ABSTRACT
In this chapter we explore the relationship between employment change and new firm formation at the UK county level during the 1980s. The research reported here was stimulated and sponsored by Scottish Enterprise (SEN). Previous research had shown that Scot-land’s regions generally exhibited a low rate of new firm formation compared with their UK counterparts. Our earlier work offered some pointers to the reasons for Scotland’s underperformance, but as SEN moved towards the development of an initiative aimed at raising the rate of new firm formation in Scotland the agency felt that it was important to understand the role and significance of new firm formation in net job creation. Clearly, to the extent that firm formation is found to be of limited significance to net employment change, then the justification for a policy supporting firm formation is reduced.1
