Innovation districts: Between young firms and employment formation

Innovation districts have become a popular development tool for economic growth and employment creation. Within this context young firms develop into large and established companies and are a source of new jobs for the innovation district. However, consistent empirical evidence regarding the relationship between employment formation and young firms within innovation districts is largely missing. With a focus on Rotterdam Makers District, this study aims to assess the relationship between young firms and employment formation and explain its determinants. By employing quantitative and qualitative evidence, heterogeneous results are found. An increase in the number of young firms choosing to locate in the innovation district’s area is identified and their presence contributes to the number of new jobs concentrated within Rotterdam Makers District. Nevertheless, this trend oscillates between a ‘come, grow, and leave’ and ‘come and stay’ scenario. Moreover, it is shown that these trends are determined by the innovation districts conditions. The results imply that when young firms are stimulated by support initiatives, and the presence of young firms is in line with the goals and strategies of the innovation district and its driving actors, young firms can influence employment formation in the innovation district.