The Joint Influence of Agglomeration Economies and Geographical Centrality on Startup Performance in the Netherlands An Empirical Investigation Leveraging Crunchbase Data

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This study examines how agglomeration economies, gauged by urban density, and geographical centrality (jointly) affect startup performance in the Netherlands, using a dataset of 727 startups and evaluating their performance on total funding and total revenue. Core theories like the Central Places Theory and Agglomeration Economies Theory are utilized. Urban density, representing agglomeration economies, significantly predicts funding but not revenue, meaning denser urban startups attract more funding without necessarily earning more revenue. Surprisingly, geographical centrality showed no significant effect on startup performance, suggesting the traditionally assumed benefits of central locations might be overestimated. However, different patterns emerge in specific industries, highlighting the complexity between location factors and industry characteristics. Furthermore, the interaction of agglomeration economies and geographical centrality can compound the benefits of these two. Startups in less urban but central locations secured more funding, indicating an interplay between these factors. This research delivers valuable insights for startups, investors, policymakers, and academics, in providing a deeper understanding of how location-dependent factors influence startup performance. It also advocates further exploration into this relationship across various geographical contexts and industry-specific dynamics using different performance metrics to enrich the entrepreneurial literature.
Faculteit der Managementwetenschappen