrn.com/abstract=1313031

Oliver Falck (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute) - Department Human Capital and Innovation ( email )

Poschingerstr. 5
Munich, 81679
Germany

Michael Fritsch

University of Jena - School of Economics and Business Administration ( email )

Carl-Zeiss-Str. 3
D-07743 Jena
Germany

Stephan Heblich

University of Stirling - Department of Economics ( email )

Stirling, Scotland FK9 4LA
United Kingdom

HOME PAGE: http://www.management.stir.ac.uk/people/economics/academic-staff/dr-stephan-heblich

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