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Employment from new firm formation in the Netherlands: Agglomeration economies and the Knowledge Spillover Theory of Entrepreneurship

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  • Joris Knoben
  • Roderik Ponds
  • Frank van Oort

Abstract

Within the recent literature on the geography of new firm formation, much attention is given to the role of regional knowledge sources based on the Knowledge Spillover Theory of Entrepreneurship. At the same time, several other studies show the importance of agglomeration economies for new firm formation. The goal of this study is to assess the relative importance of these determinants for differences in the share of employment creation from new firms at the level of municipalities for the period of 1999--2006 in the Netherlands. It is found that the traditional drivers of new firm formation, such as economic growth and agglomeration effects, have a much stronger effect on new firm formation compared to measures of the regional knowledge base. Moreover, it is shown that when not correcting for the presence of agglomeration effects, the role of local knowledge resources is easily over-estimated, pointing to the dangers of misspecifications of models. The results imply that the knowledge spillover theory of entrepreneurship should, at least for the Netherlands, not be exaggerated.

Suggested Citation

  • Joris Knoben & Roderik Ponds & Frank van Oort, 2011. "Employment from new firm formation in the Netherlands: Agglomeration economies and the Knowledge Spillover Theory of Entrepreneurship," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 23(3-4), pages 135-157, April.
    • Handle: RePEc:taf:entreg:v:23:y:2011:i:3-4:p:135-157
    DOI: 10.1080/08985620903183736
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    References listed on IDEAS

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    1. Thomas Brenner & Dirk Fornahl, 2008. "Regional Path-Dependence in Start-up Activity," Papers in Evolutionary Economic Geography (PEEG) 0812, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Jun 2008.
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