Small Business Economics

, Volume 34, Issue 3, pp 221–241 | Cite as

The effect of clusters on the survival and performance of new firms

  • Karl WennbergEmail author
  • Göran Lindqvist


This paper contributes to the literatures on entrepreneurship and economic geography by investigating the effects of clusters on the survival and performance of new entrepreneurial firms where clusters are defined as regional agglomerations of related industries. We analyze firm-level data for all 4,397 Swedish firms started in the telecom and consumer electronics, financial services, information technology, medical equipment, and pharmaceuticals and pharmaceutical sectors from 1993 to 2002. We find that that firms located in strong clusters create more jobs, higher tax payments, and higher wages to employees. These effects are consistent for absolute agglomeration measures (firm or employee counts), but weaker for relative agglomeration measures (location quotients). The strengths of the effects are found to vary depending on which geographical aggregation level is chosen for the agglomeration measure.


Clusters Agglomeration Entrepreneurship Survival Job creation 

JEL Classifications

R12 L26 O12 



We are grateful for critical comments from Michael Dahl, Olav Sorenson, Tim Folta, Johan Wiklund, Rene Belderbos, Örjan Sölvell, Ulli Meyer, Dirk Fornahl, and seminar participants and the 2007 Uddevalla Symposium. Financial support was provided by Handelsbanken Research Foundations, the Swedish Agency for Innovation Systems (Vinnova), the Swedish Foundation for Small Business Research (FSF), and the Swedish National Board for Industrial and Technological Development (NUTEK). The usual caveats apply.


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Copyright information

© Springer Science+Business Media, LLC. 2008

Authors and Affiliations

  1. 1.Center for EntrepreneurshipStockholm School of EconomicsStockholmSweden
  2. 2.Institute of International BusinessStockholm School of EconomicsStockholmSweden

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