Explaining New Firm Survival: Is the Firm, Owner, or Agglomeration at Fault?

This paper empirically estimates the effect of several sources of agglomeration on new firm survival while controlling for firm, entrepreneur, and regional variables using a discrete-time hazard model. We utilize the longitudinal Kauffman Firm Survey of almost 5000 US startups from 2004 to 2011. Unlike previous studies, we find that the overall hazard of entrepreneurs shutting down their new firms is not significantly affected by regional agglomeration factors, but instead firm and entrepreneur variables. However, we find suggestive evidence that location does matter for particular groups of entrepreneurs such as high-tech startups and those firms not based out of their homes.