Knowledge intensive business service firms (KIBS) are an important element of modern economies, and are thus attracting increasing interest in scientific research. In the existing literature, it is argued that due to the important role of knowledge, innovation and user-producer interaction in the KIBS sector, functional integration and spatial proximity are particularly decisive for a firm's development. Nevertheless, due to the absence of suitable micro data there is a lack of studies empirically analysing the impact of functional integration and spatial proximity using micro firm data. Based upon new firm micro data from three German metropolitan regions, this article supplements the literature by giving a multivariate empirical analysis of the determinants of post-entry performance of KIBS. The results of the estimates of fi rm growth equations show that functional linkages to knowledge providers, customers and cooperation partners matter indeed for the performance of young KIBS. Regarding spatial proximity, however, a high diversifi cation of geographical reach is proven to be especially crucial.
Almus, M. , Egeln, J. and Engel, D. (2001) ‘Determinanten regionaler Unterschiede in der Gründungshäufigkeit wissensintensiver Dienstleister’ [The Determinants of Regional Differences in Firm Foundation in the Knowledge Intensive Business Service Sector], Jahrbuch für Regionalwissenschaft21(1): 25–51 .
2.
Audretsch, D. B. , Klomp, L. and Thurik, R. A. (1999) ‘Do Services Differ from Manufacturing?: The Post-entry Performance of Firms in Dutch Services’, in D. B. Audretsch and R. A. Thurik (eds) Innovation, Industry Evolution, and Employment, pp. 230–252. Cambridge: Cambridge University Press .
3.
Audretsch, D. B. , Lehmann, E. E. and Warning, S. (2004) ‘University Spillovers: Does the Kind of Science Matter?’ , Industry and Innovation11(3): 193–206 .
4.
Autio, E. (2000) ‘Growth of Technology-based New Firms’, in D. L. Sexton and H. Landström (eds) Handbook of Entrepreneurship, pp. 329–347. Oxford: Blackwell .
5.
Boschma, R. (2005) ‘Proximity and Innovation: A Critical Assessment’ , Regional Studies39(1): 61–74 .
6.
Boschma, R. and Weterings, A. (2005) ‘The Effect of Regional Differences on the Performance of Software Firms in the Netherlands’ , Journal of Economic Geography5(5): 567–588 .
7.
Brixy, U. and Grotz, R. (2006) ‘Regional Patterns and Determinants of New Firm Formation and Survival in Western Germany’, IAB Discussion Paper No. 05/2006. Nürnberg: IAB .
8.
Brüderl, J. , Preisendörfer, P. and Ziegler, R. (1996) Der Erfolg neugegründeter Betriebe: eine empirische Studie zu den Chancen und Risiken von Unternehmensgründungen [The Success of Newly Founded Firms: An Empirical Study Analysing the Chances and the Risks of Firm Start-ups]. Berlin: Duncker & Humblot .
9.
Cairncross, Frances (1997) The Death of Distance: How the Communications Revolution is Changing Our Lives. Boston, MA: Harvard Business School Press .
10.
Camagni, R. (1991) ‘Local “Milieu”, Uncertainty and Innovation Networks: Towards a New Dynamic Theory of Economic Space’, in R. Camagni (ed.) Innovation Networks: Spatial Perspectives, pp. 121–144. New York and London: Belhaven Press .
11.
Centre for European Economic Research (2004) ZEW Gründungsreport [ZEW Start-up Report]. Mannheim: ZEW .
12.
Cooper, A. C. (1985) ‘The Role of Incubator Organizations in the Founding of Growth-oriented Firms’ , Journal of Business Venturing1(1): 75–86 .
13.
Czarnitzki, D. and Spielkamp, A. (2003) ‘Business Services in Germany: Bridges for Innovation’ , The Service Industries Journal23(2): 1–30 .
14.
Evans, D. S. (1987) ‘Tests of Alternative Theories of Firm Growth’ , Journal of Political Economy95(4): 657–674 .
15.
Freel, M.S. and P.J.A. Robson (2004), ‘Small Firm Innovation, Growth and Performance: Evidence from Scotland and Northern England’ , International Small Business Journal, 22(6): 561–575 .
16.
