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Explaining regional variation in business births and deaths: U.S. 1976–88

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Abstract

Linear models are developed to determine the relative impact of 15 start-up processes on the annual regional birth rate of new business organizations for all industry sectors in the U.S. over 6 two-year periods. These stable linear models explained from 50–70|X% of the variation in regional firm birth and death rates up to 16 years into the future. Start-up processes that have the most impact involve regional economic diversity; population growth; greater personal wealth; presence of mid-career adults; low unemployment; and greater flexibility in employment relationships. There was a complete absence of any impact of regional variation associated with higher densities of customers, suppliers, workers, R&D resources; costs of production; or access to national transportation facilities.

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Authors and Affiliations

  1. Marquette University, Milwaukee, WI

    Paul D. Reynolds (Coleman Foundation Chair in Entrepreneurial Studies)

  2. Center for the Study of Entrepreneurship, Marquette University, Milwaukee, WI

    Brenda Miller (Research Consultant)

  3. University of Minnesota, St. Paul, MN

    Wilbur R. Maki (Professor of Agricultural and Applied Economics)

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  1. Paul D. Reynolds
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  2. Brenda Miller
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  3. Wilbur R. Maki
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Additional information

The analysis reported is based on data provided by the U.S. Small Business Administration to Regional Economic Development Associates, Incorporated (Edina, Minnesota) in fulfillment of Contract SBA 3067-0A-88 and financial support provided through the University of Minnesota by the Rural Poverty and Resources Program of the Ford Foundation (Grant No. 900-013) and administered by the Aspen Institute. None of the sponsors are responsible for the analysis or the interpretations. Initially presented to the 1992 American Sociological Association Meetings; Pittsburgh, Pennsylvania; 20–24 August 1992. We are indebted to the anonymous journal reviewer for a number of suggestions that improved the manuscript.

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Reynolds, P.D., Miller, B. & Maki, W.R. Explaining regional variation in business births and deaths: U.S. 1976–88. Small Bus Econ 7, 389–407 (1995). https://doi.org/10.1007/BF01302739

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