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Agents of Structural Change : The Role of Firms and Entrepreneurs in Regional Diversification

Neffke, Frank LU ; Hartog, Matté LU ; Boschma, Ron LU and Henning, Martin LU (2018) In Economic Geography 94(1). p.23-48
Abstract

Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or nonlocal establishment founders create most novelty in a region? We develop a theoretical framework that focuses on the roles different agents play in regional transformation. We then apply this framework, using Swedish matched employer–employee data, to determine how novel the activities of new establishments are to a region. Incumbents mainly reinforce a region’s current specialization: incumbent’s growth, decline, and industry switching further align them with the rest of the local economy. The unrelated diversification required for structural change mostly originates via new establishments, especially via those with nonlocal... (More)

Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or nonlocal establishment founders create most novelty in a region? We develop a theoretical framework that focuses on the roles different agents play in regional transformation. We then apply this framework, using Swedish matched employer–employee data, to determine how novel the activities of new establishments are to a region. Incumbents mainly reinforce a region’s current specialization: incumbent’s growth, decline, and industry switching further align them with the rest of the local economy. The unrelated diversification required for structural change mostly originates via new establishments, especially via those with nonlocal roots. Interestingly, although entrepreneurs often introduce novel activities to a local economy, when they do so, their ventures have higher failure rates compared to new subsidiaries of existing firms. Consequently, new subsidiaries manage to create longer-lasting change in regions.

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author
organization
publishing date
type
Contribution to journal
publication status
published
subject
in
Economic Geography
volume
94
issue
1
pages
23 - 48
publisher
Economic Geography
external identifiers
  • scopus:85037739661
ISSN
0013-0095
DOI
10.1080/00130095.2017.1391691
language
English
LU publication?
yes
id
30b6a757-37dd-4733-a5df-c438cebf1188
date added to LUP
2018-01-03 13:06:18
date last changed
2018-10-07 05:03:28
@article{30b6a757-37dd-4733-a5df-c438cebf1188,
  abstract     = {<p>Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or nonlocal establishment founders create most novelty in a region? We develop a theoretical framework that focuses on the roles different agents play in regional transformation. We then apply this framework, using Swedish matched employer–employee data, to determine how novel the activities of new establishments are to a region. Incumbents mainly reinforce a region’s current specialization: incumbent’s growth, decline, and industry switching further align them with the rest of the local economy. The unrelated diversification required for structural change mostly originates via new establishments, especially via those with nonlocal roots. Interestingly, although entrepreneurs often introduce novel activities to a local economy, when they do so, their ventures have higher failure rates compared to new subsidiaries of existing firms. Consequently, new subsidiaries manage to create longer-lasting change in regions.</p>},
  author       = {Neffke, Frank and Hartog, Matté and Boschma, Ron and Henning, Martin},
  issn         = {0013-0095},
  language     = {eng},
  number       = {1},
  pages        = {23--48},
  publisher    = {Economic Geography},
  series       = {Economic Geography},
  title        = {Agents of Structural Change : The Role of Firms and Entrepreneurs in Regional Diversification},
  url          = {http://dx.doi.org/10.1080/00130095.2017.1391691},
  volume       = {94},
  year         = {2018},
}