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The Distribution of Firm Start-Up Size across Geographic Space

30 Pages Posted: 17 Jun 2008  

David B. Audretsch

Indiana University - Institute for Development Strategies; King Saud University; WHU - Otto Beisheim School of Management; Indiana University Bloomington - School of Public & Environmental Affairs (SPEA)

Jagannadha Pawan Tamvada

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics; University of Goettingen (Gottingen)

Date Written: June 2008

Abstract

A growing body of literature shows that geographic location plays an important role in influencing economic phenomena. Despite the renewed interest in economic geography, the existing literature on the firm size distribution (FSD) has ignored the impact of geographic location. A wave of recent studies has examined the determinants and evolution of FSD (Cabral and Mata, 2003; Angelini and Generale 2008, AER) and a component of this literature has focused on the size of the new firm start-ups. However, while the impact of firm-specific and industry-specific characteristics on size of new firms has been analyzed, the role of geographic location has been largely neglected. Using Bayesian semi-parametric geoadditive models, we estimate geographic location as a micro-determinant of firm start-up size. The estimations based on a comprehensive database of firm start-ups in India suggest that the size distribution of new firms exhibits distinct regional patterns, even after controlling for firm and industry characteristics. These residual spatial patterns are found to be attributable, to some extent, to the level of economic and financial development in the regions.

Keywords: Bayesian Methods, Developing Countries, Firm Size Distribution, Geoadditive Models, Geography, Start-Up Size

JEL Classification: L11, L60, R12

Suggested Citation

Audretsch, David B. and Tamvada, Jagannadha Pawan, The Distribution of Firm Start-Up Size across Geographic Space (June 2008). CEPR Discussion Paper No. DP6846. Available at SSRN: https://ssrn.com/abstract=1146772

David B. Audretsch (Contact Author)

Indiana University - Institute for Development Strategies ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States
812-855-6766 (Phone)
812-855-0184 (Fax)

King Saud University ( email )

Riyadh, 11451
Saudi Arabia

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

Indiana University Bloomington - School of Public & Environmental Affairs (SPEA) ( email )

1315 East Tenth Street
Bloomington, IN 47405
United States

Jagannadha Pawan Tamvada

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Economics ( email )

Kahlaische Strasse 10
D-07745 Jena, 07745
Germany

HOME PAGE: http://https://people.econ.mpg.de/~tamvada

University of Goettingen (Gottingen) ( email )

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

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