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Local entrepreneurship clusters in cities

Andersson, Martin and Larsson, Johan P. (2016) In Journal of Economic Geography 16(1). p.39-66
Abstract

We show that entrepreneurs are co-located within cities. One plausible source of such spatial clustering is local social interactions, where individuals' decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability that an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5% point higher entrepreneurial intensity, all else equal, produces between six and seven additional entrepreneurs per square kilometer, each year. Our estimates suggest a local feedback-effect in which... (More)

We show that entrepreneurs are co-located within cities. One plausible source of such spatial clustering is local social interactions, where individuals' decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability that an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5% point higher entrepreneurial intensity, all else equal, produces between six and seven additional entrepreneurs per square kilometer, each year. Our estimates suggest a local feedback-effect in which the presence of established entrepreneurs in a neighborhood influences the emergence of new local entrepreneurs. Our analysis supports the conjecture that social interaction effects constitute a mechanism by which local entrepreneurship clusters in cities develop and persist over time.

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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Clusters, Entrepreneurship, Local social interactions, Neighborhood, Path dependence, Peer effects, Role models, Social network externalities
in
Journal of Economic Geography
volume
16
issue
1
pages
28 pages
publisher
Oxford University Press
external identifiers
  • scopus:84965005992
  • wos:000374189600002
ISSN
1468-2702
DOI
10.1093/jeg/lbu049
language
English
LU publication?
no
id
6a7cfb61-160e-4198-a849-6b4d6d3c270f
date added to LUP
2016-10-10 11:34:39
date last changed
2017-02-26 04:41:42
@article{6a7cfb61-160e-4198-a849-6b4d6d3c270f,
  abstract     = {<p>We show that entrepreneurs are co-located within cities. One plausible source of such spatial clustering is local social interactions, where individuals' decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability that an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5% point higher entrepreneurial intensity, all else equal, produces between six and seven additional entrepreneurs per square kilometer, each year. Our estimates suggest a local feedback-effect in which the presence of established entrepreneurs in a neighborhood influences the emergence of new local entrepreneurs. Our analysis supports the conjecture that social interaction effects constitute a mechanism by which local entrepreneurship clusters in cities develop and persist over time.</p>},
  author       = {Andersson, Martin and Larsson, Johan P.},
  issn         = {1468-2702},
  keyword      = {Clusters,Entrepreneurship,Local social interactions,Neighborhood,Path dependence,Peer effects,Role models,Social network externalities},
  language     = {eng},
  month        = {01},
  number       = {1},
  pages        = {39--66},
  publisher    = {Oxford University Press},
  series       = {Journal of Economic Geography},
  title        = {Local entrepreneurship clusters in cities},
  url          = {http://dx.doi.org/10.1093/jeg/lbu049},
  volume       = {16},
  year         = {2016},
}