Are There Too Many Innovation Centres in Germany

TLDR: This paper showed empirically that two thirds of all new jobs were created by firms with fewer than 20 employees or by newly founded firms in the United States from 1969-1976 and that these firms can react flexibly with respect to innovations and often adopt revolutionary new technologies like semiconductors, genetic engineering or biotechnology in the early stages of development.

Abstract: Since the beginning of the 1980s young, innovative firms have been viewed in politics as a source of hope for the economy. This emphasis began with the studies by Birch (1979, 1987), who showed empirically that in the United States from 1969-1976 two thirds of all new jobs were created by firms with fewer than 20 employees or by newly founded firms. Examples of successful regional economies in the United States, like Silicon Valley in California, or Route 128 near Boston, also demonstrate that significant effects on employment and innovation at the regional level can stem from young, innovative firms. In contrast to the 1970s, when large corporations with significant market power were considered to be the motor of economic development, nowadays the importance of young, innovative firms in securing international competitiveness and solving problems on the job market is highlighted (see Kulickeet al.1993). Due to their relatively small size and technological competence, such firms can react flexibly with respect to innovations and often adopt revolutionary new technologies like semiconductors, genetic engineering or biotechnology in the early stages of development, playing an important role in structural change (see Nerlinger 1998).