Geography Reference
In-Depth Information
working in the region where they were born is signii cantly higher than the correspond-
ing fraction for dependent workers (Michelacci and Silva, 2007). A study of Portuguese
manufacturing i rms found that entrepreneurs were willing to accept labour costs three
times higher than in alternative locations to locate the new business in their current
region (Figueiredo et al., 2002).
There are several reasons for the locational inertia of entrepreneurs. First, they can
utilize their existing (local) network to seek partners, employees, suppliers, custom-
ers, advisors and investors (Michelacci and Silva, 2007; Zander, 2004). This decreases
search costs, but it also permits them to build on credibility and trust developed in
past relationships. The behavioural matrix of Pred (1967) is relevant here, as locational
inertia can also be explained by imperfect information about alternative locations and/
or limited cognitive abilities to process all information available (see Simon's, 1957,
bounded rationality). Second, more normative motivations might be at play here, as
some relationships involve more than rational instrumental motivations, and continuing
these relationships might only be possible when the entrepreneur stays within the region.
Dahl and Sorenson (2009) conclude in their empirical study of Danish entrepreneurs
that entrepreneurs appear to value proximity to family and friends not for the help that
those connections might of er to their ventures but for emotional reasons. Third, they
can start on a part-time basis (often being home-based) and delay full-time commitment
until the venture seems sui ciently promising (part-time entry as a real option strategy:
see Wennberg et al., 2007). Third, a spouse can keep a job so that income continues to
l ow to the family; other aspects of a founder's life can remain the same (Hanson, 2003).
The full energies of the entrepreneur can then be devoted to start-up.
Earlier in this chapter it has been said that entrepreneurship is the result of the inter-
action between individual attributes and the surrounding environment. For explaining
the spatial distributions of entrepreneurship, one should thus look at spatial aspects of
this interaction. In geographical terms we mainly refer to characteristics of particular
places and spatial distance between particular actors. We can start the explanation with
the availability of (potential) entrepreneurs in particular places. Several perspectives are
useful here: the nature and number of organizations in a region, the regional culture,
and the labour market structure in a region. Key elements are the resources, abilities and
preferences of individuals. The key question is why in a given (opportunity) environment
some individuals are more likely to start a i rm than in another environment: for example
because of their willingness to incur risk, preference for autonomy and self-direction,
specii c human capital and experience. One important underlying factor can be found in
generational ef ects: having an entrepreneurial family background strengthens the prob-
ability of entering self-employment. Intergenerational transmission of self-employment
is an explanation for spatial dif erences in self-employment (Niittykangas and Tervo,
2005; Vaillant and Lafuente, 2007).
Another starting point represents the opportunities for entrepreneurship. From this
point of view, individuals in particular environments are more likely to be entrepreneurs
because the availability of opportunities encourages their exploitation by starting a i rm.
The sources of opportunities can be manifold: for example a growing purchasing power
in the region, technological change, regulatory change.
Historical processes produce uneven spatial economic patterns, of both the charac-
teristics of individuals and the 'availability' of opportunities, that condition but do not