Gallouj, F. and Weinstein, O. (1997) ‘Innovation in Services’ , Research Policy26(4–5): 537–556 .
17.
Garnsey, E. (1998) ‘A Theory of the Early Growth of the Firm’ , Industrial and Corporate Change7(3): 523–556 .
18.
Geroski, P. A. (1998) ‘An Applied Econometrician's View of Large Company Performance’, CEPR Discussion Paper No. 1862, Centre for Economic Policy Research.
19.
Greene, W. H. (2003) Econometric Analysis. Upper Saddle River, NJ: Prentice Hall .
20.
Haas, H.-D. and Lindemann, S. (2003) ‘Wissensintensive unternehmensorientierte Dienstleistungen als regionale Innovationssysteme’ [Knowledge Intensive Business Services as Regional Systems of Innovation], Zeitschrift für Wirtschaftsgeographie47(1): 1–14 .
21.
Hall, B. H. (1987) ‘The Relationship Between Firm Size and Firm Growth in the US Manufacturing Sector’ , Journal of Industrial Economics35(4): 583–606 .
22.
Hamilton, L. C. (2002) Statistics with Stata. Belmon, CA: Duxbury .
23.
Harhoff, D. , Stahl, K. and Woywode, M. (1998) ‘Legal Form, Growth and Exit of West German Firms: Empirical Results for Manufacturing, Construction, Trade and Service Industries’ , Journal of Industrial Economics46(4): 453–488 .
24.
Honjo, Y. (2004) ‘Growth of New Start-up Firms: Evidence from the Japanese Manufacturing Industry’ , Applied Economics36(4): 343–355 .
25.
Howells, J. (2002) ‘Tacit Knowledge, Innovation and Economic Geography’ , Urban Studies39(5–6): 871–884 .
26.
Illeris, S. (1994) ‘Proximity between Service Producers and Service Users’ , Tijdschrift voor Economische en Sociale Geografie85(4): 294–302 .
27.
Isaksen, A. (2003) ‘Knowledge-intensive Industries, Clustering and Regional Development: The Software Industry in Norway’ , paper presented at the RSA Conference on Reinventing Regions in the Global Economy, Pisa, April.
28.
Johannisson, B. (1998) ‘Personal Networks in Emerging Knowledge-based Firms: Spatial and Functional Patterns’ , Entrepreneurship & Regional Development10(4): 297–312 .
29.
Jovanovic, B. (1982) ‘Selection and the Evolution of Industry’ , Econometrica50(3): 649–670 .
30.
Klepper, S. (2001) ‘Employee Start-ups in High-tech Industries’ , Industrial and Corporate Change10(3): 639–674 .
31.
Koch, A. and Stahlecker, T. (2006) ‘Regional Innovation Systems and the Foundation of Knowledge Intensive Business Services’ , European Planning Studies14(2): 123–146 .
32.
Koster, S. and Van Wissen, L. G. (2004) ‘Inherited Resources and Company Support as Basis for New Firm Formation. A Taxonomy of Founding Types: Start-ups, Spin-outs, and Spin-offs’, in I. Johansson (ed.) Uddevalla Symposium 2003: Entrepreneurship, Spatial Industrial Clusters and Inter-Firm Networks, pp. 557–574. Uddevalla, Sweden: University of Trollhättan/Uddevalla .
33.
LeBrasseur, R. , Zanibbi, L. and Zinger, T. J. (2003) ‘Growth Momentum in the Early Stages of Small Business Start-ups’ , International Small Business Journal21(3): 315–330 .
34.
Lechner, C. and Dowling, M. J. (2003) ‘Firm Networks: External Relationships as Sources for the Growth and Competitiveness of Entrepreneurial Firms’ , Entrepreneurship & Regional Development15(1): 1–26 .
35.
Mansfield, E. (1962) ‘Entry, Gibrat's Law, Innovation, and the Growth of Firms’ , The American Economic Review52(5): 1023–1051 .
36.
Marshall, A. (1900) Elements of Economics of Industry. London: Macmillan .
37.
Miles, I. , Kastrinos, N. , Flanagan, K. , Bilderbeek, R. , Den Hertog, P. , Huntink, W. and Bouman, M. (1995) Knowledge-intensive Business Services: Users, Carriers and Sources of Innovation. Brussels: European Commission .
