Geography Reference
In-Depth Information
and Vernon, 1959). In addition, cities provide contexts in which serendipitous meetings
are more likely to occur than in less densely populated areas (Jacobs, 1969); these seren-
dipitous meetings increase the likelihood of new opportunities and collaborations that
might trigger the emergence of a new i rm. Urban density also improves the likelihood
of getting into contact with more skilled individuals in the same or related knowledge
domains: learning from these more skilled peers stimulates human capital accumulation
in urban environments (Glaeser, 1999) and might lead to the creation and recognition of
better quality entrepreneurial opportunities. This human capital ef ect on opportunities
is strengthened by the relatively high concentration of universities and research centres
in urban areas, which produce new scientii c and technological knowledge that has also
been recognized as an important source of entrepreneurial opportunities (Audretsch
et al., 2006; see also the section on 'growth in knowledge'). The risk of starting a busi-
ness in urban areas is also relatively low because of the abundant employment oppor-
tunities, which function as an occupational buf er for the entrepreneur when the i rm
fails.
Urbanized areas are often concentrations of educated individuals with business
experience in their early and middle adult years,
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and in that way they are a source of
entrepreneurs (Glaeser, 2007). Urban areas have important advantages for the demand
for entrepreneurship (especially in retailing), as they contain demand for a rich variety
of services and consumer goods (see Glaeser, 2007; Glaeser et al., 2000). Urbanization
positively af ects diversii cation of consumer demand. This latter phenomenon is central
in l exible specialization theory (Piore and Sabel, 1984), which explains such trends in
terms of the breakup of the mass market for standardized goods and services and the
consequent emergence of a variety of smaller niche markets capable of exploitation by
new or small businesses. This diversii cation is, next to urbanization, also directly driven
by growth in overall demand.
Culture
Culture is important in the explanation of spatial variation in entrepreneurship via its ef ect
on the attitude and values that people acquire. Social psychologists have claimed that an
individual's attitudes and traits are not inherited but are developed in interaction with the
social environment. Perceptions about the desirability of becoming an entrepreneur are
formed and revised given the set of information available to each person (Lafuente and
Salas, 1989; Saxenian, 1990). Culture is a property of groups, and it seems that especially
national (Uhlaner and Thurik, 2007), and to a lesser degree regional cultures (Davidsson
and Wiklund, 1997) have signii cant ef ects on new i rm formation. These cultures can
change over time, but they tend to be very persistent (Beugelsdijk, 2007).
The existence of a number of entrepreneurs in a region also legitimizes the activities
of nascent entrepreneurs (Kristensen, 1994). Dif erences in culture in that way af ect
the level to which people aspire and think about becoming an entrepreneur, which is
an important phase in the process of starting a i rm. One example of this is the fear of
failure that might deter people from starting a new i rm (Arenius and Minniti, 2005;
Vaillant and Lafuente, 2007). Cognitive theories have proposed that individuals acquire
information and skills by observation of (entrepreneurial) activities by others, that might
trigger and enable their choice of an entrepreneurial career (Forbes, 1999; Minniti, 2005;
Zander, 2004).
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