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Differences in Regional Firm Formation Rates: A Decomposition Analysis

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  • Peter Johnson

Abstract

This article examines regional differences in recent business formation activity in the United Kingdom over the period 1994–2001. It considers the extent to which regional differences can be accounted for by (i) variations in industrial structure, with some regions having a greater or lesser share of sectors where the formation rate tends to be high; and (ii) variations across regions in the formation rate in the same sector. The article shows wide variations across regions and over time in the relative importance of these two factors. The article explores some policy implications of this decomposition.

Suggested Citation

  • Peter Johnson, 2004. "Differences in Regional Firm Formation Rates: A Decomposition Analysis," Entrepreneurship Theory and Practice, , vol. 28(5), pages 431-446, September.
    • Handle: RePEc:sae:entthe:v:28:y:2004:i:5:p:431-446
    DOI: 10.1111/j.1540-6520.2004.00056.x
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    References listed on IDEAS

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    1. Johnson, P S, 1983. "New Manufacturing Firms in the U.K. Regions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 30(1), pages 75-79, February.
    2. Schmitz, James A, Jr, 1989. "Imitation, Entrepreneurship, and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 721-739, June.
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    5. Johnson, Peter & Conway, Cheryl, 1997. "How Good Are the U.K. VAT Registration Data at Measuring Firm Births?," Small Business Economics, Springer, vol. 9(5), pages 403-409, October.
    6. Catherine Armington & Zoltan J. Acs, 2008. "The Determinants of Regional Variation in New Firm Formation," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 18, pages 224-243, Edward Elgar Publishing.
    7. Peter E. Hart & Nicholas Oulton, 2001. "Galtonian Regression, Company Age and Job Generation 1986–95," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(1), pages 82-98, February.
    8. Peter Johnson & Simon Parker, 1996. "Spatial Variations in the Determinants and Effects of Firm Births and Deaths," Regional Studies, Taylor & Francis Journals, vol. 30(7), pages 679-688.
    9. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
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    Cited by:

    1. Shaoming Cheng, 2011. "Business cycle, industrial composition, or regional advantage? A decomposition analysis of new firm formation in the United States," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(1), pages 147-167, August.
    2. Jessica Birkholz, 2023. "Do not judge a business idea by its cover: The relation between topics in business ideas and incorporation probability," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1327-1358, August.
    3. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    4. Bergner, Sören Martin & Bräutigam, Rainer & Evers, Maria Theresia & Spengel, Christoph, 2017. "The use of SME tax incentives in the European Union," ZEW Discussion Papers 17-006, ZEW - Leibniz Centre for European Economic Research.
    5. NYSTRÖM, Kristina, 2009. "The Importance Of Industry Structure In The Analysis Of Regional Entry And Exit: The Case Of Sweden," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 9(2).
    6. Andres Jauregui & Kirk C. Heriot & David T. Mitchell, 2021. "Corruption and formal-sector entrepreneurship in a middle-income country: spatial analysis of firm births in the Mexican states," Small Business Economics, Springer, vol. 57(4), pages 1957-1972, December.
    7. Colombelli, Alessandra & D'Ambrosio, Anna & Meliciani, Valentina & Francesco Quatraro,, 2016. "Explaining the industrial variety of newborn firms: The role of cultural and technological diversity," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201610, University of Turin.
    8. Scott Shane, 2009. "Why encouraging more people to become entrepreneurs is bad public policy," Small Business Economics, Springer, vol. 33(2), pages 141-149, August.
    9. James Derbyshire & Garry Haywood, 2007. "Schumpeterian 'Creative Destruction' and Strengthening the Business Stock Through Firm Formation," Working Papers 200739, University of Liverpool, Department of Economics.
    10. Frank Lasch & Frank Robert & Frédéric Roy, 2013. "Regional determinants of ICT new firm formation," Small Business Economics, Springer, vol. 40(3), pages 671-686, April.
    11. Christian Felzensztein & Eli Gimmon & Claudio Aqueveque, 2013. "Entrepreneurship at the Periphery: Exploring Framework Conditions in Core and Peripheral Locations," Entrepreneurship Theory and Practice, , vol. 37(4), pages 815-835, July.
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    13. Andersson, Martin & Lavesson, Niclas & Partridge, Mark D., 2019. "Local Rates of New Firm Formation: An Empirical Exploration using Swedish Data," Working Paper Series 1290, Research Institute of Industrial Economics.
    14. José Amorós & Christian Felzensztein & Eli Gimmon, 2013. "Entrepreneurial opportunities in peripheral versus core regions in Chile," Small Business Economics, Springer, vol. 40(1), pages 119-139, January.
    15. Simón-Moya, Virginia & Revuelto-Taboada, Lorenzo, 2016. "Revising the predictive capability of business plan quality for new firm survival using qualitative comparative analysis," Journal of Business Research, Elsevier, vol. 69(4), pages 1351-1356.
    16. James Derbyshire, 2009. "Uncovering Creative Destruction brought about by New Firm Formation: A New Method and Data Source," Local Economy, London South Bank University, vol. 24(4), pages 310-322, June.
    17. Henry Renski, 2014. "The Influence of Industry Mix on Regional New Firm Formation in the United States," Regional Studies, Taylor & Francis Journals, vol. 48(8), pages 1353-1370, August.

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