Start-up activities, individual characteristics, and the regional milieu: Lessons for entrepreneurship support policies from German micro data

Abstract

This paper contributes to empirical research on the role of regional policy for entrepreneurship by focusing on the link between two stylized facts that emerged from a number of studies for Germany and other countries: Entry rates differ between regions, and the propensity to become an entrepreneur is influenced by socio-demographic variables and attitudes. We develop a theoretical framework to discuss this link, and we test whether for a person of a given age, degree of schooling, attitude towards risk etc. regional variables and, therefore, regional policies, do matter for the decision to start a new business ceteris paribus. Our econometric study is based on data for 10.000 persons from a recent representative survey of the population in ten German planning regions, the Regional Entrepreneurship Monitor (REM). We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We find that the propensity to step into self-employment is, among others, higher for males, unemployed, people with contacts to a role model, and with past entrepreneurial experience, who live in more densely populated and faster growing regions with higher rates of new firm formation, while risk aversion and high prices of land have the opposite impact. Interestingly, it does not matter whether the region has a “left” or “right” government. However, many implications for entrepreneurship supporting policies in German regions are discussed in the final section. Copyright Springer-Verlag 2004

Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: a tale of two regions

“…The APS asks people whether or not they are engaged in entrepreneurship and also surveys several attitudes towards entrepreneurship in the general population. Because of its large scale, GEM data provides the opportunity to conduct analyses at the regional level in Germany as is demonstrated by other studies (e.g., Bergmann and Sternberg;Brixy et al, 2012;Stuetzer et al, 2014;Wagner and Sternberg, 2004). The GEM data for the present study refer to Germany, covering five years (2003-2006; 2008) 4 .…”

“…This GEM variable has been used in other studies examining peer effects (e.g., Vaillant and Lafuente, 2007;Wagner and Sternberg, 2004). As an alternative to this measure of knowing an entrepreneur, previous entrepreneurship literature has offered other potential proxies of entrepreneurial success, such as venture growth (Baum and Locke, 2004), profitability (e.g., Davidsson and Honig, 2003), and income (Åstebro and Thompson, 2011) to name a few.…”

“…Accordingly, observing that peers can make it in entrepreneurship should reduce fearing to fail as an entrepreneur on the side of the observer. Building on these arguments, a number of studies have shown that the presence of entrepreneurial role models is positively related to entrepreneurial intentions (e.g., Krueger et al, 2000;van Auken et al, 2006) and to engaging in entrepreneurship (e.g., Arenius and Minniti, 2005;Davidsson and Honig, 2003;Dunn and Holtz-Eakin, 2000;Lafuente et al, 2007;Wagner and Sternberg, 2004).…”

What makes student entrepreneurs? On the relevance (and irrelevance) of the university and the regional context for student start-ups

“…Studies usually find an inverse u-shaped relationship between age and start-up activity (see e.g. Wagner & Sternberg, 2004). As we only investigate students up to 40 years of age, we assume a linear relationship between age and entrepreneurial activity.…”

Renascent entrepreneurship

“…The limited evidence to date indicates that people in urban locations are more likely to become a nascent entrepreneur than their rural counterparts (Van Gelderen 1999;Wagner and Sternberg 2004;Arenius and De Clercq 2005;Kolvereid and Isaksen 2006). Due to the density of people and organizations, urban and especially metropolitan locations provide more entrepreneurial opportunities than rural locations (Jacobs 1961).…”