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The shadow of death: do regional differences matter for firm survival across native and immigrant entrepreneurs?

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Abstract

Do regional differences matter for firm survival across native and immigrant entrepreneurs? We investigate this question applying a unique data derived from the Chamber of Industrial and Commercial Matters in Munich, Germany. The data consist of 110,250 companies either founded or liquidated during the period 1997–2004. We develop a Gompertz-Makeham hazard model to predict the chances of firm survival. After controlling for individual and environmental characteristics, we found that the performance of German and foreign companies do differ across administrative districts. Indicators such as tax trade collection rate and unemployment rate lead to significant increase in the hazard rate, while the population density and share of foreign population enhance the survival chances. The relationship between survival and agglomeration versus founder’s age show an inverted U-shaped pattern.

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Notes

  1. The computed χ 2-statistics accounts for 2,967.47 with nine degrees of freedom and is statistically significant at the 1% level.

  2. For recent examples, see the individual country studies contained in Geroski and Schwalbach (1991) as well as Audretsch and Mahmood (1994, 1995).

  3. The survival function is denoted as \(S\left( t \right)=\hbox{exp} \left\{ {-\alpha t-\beta/{\gamma \left[ {\hbox{exp} \left( {\gamma t} \right)-1} \right]}} \right\}, \) whereas the density is specified by f(t) = exp {−αt − β/γ [exp (γ t) − 1]} · { β exp [γt]}.

  4. Cluster 1: Berchtesgaden Region, Bad Toelz, Dachau, Ebersberg, Erding, Fuerstenfeldbruck, Garmisch-Partenkirchen, Landsberg am Lech, Miesbach, Muehldorf, Neuburg-Schrobenhausen and Rosenheim Region; Cluster 2: Munich City and Munich Region; Cluster 3: Ingolstadt, Rosenheim City, Altoetting and Pfaffenhofen, and Cluster 4: Eichstaett, Freising, Starnberg, Traunstein and Weilheim-Schongau.

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Acknowledgements

The author would like to thank the anonymous referees, as well as the participants of the workshop ‘Entrepreneurship, Firm Demography and Industrial Location’ (2006) held at the Austrian Institute for Economic Research.

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Correspondence to Nikolinka Fertala.

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Fertala, N. The shadow of death: do regional differences matter for firm survival across native and immigrant entrepreneurs?. Empirica 35, 59–80 (2008). https://doi.org/10.1007/s10663-007-9051-2

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