Anchoring of Firms in the Neighbourhood: Does Local Social and Physical Order Affect Local Firms' Investment Strategies?

An increasing number of small- and medium-sized firms, whose low relocation propensity seems to point to strong local anchors, have moved to residential neighbourhoods. On the one hand, the neighbourhood context, an attractive production milieu with rich social network potential, may enable entrepreneurs to increase investments in either human capital (personnel) or physical capital (premises, production goods). These investments further anchor firms in a neighbourhood, where they contribute to a thriving local economy. On the other hand, high crime rates, a deteriorated physical environment and a lack of social capital can discourage entrepreneurs from investing locally. In this study, we conducted a multilevel analysis on the relative contribution of neighbourhood characteristics to entrepreneurial investment strategies and controlled for firm and entrepreneur characteristics. We found that neighbourhood cohesiveness and liveability—but not local market characteristics—make a small but significant contribution to explaining local entrepreneurs' investments. This contribution is even stronger for the smallest firms. Therefore, a spatially targeted policy aimed at improving social cohesion and safety is likely to benefit both residents and small local firms.     

DO CAPITAL TAX INCENTIVES ATTRACT NEW BUSINESSES? EVIDENCE ACROSS INDUSTRIES FROM THE NEW MARKETS TAX CREDIT

In this paper, we examine how government policy affects the sorting of industries across jurisdictions using the New Markets Tax Credit (NMTC) program. When estimating the impact of the tax credit on business activity, there are likely to be unobservable local characteristics that are correlated with business location decisions that would cause OLS estimates to be biased. To control for this endogenous selection, we use a plausibly exogenous eligibility cutoff and compare census tracts that are just eligible for the NMTC program to those that are just ineligible. Using data from the Dun and Bradstreet MarketPlace Files, we find that eligibility for the NMTC program caused industries to sort across eligible and noneligible tracts. In particular, we find that there is an increase in retail employment, both among new businesses and existing businesses, and an increase in manufacturing employment at existing businesses in tracts that were eligible for the program. However, we find negative effects on employment at new firms in the wholesale and transportation industries, and decreases in the number of new firms in FIRE and services. Policy makers should be cognizant of these results, as the implications of the sorting across industries on local areas must be considered to design effective policy.     

Global Value Chains,Industrial Policy and Economic Upgrading in Ethiopia's Apparel Sector

This article examines whether low-income countries can still benefit from participating in manufacturing global value chains (GVCs) in terms of broader industrial development in a global context of greater competition and higher requirements. It contends that developing internationally competitive local firms and domestic linkages, in addition to upgrading, is crucial for participation in GVCs to drive industrialization. The study focuses on Ethiopia's recent experience with developing an apparel export industry through strategic industrial policy. Based on original empirical data collected through firm-level surveys and interviews with government officials, industry experts and buyers, the article analyses the upgrading and localization trajectories of foreign and local apparel-exporting firms. It argues that value-capture benefits in assembly positions in apparel GVCs have become more difficult. The potential for localization benefits depends on the type of global buyers and foreign producers and their levels of embeddedness, but whether this potential is realized also depends on local firm characteristics and related industrial policy. Ethiopia's industrial policy has been relatively successful regarding national economy linkages, but less successful in developing competitive local export firms due to a weak local manufacturing tradition combined with a global context that has led to a supplier squeeze.     

Staying Power: What Influences Micro-firm Survival in Tourism?

Abstract

The purpose of this paper is to investigate how previous experience and location of entrepreneurs influence the survival of new tourism firms. The paper departs from recent evolutionary economic geography advancements, highlighting the importance of routines and skills as well as location-specific knowledge for firm success. While having been well-researched for manufacturing industries characterized by high entry barriers, little knowledge is currently available on the factors influencing survival rates in service sectors with low entry barriers. A quantitative approach applies hazard models to investigate the survival rates over a seven-year period of a total of 133 new micro-tourism firms started between 1999 and 2001 in the four northernmost counties of Sweden. The geo-referenced micro-database ASTRID links information on firm features (e.g. firm births and deaths, spatial coordinates and industry codes) to characteristics of entrepreneurs (e.g. age, education, previous experience). The main finding is that entrepreneurs with previous work experience in related sectors are more likely to survive and, in this case, entrepreneurs without local experience tend to be less successful. We find no evidence that new firms operating in regions specialized in tourism have a survival advantage. Our analysis also indicates that surviving firms improve performance over time. The paper thus contributes new knowledge on the determinants of micro-firm survival in tourism.     

