-
Geography and microenterprises: clustering, networking, and knowledge spillovers
01.12.2013
Although an examination of the determinants of microenterprise performance has been a frequent area of research in the literature, data shortcomings have prevented a careful study of the effects of firm clustering and networking. Using GPS technology to pinpoint firms' locations, we examine the potential agglomeration benefits not only from the clustering of small businesses, but also the potential benefits of knowledge spillovers benefiting entrepreneurs. We find that for some microenterprises clustering is beneficial in terms of employment growth while for others clustering raises total revenue per worker. Although the size of the owner's informal business network does not appear to improve growth, we find a positive effect on revenue per worker for commercial firms. There is evidence that having lived in a larger city in the past enhances performance for some firms.