Geography Reference
In-Depth Information
6
Entrepreneurship, evolution and geography
Erik Stam
1. Introduction
Entrepreneurship is a fundamental driver of economic evolution. It is also a distinctly
spatially uneven process, and thus an important explanation of the uneven economic
development of regions and nations. Not surprisingly, entrepreneurship is a key
element of evolutionary economics (Grebel, 2004; Grebel et al., 2003; Metcalfe, 2004;
Schumpeter, 1934; Witt, 1998) and has been recognized as an important element in
explaining (regional) economic development (Acs and Armington, 2004; Audretsch
et al., 2006; Fritsch, 2008). This means that the explanation of regional variations in
entrepreneurship has also become an important issue. Even more so because there are
pronounced dif erences within and between nations in rates of entrepreneurship and in
their determinants (Bosma and Schutjens, 2008), and these dif erences tend to be persist-
ent over time, rel ecting path dependence in industry structure (Brenner and Fornahl,
2008), institutions (Casper, 2007) and culture (Saxenian, 1994) that vary widely across
regions and countries, but are relatively inert over time. Introducing entrepreneurship
into evolutionary economic geography means that the traditional focus on i rms is com-
plemented with a focus on individuals.
This chapter is an enquiry into the role of entrepreneurship in evolutionary economic
geography. The focus is on how and why entrepreneurship is a distinctly spatially uneven
process. We start with a discussion on the role of entrepreneurship in the theory of eco-
nomic evolution. Next, we review the empirical literature on the geography of entrepre-
neurship. The chapter concludes with a discussion of a future agenda for the study of
entrepreneurship within evolutionary economic geography.
2. Entrepreneurship and economic evolution
'Newcomers' to the economy have an important role to play in the evolution of eco-
nomic systems. According to Schumpeter (1942; p. 83):
The fundamental impulse that sets and keeps the capitalist engine in motion comes from the
newcomers' goods, the new methods of production or transportation, the new markets, the new
forms of industrial organisation that capitalist enterprise creates. . . . [This is a] process of indus-
trial mutation - if I may use that biological term - that incessantly revolutionises the economic
structure
from within
, incessantly destroying the old one, incessantly creating a new one. This
process of Creative Destruction is the essential fact about capitalism.
By creating new variations (products, processes, business models) in the economy, these
innovative new i rms compete with incumbent i rms, which force the latter to improve
or change their production, sanctioned by liquidation if this is not done successfully
(Schumpeter, 1934, 1942). The creation of this variation is unevenly distributed over
space. Although relatively inert, this spatial distribution of variety creation itself changes
over time. These new variations are thus created somewhere, but are not dif used
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