Abstract
Many studies have shown that regional externalities play a crucial role for the survival prospects of newly founded companies. However, recent research provides evidence that not all businesses are affected by these externalities in the same way. Relying on new and representative panel survey data containing information about 6776 newly founded firms from almost all economic sectors in Germany, this paper suggests that the effects of regional externalities on survival are contingent upon the start-up’s innovative behavior. First, we show that introducing market novelties is not necessarily beneficial for newly founded firms and might even endanger their survival. Second, we find that being located in spatial proximity to similar firms is important for start-ups in non-high-tech environments and has a positive influence on survival only for less innovative companies. In contrast, high-tech start-ups are more likely to be affected by a diverse economic structure. We thus suggest that the recombination of knowledge from diverse sources can lead to overly complex innovation projects with detrimental effects on the start-up’s survival prospects.
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Notes
The definition of high-tech industries follows the approach of Legler and Frietsch (2006).
However, the results for this variable may not be reported as they are subject to data protection regulations.
We thank an anonymous referee for this idea.
A violation of the proportional hazards assumption required a stratification of the model according to founding cohorts.
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Ebert, T., Brenner, T. & Brixy, U. New firm survival: the interdependence between regional externalities and innovativeness. Small Bus Econ 53, 287–309 (2019). https://doi.org/10.1007/s11187-018-0026-4
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DOI: https://doi.org/10.1007/s11187-018-0026-4