DOES AGGLOMERATION MATTER EVERYWHERE?: NEW FIRM LOCATION DECISIONS IN RURAL AND URBAN MARKETS*

We test whether commonly used measures of agglomeration economies encourage new firm entry in both urban and rural markets. Using new firm location decisions in Iowa and North Carolina, we find that measured agglomeration economies increase the probability of new firm entry in both urban and rural areas. Firms are more likely to locate in markets with an existing cluster of firms in the same industry, with greater concentrations of upstream suppliers or downstream customers, and with a larger proportion of college‐educated workers in the local labor supply. Firms are less likely to enter markets with no incumbent firms in the sector or where production is concentrated in relatively few sectors. The same factors encourage both stand‐alone start‐ups and establishments built by multiplant firms. Commuting decisions exhibit the same pattern as new firm entry with workers commuting from low to high agglomeration markets. Because agglomeration economies are important for rural firm entry also, policies encouraging new firm entry should focus on relatively few job centers rather than encouraging new firm entry in every small town.     

清代前期账局、放账铺研究--以五种账局、放账铺清单的解读为中心

清代前期不但有资本规模较大,主要针对商号及官员放贷的大账局,也有资本规模较小,可能针对小商人、小手工业者甚至地主农民放贷的放账铺。至少从乾隆年间开始,账局、放账铺已经比较普遍地运用合伙制的方式筹措资本。账局的重要业务之一就是对官员放京债,这种放贷利率高、数额大,但风险也甚高。与此同时,账局也开始大规模地对商号商人放贷,每家较大型的账局至少可能对三十至五十家以上的商号放贷,放贷数额常到一千两以上,最少也有一百两。这种放贷,直至道光年间还很兴盛。账局、放账铺已经具有了商业银行的功能,但是否够得上商业银行,还须进一步探讨。     

The Role of Personal Factors in the Location Decision of Software Services Start-up Firms

This paper explores the factors which influence the business location decisions of start-ups, focusing in particular on the role of personal factors. Established explanations of industry location emphasize proximity to firms in the same or related industries and proximity to a wider set of business services, though recent research suggests that personal factors may play an important role in explanations of industry location—particularly in technology-enabled sectors. A survey of 97 new firms, founded between 2008 and 2012, in the Irish software services sector, shows that the business location decision is influenced by the personal motivation of entrepreneurs to attain a desired quality of life, and that this outweighs economic factors such as proximity to firms within the same or related industries, proximity to a broader set of supporting business services, infrastructure or the availability of government support schemes. Personal factors are particularly important to firms located outside the Dublin metropolitan area and to home-based businesses. This has important policy implications for national and regional governments seeking to encourage entrepreneurship in technology-enabled service sectors.     

Economic Policy and Women’s Informal Work in South Africa

This article examines the gender dimensions of the growth in informal and flexible work in South Africa and the government’s policy response to this. It outlines the growth in informal and flexible work practices and, as illustrative examples, analyses how trade and industrial policies and labour market policies are impacting on the growth of informal and flexible work. It is argued that the South African government’s trade and industrial policies are shifting the economy onto a path of capital intensification. Allied to this, firms are undergoing a process of extensive restructuring. These developments are further promoting the growth of flexibilization and informalization, and thereby disadvantaging women. The article demonstrates that whilst the government offers a vast package of support measures to big business, its policy is largely irrelevant to the survivalist segment of small business, where most women in the informal economy are to be found. The picture for labour policy is more diverse. Aspects of the labour legislation are promoting the growth of a dual labour market, whilst there seems to be some tightening up of practices aimed at bypassing aspects of the protection provided to workers.     

SMALL BUSINESS VIABILITY IN THE URBAN GHETTO*

ABSTRACT Within the minority communities of large SMSAs, neither the black-owned business nor the small nonminority enterprises are flourishing. Facing limited access to financial capital as well as constrained markets, the ghetto firms that do persist are typically quite small in terms of sales and employment. Among black establishments, the least educated entrepreneurs are the ones who are most likely to remain in business. Unless greater financial capital is forthcoming and better educated owners are induced to remain in business, the business community that is located in minority neighborhoods of large urban areas may be destined to stagnate.     

