Tech hubs within cities—determinants and dynamics

Abstract

This paper explores the microgeographic determinants of firm birth activity and relocation patterns in the digital economy simultaneously. The study investigates the spatial dynamics of young firms within Berlin, Hamburg, and Munich using geo-coded data of firm births and relocation from 2009 to 2016 aggregated at a 1 × 1 km2 grid level. The panel fixed effect regression models examine the impact of changes within persistent city structures on the location choices using several control variables. The findings suggest that firm clustering, commercial building density, and higher rent prices positively influence firm births, while the impact of knowledge institutions in the neighborhood is mixed. Relocation patterns highlight the role of proximity to competitors, with higher prices in areas not deterring relocations. These findings contribute to understanding firm location choices within cities by considering the two avenues of growth and highlight the future need for further investigations on the microgeography of firm growth dynamics.