Entrepreneurship and firm dynamics are influenced by local conditions, despite the trend towards globalization. Face-to-face interactions remain crucial for business success, even in the digital age. The theory of firm dynamics needs to focus more on how firms grow and change over time. The development of entrepreneurial firms involves stages like founding and early growth, shaping the new economy. The spatial organization of firms evolves as they grow, akin to a caterpillar turning into a butterfly.