Survival, Growth, and Interfirm Collaboration of Start-Up Companies in High-Technology Industries: A Case Study of Upper Bavaria

Abstract:     
Our analysis of the survival of firms leads to the important result that the hypotheses about differences between various industries in the life duration of new firms and about the importance of the region of location for the probability of survival are confirmed. Many more enterprises are founded in the service sector than in manufacturing, but also many more of these start-ups die. The probable life duration in agglomeration areas is in total greater than in rural areas. The analysis of the determinants of the hazard rates of firms confirmed the additional hypothesis that a larger number of employees at the time of foundation and the legal form of the limited company reduce the risk of exit.

The growth of employment in firms interviewed by us shows a similar sectoral and regional differentiation as the life duration. The survey found that sectors with a greater proportion of cooperating firms have a greater growth rate. The innovation activities however do hardly differ between the analysed high-tech industries. Cooperation between start-up firms can be interpreted as a kind of mutual assistence which results predominantly from personal contacts. The personal networks which developed from the environment of the entrepreneurs and according to specific sector conditions should not be treated as equivalent to innovation networks for which our analysis does not find any empirical hint.

Keywords: Life Duration, Labor Market Policy, Start-Up, High-Tech Firms, Cooperation

JEL Classifications: C41, J2, J60, L10, R30

Working Paper Series