Assessing the role of spatial externalities in the survival of Italian innovative startups

Abstract

AbstractThe paper provides novel empirical evidence about the effects of spatial externalities on the survival of innovative startups in Italy. Using geocoded firm‐level data, we build micro‐geographic measures of specialization and diversity that are robust to the modifiable areal unit problem. Estimates of spatial externalities are obtained through survival regression models that assess the relationship between these measures and firms' survival time. The main findings are that the nature and strength of agglomeration externalities depend on the firm's life cycle. In particular, an interesting stylized fact can be deduced: these kinds of external economies have a negative effect on innovative startups' survival at the beginning of their activity, which then reverses to be positive when innovative startups reach a certain maturity.