Innovative new firms, embeddedness and regional development
by Rolf Sternberg
International Journal of Entrepreneurship and Innovation Management (IJEIM), Vol. 7, No. 2/3/4/5, 2007

Abstract: This paper focuses on the causal chain of creation of new innovative firms, their regional causes (i.e. embeddedness) and their effects on regional economic development and the related entrepreneurship policies. Theoretical argumentation refers to the role of innovative new firms for regional growth on the one hand and on the influence of the regional environment on the existence and development of new innovative firms on the other. Empirical data stems from the European Regional Innovation Survey (ERIS). Results show that new innovative firms are more strongly embedded in a regional context than older firms, but, on the other hand, strong intraregional embeddedness coincides with a lower impact on regional employment, even if controlled for firm age or firm size. Thus, local entrepreneurship support policies need not focus primarily on intraregional networks for new innovative firms in order to make start-ups capable of surviving and growing. Rather, intraregional and interregional embeddedness ('local buzz' and 'global pipelines') should be strived for and supported by relevant policy programmes.

Online publication date: Wed, 21-Mar-2007

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