Imitation or opposition? A focus on neighbouring effects at the local level in the business creation process

Abstract

This paper seeks to shed some light on the influence that the characteristics of the local context in a given area and in adjacent ones exert on the entrepreneurial process. In order to make a distinction between purely local factors and the role played by the neighborhood, we mobilize the so-called Exploratory Spatial Data Analysis which determines the degree of spatial dependence and its consequence for the entry rate. We empirically address this question by considering the case of French employment areas from 2006 to 2010 using spatial econometric models adapted to panel data. Our results show that locally available financial, material, human and organizational resources are far from being the unique geographical determinants of the creation of firms. Instead, the entry rate in a given area also strongly depends on the propensity to create firms in adjacent places. Spillover effects originating in adjacent areas should thus be considered when explaining the local determinants of the creation of firms.JEL Codes: L26, R11, C21