Knowledge-intensive business services and new venture growth: A sub-national analysis based on complexity theory

Abstract

The significance of economic complexity in fostering extensive entrepreneurship is increasingly recognized. However, previous research has largely overlooked how economic complexity impacts intensive entrepreneurship, particularly the role of knowledge-intensive business services (KIBS) in this process. This study addresses this gap by analyzing over 12,000 observations from all 47 regions of Japan between 2006 and 2017. Our findings reveal that KIBS complexity significantly promotes new venture growth through three key mechanisms: improved financial access, enhanced professional services, and increased innovation opportunities. Furthermore, we find that the positive effects of KIBS complexity are especially strong in industries with high complexity and in urbanized regions. This study makes several contributions: it refines the analysis of economic complexity to the sub-national level, introduces a micro-level perspective to the literature on economic complexity, and connects KIBS with the intensive margin of entrepreneurship through the complexity lens.