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Regional characteristics, opportunity perception and entrepreneurial activities

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Abstract

This article seeks to better understand the link between regional characteristics and individual entrepreneurship. We combine individual-level Global Entrepreneurship Monitor data for Western Germany with regional-level data, using multilevel analysis to test our hypotheses. We find no direct link between regional knowledge creation, the economic context and an entrepreneurial culture on the one side and individual business start-up intentions and start-up activity on the other side. However, our findings point to the importance of an indirect effect of regional characteristics as knowledge creation, the economic context and an entrepreneurial culture have an effect on the individual perception of founding opportunities, which in turn predicted start-up intentions and activity.

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Notes

  1. We also acknowledge the potential role of individual human and social capital and do not ignore these variables, but use them as control variables to check for the robustness of the indirect effects via opportunity perception.

  2. In 2007 Germany did not take part in the GEM 2007 cycle.

  3. We use the Establishment History Panel of the IAB to compute start-ups at the regional level (Spengler 2008). For the technique of how to identify newly founded firms, see Fritsch and Brixy (2004). Note that in IAB databases start-ups are only taken into account if they employed at least one person, that is, subject to compulsory social insurance. This operationaliation of start-up activity deviates from GEM concepts such as Total Early-stage Entrepreneurship Activity (TEA) and arguably underestimates the level of entrepreneurial activity, because of the exclusion of entrepreneurs without employees and its focus on latter part of the entrepreneurial process. However, we use this data source because of its complete coverage providing us with a sufficient number of observations in all districts.

  4. The choice of a 24-year time lag is governed by data availability. 1978 is the earliest year regional start-up rates can be computed from the IAB Establishment History Panel. Compared with 2002—the first year GEM data were available for this article—this results in a time lag of 24 years. Note that employing any shorter time lags or averages over a certain time period does not change the regression results as regional start-up rates do not vary much over time.

  5. In order to compute the pseudo R 2 in a multilevel setting, we follow recommendations of Snijders and Bosker (1999). According to them R 2 is calculated by dividing the variance of the predicted residuals of the estimated model by the sum of (1) the variance of predicted residuals of the estimated model, (2) the level-2 variance and (3) the level-1 variance, which is equal to π 2/3 in a logistic model.

  6. As this variable is now a dependent variable (instead of an individual-level predictor), we do not test a random coefficient model.

  7. The respective results are available from the authors on request.

  8. Due to space constraints, we do not report these regression results, but they are available from the authors on request.

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Acknowledgments

Earlier versions of this paper were presented at the 50th Annual Congress of the European Regional Science Association (Jönköping, Sweden; 2010), the 8th AGSE International Entrepreneurship Research Exchange (Melbourne, Australia; 2011) and the 4th Global Entrepreneurship Research Conference, Imperial College, London (UK). Parts of this research were conducted while the first author was member of the DFG research training group 1411 “The economics of innovative change”. The work of the second author on this study was supported by the PATHWAYS International Postdoctoral Fellowship Programme for the Comparative Study of Productive Youth Development (Jacobs Foundation) and the Center for Applied Developmental Science (CADS) of the Friedrich-Schiller-University of Jena, Germany. The authors are grateful to Michael Fritsch, Per Davidsson and Veronique Schutjens for helpful comments on an earlier version of this paper.

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Authors and Affiliations

  1. Chair of Economic Policy, Technical University Ilmenau, Ehrenbergstr. 29, 98684, Ilmenau, Germany

    Michael Stuetzer

  2. Australian Centre for Entrepreneurship Research, QUT Business School, Queensland University of Technology, GPO Box 2434, Brisbane, QLD, 4001, Australia

    Michael Stuetzer

  3. Center for Applied Developmental Science, Friedrich Schiller University Jena, Am Steiger 3/1, 07743, Jena, Germany

    Martin Obschonka

  4. Institute for Employment Research (IAB), Regensburger Str. 104, 90478, Nuremberg, Germany

    Udo Brixy

  5. Institute of Economic and Cultural Geography, Leibniz Universität Hannover, Schneiderberg 50, 30167, Hannover, Germany

    Rolf Sternberg

  6. Department of Economics and Business Administration and Graduate College “The Economics of Innovative Change” (DFG-GK-1411), Friedrich Schiller University Jena, Carl-Zeiss-Str. 3, 07743, Jena, Germany

    Uwe Cantner

  7. Department of Marketing and Management, I2M Group, University of Southern Denmark, Campusveij 55, 5230, Odense M, Denmark

    Uwe Cantner

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  1. Michael Stuetzer
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Correspondence to Rolf Sternberg.

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Stuetzer, M., Obschonka, M., Brixy, U. et al. Regional characteristics, opportunity perception and entrepreneurial activities. Small Bus Econ 42, 221–244 (2014). https://doi.org/10.1007/s11187-013-9488-6

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