The role of the regional milieu for the decision to start a new firm: Empirical evidence for Germany

Although comprehensive data from official statistics on new firm formation and entrepreneurs starting a new business are lacking in Germany, we know from empirical studies that entry rates differ between regions, and that the propensity to become an entrepreneur is influenced by socio-demographic variables like sex and age. The focus of our paper is on the link of these two stylised facts. Our econometric study is based on data for 10.000 persons from a recent representative survey of the population in ten German planning regions. We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We show that the region matters for the decision to start a new business ceteris paribus, i.e. after controlling for sex, age, education etc.. In a second step we peek inside the black box of the regional effect by showing that the regional level of current start-up activity has a positive ceteris paribus effect on the propensity to become an entrepreneur, while the share of self-employed in the region does not matter. The consequences of these findings for regional policies to encourage new firm entry are discussed briefly in the concluding section.

Learning from the Past? Why 'Creative Industries' can hardly be Creted by Local/Regional Government Policies

US regional economist Richard Florida has developed simple, but very popular ideas to foster regional economic growth: attracting and haltening of members of the so-called ‘creative class’ by steering the focus of local government development policies for culture, tolerance (towards ethnic and other kinds of minorities) and knowledge. Members of the creative class, characterised by indicators of talent, technology and tolerance, should feel at home in the cities – the result of which would be that creatives either stay in the city where they already lived before or move to those cities which possess the named characteristics. The larger the number of creative people in a city, the better the economic performance of the city. Why that? Because, as Florida postulates, creative people produce economic value added for the region where they live as they more often (than non-creative people) start successful firms and more often engage in highgrowth sectors of the economy. Furthermore they are assumed – as an aggregate – to be able to attract existent firms: ‘jobs follow (creative) people’ instead of ‘people follow jobs’ to cite an old, but – thanks to Florida – still modern debate among economists. As Florida in his own empirical studies focuses on U.S. metropolitan areas only, there is a need to close the significant research gap in terms of empirical evidence outside the U.S., given the great popularity of his ideas among policy-makers outside the U.S. In the paper five of Florida’s main hypotheses are discussed in an explorative approach based upon the available literature. None of these hypothesesreceive sufficient support. Consequently, it will hardly be possible to create creative industries by developing related government policies. Comparing government policies in favour of creative industries with government policies of former eras (when, e.g., clusters or high-tech regions belonged to the targets of such policies) there is not much empirical evidence that policymakers are able or even willing to learn from previous experiences – and failures

Entrepreneurship and geography—some thoughts about a complex relationship

This review article sheds a light on the complex and hitherto under-researched relationship between geography and entrepreneurship. This relationship is considered to be interdependent. Both directions are discussed. The paper also describes the perspectives of both academic disciplines involved in regional entrepreneurship research, namely (geographically sensitive) economics and management studies on the one hand, and economic geography on the other. Based on a comprehensive overview of the theoretical and empirical literature on regional entrepreneurship, several research gaps are identified that could be helpful for designing future research. Some have strong relevance for government policy, which has recently paid much more attention to entrepreneurship than in the past (e.g. related to the entrepreneurial ecosystem approach), but which rather rarely has been considered in academic evaluations so far. This paper ends with a suggestion for an agenda for future regional entrepreneurship research. Digital transformation with its potential for a disruptive transformation of economies and societies will provide an excellent and, of course, a currently not well-understood research field for regional entrepreneurship research

From potential to real entrepreneurship

"Not everyone who plans to set up a firm succeeds in doing so. This paper focuses on the phase before a firm is founded, the pre-nascent stage of the entrepreneurship process. Based upon cross-sectional data from the German section of the Global Entrepreneurship Monitor (GEM), the specific aim of this paper is to shed some light on the selection that takes place during the entrepreneurial process and to explain empirically demographic and cognitive characteristics and differences between latent nascent entrepreneurs, nascent entrepreneurs and young entrepreneurs. The results clearly reveal that there are both significant differences between and common determinants of the three phases of the entrepreneurial process. Education, the readiness to take risks, and role models are very important determinants during all phases. However, the regional environment and the age of the entrepreneur have quite a differentiating impact during the entrepreneurial process." (Author's abstract, IAB-Doku) ((en))Unternehmensgründung, Unternehmer, Unternehmensgründung - Planung, unternehmerische Qualifikation, Risikobereitschaft, Qualifikation, Berufsrolle, regionale Disparität, altersspezifische Faktoren

The Changing Face of Entrepreneurship in Germany

This paper explains individual start-up activities on the basis of both person-related characteristics and the regional context. The analysis is based upon micro data from the GEM adult population survey. Both individual and regional variables have an influence on the decision to become self-employed. There are considerable differences between nascent opportunity entrepreneurship and nascent necessity entrepreneurship. Whereas the results for opportunity entrepreneurship are in line with theoretical predictions the factors influencing necessity entrepreneurship are far more difficult to determine. The most significant change between 2001 and 2003/2004 is the reversal of the influence of a change in the regional rate of unemployment on nascent entrepreneurship activitie

