Jun Koo is an Associate Professor and Kwang-Rae Cho is a Ph.D. candidate at the Department of Public Administration, Korea University, Seoul, South Korea. Their e-mail addresses are: firstname.lastname@example.org; email@example.com.
New Firm Formation and Industry Clusters: A Case of the Drugs Industry in the U.S.
Article first published online: 26 MAY 2011
© 2011 Wiley Periodicals, Inc
Growth and Change
Volume 42, Issue 2, pages 179–199, June 2011
How to Cite
KOO, J. and CHO, K.-R. (2011), New Firm Formation and Industry Clusters: A Case of the Drugs Industry in the U.S. Growth and Change, 42: 179–199. doi: 10.1111/j.1468-2257.2011.00549.x
- Issue published online: 26 MAY 2011
- Article first published online: 26 MAY 2011
- Submitted April 2010; revised October 2010; accepted November 2010.
The importance of new firms in regional growth led many scholars to probe the determinants of new firm formation. A close examination of cluster theory predicts that industry clusters can enhance new firm births as well as the productivity of existing firms. Linkages among firms and related institutions, which are the key characteritics of the cluster phenomenon, can serve as an important determinant of new firm formation. The network aspect of clusters helps nascent entrepreneurs find resources and information easier and faster than in an isolated environment. In addition, nascent entrepreneurs in industry clusters often have rich experience in existing local firms, which becomes important prior knowledge to explore new market opportunities. This study examines the effects of clusters on new firm formation. We found that the cluster based on knowledge sharing (i.e., knowledge–labor cluster) significantly affects the new firm formation process, whereas the cluster based on market transactions (i.e., value-chain cluster) does not seem to play a role in new firm formation.