Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32600
Authors: 
Fritsch, Michael
Schröter, Alexandra
Year of Publication: 
2009
Series/Report no.: 
Jena economic research papers 2009,070
Abstract: 
Empirical analyses suggest that the employment creating effect of start-ups is highest in regions with a low level of new business formation and that an increase in the regional start-up rate beyond a certain level may lead to negative employment effect. In explaining these results, we assume that the average quality of regional start-ups decreases with the number of start-ups, while the costs of the induced resource reallocation increase. Our model implies that it is not the number of start-ups but their quality that is decisive for their effect on economic development. Therefore, a policy aiming at stimulating economic growth through entrepreneurship should focus on high-quality start-ups.
Subjects: 
Entrepreneurship
new business formation
regional development
entrepreneurship policy
JEL: 
L26
M13
O1
O18
R11
Document Type: 
Working Paper

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