The Industry Component of Regional New Firm Formation Processes

We demonstrate that the link between geographic specific factors and the propensity for entrepreneurs to start new firms varies from industry to industry. Linking regional startup rates in Germany during the late 1980s to geographic-specific factors for disaggregated manufacturing industries, we find that the impact of geographic specific factors of startup activity varies substantially across industries. In addition, the evidence suggests that it is factors specific to each industry, such as capital intensity, that shape the link between geographic-specific factors and new-firm startup activity.