Entrepreneurship, innovation and regional economic development

Abstract

Globalization and technological changes are inexorable and impact both urban and rural communities. Innovation and entrepreneurship play an increasingly important role in shaping economic development policy in the U.S. However, innovation and business activities are unevenly distributed across the States. Most economic and public resources supporting innovation and entrepreneurship activities are concentrated in large urban and metropolitan areas, while small and hinterland communities are left behind and still facing barriers to sustain economic growth. Therefore, the purpose of my research is to understand the regional determinants of innovation and entrepreneurship activities, and explore how the development patterns differ across various geographical regimes (i.e. urban and rural, large and small communities, metropolitan and non-metropolitan regions). The empirical models of my studies mainly draw from the theories of urbanization/localization economies, endogenous growth and geographical knowledge spillover of entrepreneurship, all of which emphasize the critical role of human capital, innovation, industries and entrepreneurship in economic development. This dissertation research is organized into three chapters consisting of three stand-alone articles. The first article studies the spatial patterns of general and high-tech startup rates and explores regional factors associated with entrepreneurship in smaller micropolitan areas in the United States. The results show that general entrepreneurship in small cities is mainly predicted by population growth, the middle-age population group, the presence of small businesses, and natural amenities. High-tech startup activities in small cities are positively associated with human capital, creative knowledge, high-tech clustering, and proximity to a large metropolitan area. This research sheds light on local entrepreneurship policy in the small-city context, which is often neglected in regional entrepreneurship studies. The second article assesses the efficacy of the Small Business Innovation Research (SBIR) Program on innovation, employment, and business formation in small and nonmetropolitan counties. The primary goal is to further understand rural innovation and growth process by a way of government intervention on small business development. Using panel data and employing fixed-effect models, the results suggest that, compared to large metropolitan counties, the SBIR may not be an effective program to generate employment and entrepreneurship opportunities in small and nonmetropolitan regions, but it could be a viable source to improve rural innovation outcome. This study contributes to the innovation policy agenda in small and nonmetropolitan regions, which is an important and emerging topic in the field. The third essay aims to understand whether and how entrepreneurship is associated with income inequality in U.S. Metropolitan Statistical Areas (MSAs). In this study, entrepreneurship activities are measured by new firm formation and self-employment rates. The empirical analyses indicate that these two commonly used entrepreneurship measures represent different streams of entrepreneurial activities and can impact income inequality differently across U.S. cities. This study highlights the need for differentiating entrepreneurship in understanding its role in income inequality and, more broadly, in regional development. Policymakers at the regional and local levels will gain insights into whether promoting entrepreneurship as an economic development strategy has any unforeseen impact on the income gap.--Author's abstract