Entrepreneurship, Growth and Economic Development

Entrepreneurship, Growth and Economic Development

Frontiers in European Entrepreneurship Research

Frontiers in European Entrepreneurship series

Edited by Mário Raposo, David Smallbone, Károly Balaton and Lilla Hortoványi

This timely book presents contemporary research on the key role of entrepreneurship in firm growth and development strategies. The contributors reveal that a high level of entrepreneurial activity contributes to economic growth, innovative activities, competition, job creation and local development.

Chapter 6: Effects of Regional Human Capital Structure on Business Entry: A Comparison of Independent Start-ups and New Subsidiaries in Different Industries

Kenta Ikeuchi and Hiroyuki Okamuro

Subjects: business and management, entrepreneurship, economics and finance, regional economics, urban and regional studies, regional economics


6. Effects of regional human capital structure on business entry: a comparison of independent start-ups and new subsidiaries in different industries Kenta Ikeuchi and Hiroyuki Okamuro INTRODUCTION The start-up of new businesses increases innovation and competition and creates local employment. Therefore, start-up activities have been encouraged and supported by various programmes in many countries. However, even in Japan, where the start-up ratio1 has been lower than the closure ratio2 since the late 1980s, considerable efforts aimed at increasing the entry of start-ups have hitherto not met with much success (Okamuro and Kobayashi, 2006). Business start-ups are important for both national and regional economies. In order to comprehensively consider the impact of business start-ups on the regional economy, we find it appropriate to distinguish between new business entries of independent start-ups and subsidiaries of existing firms. The former type depends basically on the decision of the people living or working in the region regarding setting up independent businesses, which means the regional structure of human capital is expected to play a significant role. The latter type is based on decisions by the top management of existing firms, which could be located outside the region, regarding where to locate new subsidiaries. In this case, the regional level of demand and cost may be more important than the human capital structure. Bosma et al. (2008) investigate differences in the regional determinants of independent start-ups and new subsidiaries, focusing on agglomeration effects and comparing manufacturing and service sectors. The effects of human capital structure...

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