Abstract
Impactful, growth-oriented entrepreneurship is a major research and policy focus. Building on arguments put forward by Jane Jacobs more than 50 years ago, we propose that local knowledge spillovers in a city are enhanced by human agency in that city (e.g. local psychological openness). This effect is critically amplified by the catalyst function of a favorable structural city environment that not only connects these agentic people (via urban density), but also facilitates the production and flow of new knowledge for these connected agentic people (via a diverse industry mix). This three-way interaction effect was confirmed in our empirical investigation of quality entrepreneurship across the MSAs (cities) in the US, using a large-scale dataset of the psychological profiles of millions of people. Local openness shows a robust positive effect on the level of quality entrepreneurship. This effect is further strengthened by a favorable structural city environment (i.e. high density and diversity) by up to 35%. Reviving Jacobs’ people focus, the results indicate that the best performing cities in terms of knowledge spillovers and economic performance are those that are not only home to, and attract, agentic people, but also empower these people by means of a physical and industrial city landscape that enables them to act in more innovative and entrepreneurial ways, as envisioned by Jacobs. We discuss the policy implications of our findings and an agenda for future research.
Highlights
Cities are recognized as the engine of their own national economies as well as the global economy
Acknowledging that regions do differ in such openness (e.g., Garretsen et al, 2020), we propose that those cities with more open people achieve more knowledge spillovers
A interesting result among the control variables is about Specialization, because this variable is argued to be an alternative way of capturing knowledge spillover in cities (Glaeser et al, 1992)
Summary
Cities are recognized as the engine of their own national economies as well as the global economy. While disparate views have emerged on how knowledge generation and knowledge spillover mechanisms operate in cities, contemporary thinking and analyses commonly lead back to the ideas of Jane Jacobs (1961; 1969), who was one of the pioneers of what makes cities entre preneurial and innovative (Beaudry and Schiffauerova, 2009; de Groot et al, 2016)1 She believed in urban density and diversity as the favorable structural city environment for novel idea generation and economic performance, because “the greater the sheer ‘number’ of and ‘variety’ of division of labor, the greater the economy’s inherent ca pacity for adding still more kinds of goods and services” Recent advances in the geography of psychology indicate that people and entire regions differ in their personality characteristics from one another (Ebert et al, 2019; Rentfrow and Jokela, 2016). This has important implications for local knowledge spillovers and economic performance since the local psy chological architecture of a city is deemed an essential ingredient in local economic processes (Huggins and Thomson, 2019)
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