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Spatial analysis of new firm formation in creative industries before and during the world economic crisis

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Abstract

Most empirical research on the effects of the economic downturns has been a-spatial and overlooked the location choices of creative industries (CIs). The present study addresses an open debate on whether economic downturns have pushed a change in the relative importance of resilience-based versus traditional CIs location factors. Considering the location choices of 6332 CIs Portuguese start-ups in the period 2005–2012, we found that: (1) the crisis brought changes in the relative importance of location factors, enhancing traditional CI location factors such as technology and diminishing the relevance of resilience-based factors related to regions industrial specialisation; (2) resilience-based factors, such as industrial diversity, higher education, cultural and social networking and traditional CI factors, namely lower social inequality and life quality, were robust drivers for the emergence of new start-ups all over the period; and (3) although cultural policy significantly and positively support the emergence of new CIs start-ups in the crisis period, the austerity period reversed that role. Our results suggest that the sustainable development of regions implies encompassing public stimulus to the generation of a diversified, interdependent network of creative activities, able to enhance innovation through their own synergies and linkages with the rest of the economy.

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Fig. 1

Source: Authors’ computations based on STATA 15® and micro-data from the Linked Employer–Employee Databases, GEE/ME, Portugal

Fig. 2

Source: Authors’ computations based on STATA 15® and micro-data from the Linked Employer–Employee Databases, GEE/ME, Portugal

Fig. 3

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Notes

  1. At the 74th session of the UN General Assembly, in 2019.

  2. Courtesy of GEE/ME, Gabinete de Estratégia e Estudos, Ministry of Economy, Portugal (Quadros de Pessoal, Linked Employer–Employee Databases).

  3. All the tables in Annex are included in the Electronic supplementary material.

  4. Particularly during the recession (2008–2009) and austerity period (2010–2012), CIs’ start-ups suffered a slight shift in Portugal. Being more diversified across all CI segments in pre-crisis years (2005–2007), during crisis (2008–2009) and austerity (2010–2012) periods, CIs start-ups emerged more around Software and digital/ remote-based activities, segments more resilient to the crisis. In turn, we registered a major decline on CIs that were deeply intertwined within the regions’ industrial/ manufacturing and services structure, such as: Architecture, Design, Music, Film, Video, Photography. That helps explaining the decrease in significance on LQ Manufacturing and LQ Services over these years.

  5. Cultural policy has a positive and statistically significant impact on all CIs, particularly in periods 2005–2007 and 2008–2009, namely on CI cultural services and research-oriented sectors. Running an analysis at the detail of sub-sector, for most of the relevant variables, the segments of Music, Performing and Arts and Research were the ones most impacted by the effects of Cultural Policy (Table A5 in Annex).

  6. In a separate analysis, we estimated the model for the three periods using a dummy for large cities (as Lisbon and Porto). Due to high collinearity with the other variables in the model, we run the estimation only for this dummy (Table A6 in Annex). We obtained a positive coefficient for all periods under analysis. Over the periods 2005–2007, 2008–2009 and 2010–2012, we can see a slight increase in the impact of such dummy for large cities on the location of CIs.

  7. For better comparison of our estimations, we also run the same model for traditional Manufacturing start-ups (see Table A7, in Annex). Results indicate that in traditional Manufacturing sectors most relevant location factors, in all the periods, were: LQ Manufacturing (suggesting Manufacturing within-sectorial agglomeration economies); Industrial Diversity Mix; R&D firms; and Human Capital. This suggests that, differently from CIs that developed more towards digital, remote and knowledge-based grounds, traditional Manufacturing resilience-based location factors relied more on the Manufacturing industrial structure and agglomeration economies. Yet, there were also similarities between CI and traditional Manufacturing sectors’ adaptation to the economic crisis, such as the importance of technology, R&D and human capital.

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Acknowledgements

The research work of Aurora Teixeira has been financed by Portuguese public funds through FCT - Fundação para a Ciência e a Tecnologia, I.P., in the framework of the project with reference UIDB/04105/2020.

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  1. Faculdade de Economia, Universidade do Porto, Porto, Portugal

    Sara C. Santos Cruz

  2. CEF.UP, Faculdade de Economia, INESC TEC, Universidade do Porto, R. Dr. Roberto Frias, 4200-464, Porto, Portugal

    Aurora A. C. Teixeira

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Correspondence to Aurora A. C. Teixeira.

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Cruz, S.C.S., Teixeira, A.A.C. Spatial analysis of new firm formation in creative industries before and during the world economic crisis. Ann Reg Sci 67, 385–413 (2021). https://doi.org/10.1007/s00168-021-01052-3

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