Drivers of Spin-off Performance in Industry Clusters: Embodied Knowledge or Embedded Firms?

Abstract

Numerous studies attest to the distinctive performance of intra-industry spin-offs located in agglomerated regions. Besides entrepreneurs’ pre-entry experience, both superior hires and regional embeddedness have been suggested as factors contributing to this pattern. We employ linked employer-employee data to assess their relevance in the empirical context of the Portuguese plastic injection molds industry. We find that the longevity of entrants is associated with the number and quality of early employees hired from within the industry, consistent with the importance of embodied knowledge flows. Our findings do not suggest that entrants’ centrality in the regional industry network enhances their longevity.