Sources of persistence in regional start-up rates--evidence from Sweden

Abstract

This article assesses the spatial–temporal persistence of a dynamic phenomenon: start-ups. Two mechanisms that explain persistence in start-up rates are distinguished: (i) determinants of start-ups that are spatially ‘sticky’ and durable and (ii) path dependence in start-up activities in the form of a response mechanism between previous and current start-up activities. A dynamic panel analysis of the relationship between lagged start-up rates and current start-up rates confirms that both effects are important in explaining persistence. The second mechanism implies a regional dimension in persistence, such that regions with high levels of start-up rates will exhibit stronger persistence. We find empirical evidence of this using quantile regression techniques.