Employment Dynamics on Business Estates

The central question of this paper is: “What is the magnitude of different forms of employment dynamics on business estates in the Netherlands between 2000 and 2005 and to what extent are the employment dynamics on business estates different from employment dynamics in general?” In order to answer this question, we examine three kinds of local employment dynamics: (1) entries and exits, (2) inter-municipal relocation and (3) the growth/decline of existing firms. We find that new firm formation and inter-municipal relocation do not lead to employment growth on business estates. However, the in situ employment growth on business estates is higher than the general employment growth in the Netherlands. Therefore, it can be concluded that business estates play an important role in local employment dynamics by facilitating the growth of incumbent firms.     

The Role of Location and Regional Networks for Biotechnology Firms in Israel

This article presents results of a study of the Israeli biotechnology sector. The findings of the study show that despite the small geographical size of the country, the Israeli biotechnology industry tends to a great extent to cluster around leading research institutes. Based on a survey of 109 high-tech projects, the study suggests that the relatively weak business background of the entrepreneurs, the fact that most of them have worked at research institutes and that most new biotechnology firms were originated from ideas that came out of universities or research institutes, can provide possible explanations for this geographical concentration. The research emphasizes the relative importance biotechnology entrepreneurs ascribe to networking, both in very early stages as well as in advanced stages of the firm development process. It is argued that although the focus of the network changes over time, both geographically and in content, its links to local research partners are maintained. It is suggested that earmarked regional support policies are crucial to the development of networks required by new biotechnology firms.     

Small is not Necessarily Beautiful: An Evaluation of Policy Support for Small and Medium-sized Enterprises in Australia

One of the key strategies of the current Commonwealth government in Australia is to promote a dynamic entrepreneurial culture by improving the business environment for small and medium-sized enterprises (SMEs). This paper evaluates the contribution of SMEs to innovation and employment in Australia and reviews the international evidence on the value of SMEs. It concludes that a very small percentage of SMEs are responsible for most of the employment generation and innovation in the small-firm sector. The policy implication is that general deregulatory measures designed to support SMEs as a generic class are likely to create an environment within which low-quality, low-wage employment is generated in SMEs with little future. Instead, the sectoral composition of industrial activity and the social structures and relationships within which firms are embedded require greater policy attention.     

THE DETERMINANTS OF LOCALIZATION AND URBANIZATION ECONOMIES: EVIDENCE FROM THE LOCATION OF NEW FIRMS IN SPAIN

The objective of this paper is to analyze why firms in some industries locate in specialized economic environments (localization economies) while those in other industries prefer large city locations (urbanization economies). To this end, we examine the location decisions of new manufacturing firms in Spain at the city level and for narrowly defined industries. First, we estimate firm location models to obtain estimates that reflect the importance of localization and urbanization economies in each industry. Then, we regress these estimates on industry characteristics related to the potential importance of labor market pooling, input sharing, and knowledge spillovers. Urbanization effects are high in knowledge‐intensive industries, suggesting that firms locate in large cities to benefit from knowledge spillovers. We also find that localization effects are high in industries that employ workers whose skills are more industry‐specific, suggesting that industries locate in specialized economic environments to share a common pool of specialized workers.     

上海陆家嘴金融集聚动因的实证研究

本文利用陆家嘴金融创新问卷调查和面对面访谈等实地调研资料,对上海陆家嘴的金融集聚动因进行了较为深入的探讨。研究发现,邻近金融中心市场、共享知名品牌、金融友善型政府、良好的政策法规是促进其金融集聚的主要动因;而我国金融政策环境开放度不高、金融产业水平较低、市场规模不大、中介服务机构不足则正成为影响陆家嘴金融集聚的主要不利因素。     

Life Sciences in the Netherlands: Weakness in a Strong National Policy

The Netherlands is an example of a European country in which the commercialization of knowledge is hampered by a somewhat risk-averse culture at universities and a shortage of venture capital for early growth of start-up firms. This article addresses the policy programme in the Netherlands to improve the situation for the life sciences since the early 2000s. The target number of newly established firms could easily be achieved and the programme was able to improve the business climate for new firm establishment. However, the programme could not improve conditions for growth of new firms because it could not achieve a comprehensive turn in the business climate, due to the short cycle-time of the programme (4–5 years). In addition, the programme did not take advantage of existing critical mass in the largest cluster or from any other competitive strength of particular clusters. These circumstances were influencing a relatively large number of small and vulnerable firms. The article concludes with a set of insights from which lessons can be drawn.     