Spatial implications of digitization: State of the field and research agenda

Digitization is an influential megatrend that is quickly and comprehensively transforming economic spaces worldwide. Its disruptive power has not yet been fully developed but, despite a lack of topical empirical or theoretical research, it nevertheless seems clear that it will significantly affect the economic order within and between economic spaces and places. Currently, digitization is high on the policy agenda in many countries. Several related programs and initiatives combine expansion and improvement of digital infrastructure with efforts to reduce spatial economic inequality and to facilitate a general catch-up process for lagging (often rural) regions. However, the idea that digitization can reduce spatial inequality remains highly controversial. This study aims to focus on the economic geography implications of digitization and to enrich the existing literature in two ways. First, the study overviews the state of research on the spatial consequences of digitization. Deploying a comprehensive literature review, this section discusses the primary theoretical and empirical results from two contradictory narratives on the ability of digitization to reinforce the death of distance and thus reduce spatial inequality. Second, we develop a research agenda concerning select fields of research that could appropriately be addressed in the future by economic geographers. These fields include spatial economic digitization effects, digital competencies, entrepreneurial activities, and innovation activities in both urban and rural regions. Closing the research gaps would contribute to the development of much-needed policy measures. © 2020 The Authors. Geography Compass published by John Wiley & Sons Ltd

Do the Winners Really Take It all? Exploring Entrepreneurial Learning in Start-Up Competitions

Originating from business plan competitions at universities, start-up competitions (SUCs) are nowadays a widely used policy tool to foster entrepreneurial learning among a larger group of potential and nascent entrepreneurs. While the literature on entrepreneurial learning highlights the importance of participants’ prior experiences, studies on learning in SUCs often ignore these experiences, but detect different perceptions of the learning outcomes from SUCs. To address this research gap, we explore configurations of prior experience and the participation routines of entrepreneurs at SUCs. To do so, we apply fuzzy-sets qualitative comparative analysis (fsQCA) to in-depth interview data from 26 participants at two German SUCs. Based on theories on entrepreneurial learning, insights from the interviews, and our empirical results from fsQCA, we identify one necessary condition and two specific configurations of conditions that lead to the outcome. The absence of entrepreneurial knowledge was found to be a necessary condition for entrepreneurial learning in SUCs. Prior industry experience is part of both solutions, but whether the presence or absence of it is important depends on whether it is combined with active participation in the competition. We present implications for policymakers, entrepreneurs, and researchers

Youth Entrepreneurship in Germany: Empirical Evidence on the How, the Why, the How Many, the Who and the When

Youth entrepreneurship is an increasingly prominent aspect of entrepreneurship support policies, but there is surprisingly little relevant research-based empirical evidence. This research gap is particularly noticeable when it comes to the personal and contextual factors that steer young people’s decision to start a business. Using statistically representative survey data from the Global Entrepreneurship Monitor for Germany, we apply logit regressions to determine the influence of 10 independent variables on the likelihood of starting a business. We distinguish between 18–24-year-olds and 25–64-year-olds as well as between founders and non-founders. Self-efficacy in entrepreneurial skills, fear of failure and gender are the strongest influencing variables for the person-related factors and knowledge of other founders for the contextual factors. For younger people, the formal level of education and the perception of local entrepreneurial opportunities do not play a role in the decision to start a business, whereas they are very important for older people. Our results suggest that start-up promotion policies should explicitly address the empirically proven factors of youth entrepreneurship instead of a ‘one size fits all’ policy for new businesses, regardless of the age of the founders

Competition through indicators of regional sustainability in a federal system

"Indicators of regional sustainability can attempt to inform regional actors by pointing out potentials of sustainable development. In this respect, indicators are a heuristic instrument for designing policy instruments. But theoretically sustainability indicators could also be applied in horizontal and vertical fiscal relations to allocate funds among regions. Then they could induce competition either by setting standards or else by evaluating relative efforts towards sustainable development. In a way, this seems to be comparable to ecotaxation: An incentive provides for the lack of altruistic behavior to do what is best for all. And reforming fiscal relations according to sustainability indicators would come close to a revolution. Unfortunately, chances are low of fitting complex indicator systems with rather simple measures of current fiscal relations and their structural conditions. Specifically, we show that sustainable development indicators suffer four fundamental problems if applied to fiscal relations. All four are arising from the fact that highly diverse information must be condensed into one single form of information to give the incentive: money." [author's abstract

Regional characteristics, opportunity perception and entrepreneurial activities

This paper seeks to better understand the link between regional characteristics and individual entrepreneurship. We combine individual-level GEM data for Western Germany with regional-level data, using multi-level analysis to test our hypotheses. We find no direct link between regional knowledge creation, the economic context and an entrepreneurial culture on the one side and individual business start-up intentions and start-up activity on the other side. However our findings point to the importance of an indirect effect of regional characteristics as knowledge creation, the economic context and an entrepreneurial culture have an effect on the individual perception of founding opportunities which in turn predicted start-up intentions and activity