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Location Attributes and Start-Ups in Knowledge Intensive Business Services

Author

Listed:
  • Andersson, Martin

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

  • Hellerstedt, Karin

    (JIBS and Centre for Innovation Systems, Entrepreneurship and Growth (CISEG))

Abstract

We study start-ups in Knowledge Intensive Business Services (KIBS) across regions in Sweden by individuals with a formally recognized capacity to produce and develop advanced business services. The empirical analysis is based on a theoretical framework which emphasizes both supply- and demand-side factors. Supply-side variables pertain to accessibility to knowledge and information upon which a new firm can be established. Demand-side variables refer to market-size and pertain to the ability to recover fixed start-up costs and economize on costs associated with face-to-face interaction. 78 percent of the KIBS founders have prior work experience from business services, suggesting that KIBS start-ups are more frequent in regions where the KIBS sector is already large. Controlling for the stock of potential entrepreneurs and the stock KIBS firms, we show that both supply- and demand-side factors influence KIBS start-up activity. Results are consistent with that KIBS start-ups are stimulated by the simultaneous presence of (i) knowledge resources conducive for the generation and diffusion of knowledge and ideas upon which new firms can be established and (ii) a large market. The findings suggest that the geography of KIBS is shaped in cumulative and self-reinforcing processes, and can explain the tendency of KIBS firms to agglomerate in large city-regions.

Suggested Citation

  • Andersson, Martin & Hellerstedt, Karin, 2008. "Location Attributes and Start-Ups in Knowledge Intensive Business Services," Working Paper Series in Economics and Institutions of Innovation 116, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0116
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    References listed on IDEAS

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    1. Ron A. Boschma & Michael Fritsch, 2007. "Creative Class and Regional Growth - Empirical Evidence from Eight European Countries," Jena Economics Research Papers 2007-066, Friedrich-Schiller-University Jena.
    2. Niebuhr, Annekatrin, 2000. "Convergence and the effects of spatial interaction," HWWA Discussion Papers 110, Hamburg Institute of International Economics (HWWA).
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    More about this item

    Keywords

    knowledge intensive business services; knowledge spillovers; start-ups; entrepreneurship; location;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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