New firm formation and regional knowledge production modes: Italian evidence

According to the knowledge-spillovers theory of entrepreneurship (KSTE), local knowledge spillovers affect entrepreneurial dynamics, because of knowledge asymmetries and uncertainty. Most of the empirical literature has tested this hypothesis using a measure of local knowledge stock. This paper is aimed at extending the framework by showing that the domains over which local knowledge spans are also important. The paper investigates the impact of the configuration of local knowledge bases on new firm formation dynamics by combining the KSTE framework with the recombinant knowledge approach. Local knowledge bases emerge from the combination of different knowledge inputs. These inputs may be closely or loosely related to one another. Technological differentiation and the relatedness degree of local competences can be interpreted as characteristics of the local knowledge base interacting with the knowledge filter and the entrepreneurial absorptive capacity. The paper proposes a taxonomy of regional modes of knowledge production and investigates new firm formation in 92 Italian NUTS 3 regions observed over the 1995-2009 time span. The results confirm that the availability of local knowledge pools is important, and show that the 'rich integration' mode is the configuration that favours the entrepreneurial process. Finally, the policy implications and avenues for further research are presented and discussed.