Individual foundings and organizational foundings: Their effect on employment growth in The Netherlands

Abstract

This study addresses the question of whether different types of new firm formation have different impacts on regional employment generation. It is shown that new establishments of existing firms, i.e., organizational foundings, have a mainly short-term positive effect. In contrast, genuinely new firms, i.e., individual foundings, have a longer-lasting effect. Individual foundings are based on the recognition of business opportunities and spur a process of creative destruction spanning a few years. Organizational foundings can be seen as capitalizations of scale economies. They have an immediate effect, but appear to be less relevant for structural change in a regional economy. © 2009 The Author(s).