Does the Knowledge Spillover Theory of Entrepreneurship hold for regions?

Abstract

The purpose of this paper is to test whether the Knowledge Spillover Theory of Entrepreneurship holds for regions. We do this by linking investments in knowledge by universities and regions to the amount of entrepreneurial activity associated with each university. Using binomial regressions we estimate how the number of young and high-tech firms located around universities depends on regional factors and the output of universities. The results clearly show that the number of firms located close to a university is positively influenced by the knowledge capacity of this region and the knowledge output of a university. Thus, there is considerable evidence suggesting that the Knowledge Spillover Theory of Entrepreneurship holds for regions as well as for industries.