This chapter reviews the empirical evidence concerning the regional emergence of innovative new businesses. It is argued that analyses using aggregate data that focus on the regional level and do not account for career patterns of innovative founders are of limited value in guiding policy that is aimed at fostering the emergence of innovative new businesses. Progress can be mainly expected from research that investigates the family backgrounds, education, and employment careers of potential founders. Moreover, it would be helpful to develop clearer empirical definitions of what constitutes an innovative new business, and the distinctions between different types of innovative businesses.
National and Regional Perspectives
Edited by Michael Fritsch
Michael Fritsch and Michael Wyrwich
Emerging literature shows that spatial differences in entrepreneurship tend to persist over longer periods of time. A potential mechanism underlying this pronounced persistence is that high levels of start-up activity lead to the emergence of a regional culture and a supporting environment in favor of entrepreneurship that particularly involves social capital. This chapter summarizes the available empirical evidence on the regional persistence of entrepreneurship and elaborates in detail how different elements of such a culture, such as social capital, can exert an influence on the level of new business formation and self-employment. As a demonstration for the relevance of a regional entrepreneurship culture for new business formation, we highlight the case of Germany where we find pronounced persistence of start-up activity despite radical structural and institutional shocks over the course of the twentieth century. The German case suggests that there is a long-lasting local culture of entrepreneurship that can survive disruptive changes. We discuss the relationship between place-specific social capital and a regional culture of entrepreneurship and draw policy conclusions.