Wind(ow) of Change: A Systematic Review of Policy Entrepreneurship Characteristics and Strategies

What lessons can we learn from 40 years of policy entrepreneurship scholarship on policy entrepreneurs’ strategies and defining characteristics? While scholars have offered important insights, many questions remain open. This article systematically reviews 229 articles that were published between 1984 and 2017. Our findings provide (i) an analysis of policy entrepreneurship characteristics by sector, policy domain, individual/group, government layer, and geographical spread, (ii) an empirically based identification and classification of policy entrepreneurship strategies, and (iii) a statistical analysis of the relationship between policy entrepreneurs’ characteristics and strategies. We conclude with an agenda for future studies that will continue to examine new theoretical approaches that advance our understanding of the role that individuals and small groups play in the policy process.     

Fad,fetish or fixture: contingent valuation of performing and visual arts festivals in Singapore

This paper analyses how much culture is valued in a newly-developed economy with a distinct dichotomy of an arts-appreciating population segment and a less-culturally aware mass. An analytical framework weaving together the intrinsic, business and societal benefits of arts and culture is applied to explore whether arts festivals – a popular tourism event in many countries – are a temporary fad, an expensive governmental fetish or a naturally-evolving fixture. This has implications for government funding and cultural policy. Empirical evidence supports the notion that the long-running performing arts festival is a not a fad but a fixture with some fetish elements while the visual arts festival appears to be a fad but has the potential to be a fixture. Of particular concern, however, is the evidence from both festivals that the perceptions of community benefit, business benefits as well as bequest value from the arts are not significant determinants of willingness to pay for these events.     

Employment growth and regional development: industrial change and contextual differences between Denmark and Sweden

This paper explores the potential drivers behind uneven regional development in the context of employment growth in Denmark and Sweden. In particular, we are interested in the roles of urbanization, industrial change and the rise of the new economy as manifested in the growth of the two economies in 2002–2007. The aim of this paper is, therefore, to analyse the impact of a number of key industrial sectors on regional employment growth in the two countries. The empirical analysis is based on longitudinal matched employer–employee data retrieved from official registers in each economy from 2002 to 2007, a period of strong national growth following the crisis of early 2000. Our findings indicate that the two economies follow a similar pattern in addressing total employment growth; but looking at changes in employment levels across the national borders of these two relatively similar open economies, we find that, although in general these economies react relatively similarly to changes, embarking on a narrower analysis of the individual sectors reveals marked national differences. This indicates that context matters in the analysis of regional economic dynamics in terms of structure, system and policy.     

NATIONAL INDUSTRIAL POLICY AND ECONOMICALLY DISTRESSED COMMUNITIES

Industrial policy refers to deliberate government actions to affect the growth or decline of firms or industries for the sake of aggregate national prosperity and international competitiveness. This paper presents empirical evidence that policies designed to promote these objectives would be targeted differently from those designed to promote development of economically-distressed regions and communities. Facing multiple objectives, it is difficult for the public sector to pursue industrial growth directly as effectively as can private entrepreneurs. However, government aid to economically-distressed locales and dislocated workers and firms may indirectly support national industrial policy goals.     

THE BUILD-UP AND DURATION OF SUBSIDY-INDUCED EMPLOYMENT EVIDENCE FROM U.K. REGIONAL POLICY*

ABSTRACT. The paper takes microlevel data on U.K. regional policy instruments and other financial assistance payments to industry to examine the time profile of assisted employment up to five years after the date of assistance. The theoretical analysis indicates factors bearing on the employment effect of industrial assistance and highlights the possibly key role played by the firm's access to private funds. The results from the regression analysis indicate that both the build-up and duration of subsidy-induced jobs vary between assistance form and firm, and that assistance is generally ineffective in large firms. Elsewhere, assisted jobs accumulate over a period of three years, but then are lost to policy at high rates.