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Public cluster policy and new venture creation

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Abstract

Entrepreneurship polices are perceived as an effective means to shape regional development and facilitate innovation. However, empirical evidence on the full scope of public cluster policy and the associated impact on entrepreneurial engagement is scarce. This paper addresses this issue and investigates the impact of public cluster policy on new venture creation in Germany. Based on a unique dataset ranging from 1998 to 2012 encompassing all 150 German labor market regions, we examine the effects of the ‘Leading-Edge Cluster Competition’ on new venture creation. Applying treatment and difference-in-differences estimation techniques, we evaluate whether the treated cluster regions show different entrepreneurial performance paths compared to the control group, i.e. non-government-subsidized regions. Our results confirm that public cluster policies positively affect regional entrepreneurial activities, but only in part. The overall effect of governmental subsidization—the treatment effect—is rather low compared to the impact of local research intensive universities and the innovative milieu on new venture creation.

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Notes

  1. Acs et al. (2016a) provide an explanation of the complementary but also substitution effects in entrepreneurial ecosystems.

  2. To test the robustness of our results, we introduce an alternative endogenous variable (see Table 5 in Appendix). We thereby measure the level of entrepreneurship within a region by the logarithmized number of business registrations. Respective model and estimation specifications (Model VI to X) follow the same patterns as Model I to V.

  3. A survey recently conducted by Ernst & Young, ranks Berlin, Munich, and Hamburg among the top 15 European cities for starting a new business (EY 2015). Start-ups like Zalando, Soundcloud, HelloFresh, Delivery Hero or Tirendo are just a few examples of successful businesses created and developed in Germany.

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Authors and Affiliations

  1. Indiana University, School of Public and Environmental Affairs, Bloomington, IN, 47405, USA

    David B. Audretsch

  2. CCSE, Faculty of Business and Economics, Bergamo, Italy

    Erik E. Lehmann

  3. University of Augsburg, Faculty of Business and Economics, Universitaetsstr. 16, 86159, Augsburg, Germany

    Erik E. Lehmann & Matthias Menter

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  1. David B. Audretsch
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  2. Erik E. Lehmann
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  3. Matthias Menter
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Correspondence to Matthias Menter.

Appendix

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Table 5 Robustness test
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Audretsch, D.B., Lehmann, E.E. & Menter, M. Public cluster policy and new venture creation. Econ Polit Ind 43, 357–381 (2016). https://doi.org/10.1007/s40812-016-0050-9

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