Are cities really the only place where entrepreneurship can flourish? A new study in the journal of Regional Studies examines this question. The study analyzed over 400,000 individuals across twenty-three urban areas in twelve European countries. Instead of comparing countries, the study compared regional areas internationally. This helped researchers focus on urban-rural differences and avoid attributing regional differences to the national characteristics of different countries. Here is what they found.
Entrepreneurship is present in both urban and rural areas, but in different forms. The study found a number of important differences between entrepreneurship in urban and rural areas:
- Regional context impacts the type of entrepreneurship that develops in an area. The report makes a distinction between entrepreneurship that evolves out of the opportunity to create a certain business, and necessity-motivated entrepreneurship. While opportunity-motivated entrepreneurship was more likely in urban areas, necessity-motivated entrepreneurship was not strongly associated with urban areas.
- Urban entrepreneurship is not always more successful than rural entrepreneurship. Once entrepreneurship is present, the report found that businesses succeed in both urban and rural settings.
- A country’ political structure impacts where the majority of entrepreneurial activity takes place. In countries that are centralized, as in smaller European countries, most entrepreneurial activity takes place in the nation’s capital. In contrast, in decentralized countries like Germany, Poland, and Spain, regional capitals become hubs of innovation and entrepreneurship.
- The way that entrepreneurship is presented within a region matters. Areas that were celebrated for strong economic growth had more early-stage entrepreneurs than areas that advertised high startup activity.
Studies like this one lend support to the argument that economic growth is tied to successful entrepreneurship ecosystems, and these ecosystems are often driven by regional factors. Setting aside country-specific differences helps understand the developmental trajectories of different regions, an important consideration for policy makers.
The full article is available to subscribers of Regional Studies here.
Contributed by Emily Luepker.