Establishment of higher education institutions and new firm entry

This is the post-print version of the final paper published in Research Policy. The published article is available from the link below. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. Copyright @ 2011 Elsevier B.V.The presence of universities has generally been associated with technological entrepreneurship. But what is the real impact of new universities on the levels of firm creation in a region? The present paper uses policy evaluation methodologies and longitudinal data on the establishment of higher education institutions in Portuguese municipalities for the period 1992–2002 to examine its effect on entry rates of new firms in different sectors. We find that the establishment of a new university has a positive and significant effect on subsequent levels of knowledge based firm entry in municipalities, and a negative effect on the levels of entry in other sectors, such as low-tech manufacturing

Business experience and start-up size: buying more lottery tickets next time around?

This paper explores the determinants of start-up size by focusing on a cohort of 6247 businesses that started trading in 2004, using a unique dataset on customer records at Barclays Bank. Quantile regressions show that prior business experience is significantly related with start-up size, as are a number of other variables such as age, education and bank account activity. Quantile treatment effects (QTE) estimates show similar results, with the effect of business experience on (log) start-up size being roughly constant across the quantiles. Prior personal business experience leads to an increase in expected start-up size of about 50%. Instrumental variable QTE estimates are even higher, although there are concerns about the validity of the instrument

Innovation and growth in the UK pharmaceuticals: the case of product and marketing introductions

New drug introductions are key to growth for pharmaceutical firms. However, not all innovations are the same and they may have differential effects that vary by firm size. We use quarterly sales data on UK pharmaceuticals in a dynamic panel model to estimate the impact of product (new drugs) and marketing (additional pack varieties) innovations within a therapeutic class on a firm’s business unit growth. We find that product innovations lead to substantial growth in both the short and long run, whereas a new pack variety only produces short-term effects. The strategies are substitutes but the marginal effects are larger for product innovations relative to additional packs, and the effects are larger for smaller business units. Nonetheless, pack introductions offer a viable short-term growth strategy, especially for small- and medium-sized businesses