Clusters of Entrepreneurship
Edward L. Glaeser
Harvard University - John F. Kennedy School of Government, Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)
William R. Kerr
Harvard University - Entrepreneurial Management Unit
Giacomo A. M. Ponzetto
CREI - Universitat Pompeu Fabra
September 15, 2009
Harvard Business School Entrepreneurial Management Working Paper No. 10-019
Employment growth is strongly predicted by smaller average establishment size, both across cities and across industries within cities, but there is little consensus on why this relationship exists. Traditional economic explanations emphasize factors that reduce entry costs or raise entrepreneurial returns, thereby increasing net returns and attracting entrepreneurs. A second class of theories hypothesizes that some places are endowed with a greater supply of entrepreneurship. Evidence on sales per worker does not support the higher returns for entrepreneurship rationale. Our evidence suggests that entrepreneurship is higher when fixed costs are lower and when there are more entrepreneurial people.
Number of Pages in PDF File: 54
Keywords: entrepreneurship, industrial organization, Chinitz, agglomeration, clusters, cities
JEL Classification: J2, L, L1, L2, L6, O3, R2
Date posted: September 16, 2009
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