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The Apple doesn't Fall far from the Tree: Location of Start-Ups Relative to Incumbents

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  • Oliver Falck
  • Michael Fritsch
  • Stephan Heblich

Abstract

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically bounded location factors based on data from 103 manufacturing industries across 327 West German and 111 East German districts. Our micro-geographic analysis reveals that the two parts of the country vary in their pattern of new firm location. In East Germany, only 5 percent of the industries reveal start-up localization patterns beyond what natural advantages would suggest compared to 40 percent in West Germany.

Suggested Citation

  • Oliver Falck & Michael Fritsch & Stephan Heblich, 2008. "The Apple doesn't Fall far from the Tree: Location of Start-Ups Relative to Incumbents," CESifo Working Paper Series 2486, CESifo.
    • Handle: RePEc:ces:ceswps:_2486
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    Cited by:

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    2. Ejaz Ghani & William R. Kerr & Stephen O'Connell, 2014. "Spatial Determinants of Entrepreneurship in India," Regional Studies, Taylor & Francis Journals, vol. 48(6), pages 1071-1089, June.

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    More about this item

    Keywords

    entrepreneurship; location decision; natural advantages; local knowledge spillovers;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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