Abstract
This paper analyzes regional determinants of the start-up ratio in the Japanese manufacturing sector. A major contribution of this study is the comparison between high-tech and low-tech industries. The empirical results using a sample of 253 industrial districts suggest that business density, weight of the manufacturing sector, and the average business size significantly influence the start-up ratio in both high-tech and low-tech industries. Distinct differences between these industries were found with regard to the effects of human capital, research institutes, and the weight of high-tech industries.
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Notes
The start-up ratio is calculated here as the number of new establishments (annual average during the period) divided by the number of establishments at the beginning of the period. Note that this definition of the start-up ratio is different from that used in this paper, as described later in more detail.
For example, “state-of-the-art technology industries” are those with an average R&D intensity higher than 8.5%.
Such an underestimation can be slightly modified since these “start-ups” include incumbent establishments whose number of persons engaged was less than four in 1998 but increased to four or more in 2000.
With the same purpose, Felder et al. (1997) limit the objects of their research to the start-up firms with 20 or less employees. According to the Research Institute of the National Life Finance Corporation (2001), only 3% of their sample firms in the manufacturing sector had 20 or more employees at the beginning. These data provide support to our approach of focusing on the new plants with less than 20 persons engaged.
For example, the food industry dummy takes on the value of 1 for the region where this industry has the largest share with regard to the number of establishments, and 0 otherwise.
They estimated the start-up ratio of male employees in their thirties using micro data from the “1997 Employment Status Survey” and demonstrated that university graduates are significantly less likely to start new businesses.
This result is contrary to that of Okamuro and Kobayashi (2006). However, while they employ the start-up ratio standardized by the number of existing establishments (ecological approach), this paper employs the start-up ratio standardized by the size of labor force (labor market approach). Several studies (Audretsch and Fritsch 1994a, b; Keeble and Walker 1994) show that the average business size has a positive effect on the start-up ratio defined by the ecological approach, but has a negative effect on that defined by the labor market approach. They argue that in regions with a large average business size, the number of existing plants is relatively small as compared with the number of employees and thus with the number of potential founders of new businesses. Therefore, when we use the number of existing establishments as the denominator of the start-up ratio, the larger the average business size, the higher is the value of the dependent variable. However, this does not indicate a causal relation.
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Acknowledgements
I am grateful to Toshiyuki Matsuura (Research Institute of Economy, Trade and Industry) for his kind support in obtaining the micro data used in this paper. I also thank Hiroyuki Odagiri, Toshiaki Tachibanaki, Takehiko Yasuda, Yuji Honjo, Nobuyuki Harada and Yuji Hosoya for their invaluable comments and suggestions. Furthermore, I appreciate the useful comments and suggestions made by the participants of the workshop at Hitotsubashi University in June 2006, the Annual Meeting of the Japanese Economic Association in Osaka in October 2006, and the RENT XX Conference in Brussels in November 2006. I also thank the guest editor and assistant editor of this special issue and two anonymous referees for their kind support. All remaining errors and omissions are mine.
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Okamuro, H. How different are the regional factors of high-tech and low-tech start-ups? Evidence from Japanese manufacturing industries. Int Entrep Manag J 4, 199–215 (2008). https://doi.org/10.1007/s11365-007-0062-z
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DOI: https://doi.org/10.1007/s11365-007-0062-z