Smallness, newness, and regional development

Abstract

The purpose of this paper is to present empirical findings and interpretations concerning the role of small and new firms for job creation and economic well-being from a regional perspective. More specifically, we will deal with the following questions:

• Are small firms over-represented as creators of new jobs?
• What characteristics of regions contribute to high levels of new firm formation?
• Is a large and/or dynamic small firm sector a prerequisite for favorable development of various aspects of regional economic well-being?

The analyses concern business dynamics in Sweden during the 1985-9 period, using a data set that was compiled for this particular research project. Importantly, the studied period was one of increasing GNP, rapid employment growth in the private service sector, and very low levels of unemployment in most regions. While many results from the project have been presented and discussed before (Davidsson, Lindmark & Olofsson, 1993a; 1993b; 1994a; 1994b; 1995a; 1995b; Davidsson, 1995a) some analyses were carried out specifically for this paper.