The Geography of Entrepreneurial Activity and Regional Economic Development : Multilevel Analyses for Dutch and European Regions

Countries and regions are committed to stimulating entrepreneurship by opening doors to (potential) entrepreneurs. The commonly held belief is that a variety of entrepreneurs would lead to an enriched dynamic environment and as such lies at the root of economic prosperity. Over the past 25 years, entrepreneurship literature has established that entrepreneurial activity is highly unevenly distributed over regions. Also it has been confirmed that the regional context matters for individuals’ decisions to engage in entrepreneurship. Therefore, for studying the entrepreneurial process and its role for economic development it is desirable to appreciate regional differences in explaining individuals' engagement in entrepreneurial activity. However, there are still a very limited number of studies investigating these macro-micro relationships. In addition, there is limited knowledge on the linkages between different types of entrepreneurship and regional economic development. This thesis investigates the causal mechanisms between regional conditions and different types and phases of entrepreneurial activity at the individual level on the one hand, and entrepreneurial activity and regional economic development on the other hand. In this study we link recent insights from economic geography to the entrepreneurship literature. A conceptual multilevel framework expressing the abovementioned relationships is introduced. The subsequent chapters encompass empirical studies, each exploring parts of the framework. One of the databases used is extracted from the Global Entrepreneurship Monitor (GEM) and enables analyses on over 37,000 individual observations, over 136 regions in 17 European countries. For the Netherlands we employ data on a more disaggregated scale (Nuts3 level). Our results predominantly support the relevance of integrating the regional level and individual level for studying the entrepreneurial process. We find that a large share of the observed regional differences in (types and phases of) entrepreneurial activity are accounted for by composition effects, i.e. characteristics of the population in terms of age, education and income. We also find that urbanisation effects play a key role in (i) explaining regional levels of specific types of entrepreneurship and (ii) determining linkages between specific types of entrepreneurship and regional economic development. At the national level we find a negative relationship between the degree of employment protection and the level of ambitious entrepreneurship. We demonstrate that, by using information on the individual, regional and national level, some specific elements of ‘what entrepreneurship does for economic development’ can be explored by appreciating regional context and considering different types of entrepreneurship. We argue that such a multilevel approach opens other avenues for further research into the role of entrepreneurship for economic development. This should also feed policy makers in their decisions on opening and and perhaps closing some doors to (potential) entrepreneurs