We propose an approach to the analysis of the spatial dynamics of firm formation/exit based
on micro-geographic data.
We illustrate the use of the space-time inhomogeneous K-function to detect the spatio-
temporal clustering of firm entries and firm exits generated by the interaction between
economic agents.
We show the results of an empirical application of the methodology to the case of new firms
entry and firm exit in the pharmaceutical and medical device manufacturing industry during
the years 2004-2009 in an Italian region (Veneto).
Firm creation seems to be more strongly influenced by positive spatial-temporal interaction:
new firms tend to enter the market to exploit a positive long-term business cycle and a
positive interaction with other firms.
The process of firm cancellation seems to be less influenced by a long-run temporal trend
and more by the contingent situation. It is also less affected by the geographical location of
the other firms with a positive interaction observed only at long distances.