The main purpose of this paper is to investigate the role of industrial clusters in the formation and development of new ventures as well as entrepreneurship. We take Taiwan as an example; the empirical works are conducted first by a look at the contingency table of incumbents and new firms' regional distribution to see their geographic linkage. Then a Tobit regression was performed to decide the determinants of Taiwan's manufacturing new ventures. Our empirical results show that industrial clustering and R&D intensity are important facilitators of new ventures. The policy implication from our results is that promotion of the spatial agglomeration of firms is a useful means of nurturing startups. This study further suggests that inter-firm linkages play a critical role within an industrial cluster, indicating that government support for the incubation of new businesses should be targeted towards the building of networks. In order to assist in matching local networks to the global production system, the aggressive promotion of spatial agglomeration is necessary in order to facilitate mutual learning and knowledge spillovers. Developing countries in particular may need to design policies aimed at leveraging the capabilities of multinationals in establishing both local and cross-border networks for learning.
International Council for Small Business (ICSB) 49th World Conference, Johannesburg, South Africa