38.
Morgan, K. (2004) ‘The Exaggerated Death of Geography: Learning, Proximity and Territorial Innovation Systems’ , Journal of Economic Geography4: 3–21 .
39.
Muller, E. and Zenker, A. (2001) ‘Business Services as Actors of Knowledge Transformation: Role of KIBS in Regional and National Innovation Systems’ , Research Policy30(9): 1501–1516 .
40.
Nählinder, J. and Hommen, L. (2002) ‘Employment and Innovation in Services: Knowledge Intensive Business Services in Sweden’ , report presented at the fianal meeting of AITEG, Linköping University.
41.
Nelson, R. R. and Winter, S. G. (1982) An Evolutionary Theory of Economic Change. Cambridge, MA: Harvard University Press .
42.
Okamuro, H. (2004) ‘Business Relationships and Post-entry Performance of Start-up Firms in Japan’, Discussion Paper No. 50, Hitotsubashi University, Graduate School of Economics .
43.
Rousseeuw, P. J. and Leroy, A. M. (1987) Robust Regression and Outlier Detection. New York: Wiley .
44.
Santarelli, E. and Piergiovanni, R. (1995) ‘The Determinants of Firm Start-up and Entry in Italian Producer Services’ , Small Business Economics7(3): 221–230 .
45.
Sawyerr, O. O. , McGee, J. and Peterson, M. (2003) ‘Perceived Uncertainty and Firm Performance in SMEs: The Role of Personal Networking Activities’ , International Small Business Journal21(3): 269–290 .
46.
Sorenson, O. (2003) ‘Social Networks and Industrial Geography’ , Journal of Evolutionary Economics13(5): 513–527 .
47.
Stinchcombe, A. L. (1965) ‘Social Structures and Organizations’, in J. G. March (ed.) Handbook of Organizations, pp. 142–193. Chicago, IL: Rand McNally .
48.
Strambach, S. (2002) ‘Change in the Innovation Process: New Knowledge Production and Competitive Cities–The Case of Stuttgart’ , European Planning Studies10(2): 214–231 .
49.
Strotmann, H. (2002) Arbeitsplatzdynamik in der baden-württembergischen Industrie: Eine Analyse mit amtlichen Betriebspaneldaten [Job Turnover Dynamics in the Manufacturing Sector in Baden-Wuerttemberg: An Empirical Analysis Using Panel Data from German Official Statistics]. Bern: Peter Lang .
50.
Strotmann, H. (2006, forthcoming) ‘Entrepreneurial Survival’, Small Business Economics.
51.
Vaessen, P. and Wever, E. (1993) ‘Spatial Responsiveness of Small Firms’ , Tijdschrift voor Economische en Sociale Geografie84(2): 119–131 .
52.
Van Stel, A. and Carree, M. (2004) ‘Business Ownership and Sectoral Growth: An Empirical Analysis of 21 OECD Countries’ , International Small Business Journal22(4): 389–419 .
53.
Vyakarmum, S. and Handelberg, J. (2005) ‘Four Themes of the Impact of Management Teams on Organizational Performance: Implications for Future Research of Entrepreneurial Teams’ , International Small Business Journal23(3): 236–256 .
54.
Wagner, J. (1994) ‘The Post-entry Performance of New Small Firms in German Manufacturing Industries’ , The Journal of Industrial Economics42(2): 141–154 .
55.
White, H. (1980) ‘A Heteroscedasticity-consistent Covariance Matrix Estimator and a Direct Test for Heteroscedasticity’ , Econometrica48(3): 817–838 .
56.
Witt, P. (2004) ‘Entrepreneurs’ Networks and the Success of Start-ups’ , Entrepreneurship & Regional Development16(5): 391–412 .
57.
Wooldridge, J. M. (2002) Econometric Analysis of Cross Section and Panel Data. Cambridge, MA: MIT Press .
58.
Yli-Renko, H. , Autio, E. and Sapienza, H. J. (2001) ‘Social Capital, Knowledge Acquisition, and Competitive Advantage in Technology-based Young Firms’ , Strategic Management Journal22(6–7): 587–613 .
