Small Business Economics

, Volume 36, Issue 4, pp 419–442 | Cite as

New firm formation and employment growth: regional and business dynamics

  • Rui Baptista
  • Miguel Torres PretoEmail author


This study examines differences in the effects of start-up rates on subsequent employment change. Two sources of such differences—types of start-ups and types of regions—are analyzed. We find that differences between knowledge-based and other start-ups dominate differences between highly agglomerated and modestly agglomerated regions. In particular, differences in the effects of new start-ups on subsequent employment growth between highly agglomerated and modestly agglomerated regions are greater for knowledge-based start-ups than for other types of start-ups. The results suggest that, while knowledge-based start-ups are likely to impart greater benefits on future employment than other types of start-ups, these benefits are greater when those start-ups locate in more agglomerated regions.


Entrepreneurship Employment growth Knowledge based firms Regional agglomeration 

JEL Classifications

J23 L26 M13 O52 



The authors would like to thank Marcus Dejardin, Michael Fritsch, Pamela Mueller, Andre van Stel, and participants in the Special Session “Entrepreneurship and the Region” of 2007 ERSA Conference at ESSEC Business School (Paris). We are indebted to the Portuguese Ministry of Labor and Social Solidarity and to the Portuguese National Statistics Office (INE) for allowing us access to the data used in this paper. Miguel Torres Preto gratefully acknowledges the financial support of the Portuguese Foundation for Science and Technology (FCT grant SFRH/BD/22648/2005).


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Copyright information

© Springer Science+Business Media, LLC. 2009

Authors and Affiliations

  1. 1.Department of Engineering and Management and IN+ Centre for Innovation, Technology and Policy Research, Instituto Superior TécnicoTechnical University of LisbonLisbonPortugal
  2. 2.Department of Social and Decision SciencesCarnegie Mellon UniversityPittsburghUSA
  3. 3.Max Planck Institute of EconomicsJenaGermany

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