Abstract
We investigate the role of entrepreneurship culture and the historical knowledge base of a region on current levels of new business formation in innovative industries. The analysis is for German regions and covers the time period 1907–2014. We find a pronounced positive relationship between high levels of historical self-employment in science-based industries and new business formation in innovative industries today. This long-term legacy effect of entrepreneurial tradition indicates the prevalence of a regional culture of entrepreneurship. Moreover, local presence and geographic proximity to a technical university founded before the year 1900 is positively related to the level of innovative start-ups more than a century later. The results show that a considerable part of the knowledge that constitutes an important source of entrepreneurial opportunities is deeply rooted in history. We draw conclusions for policy and for further research.
Highlights
We investigate the role of entrepreneurship culture and the historical knowledge base of a region on current levels of new business formation in innovative industries
Variables are logged, the respective coefficients can be interpreted as elasticities that indicate the relative importance of the respective measure. We find that both indicators for the historical knowledge base are highly significant (Table 3)
Analyzing the effect of historical levels of knowledge and entrepreneurship on the formation of innovative new businesses today, we found a number of highly significant relationships that indicate a strong persistence of both regional knowledge and entrepreneurship
Summary
We investigate the role of entrepreneurship culture and the historical knowledge base of a region on current levels of new business formation in innovative industries. We find a pronounced positive relationship between high levels of historical self-employment in science-based industries and new business formation in innovative industries today This long-term legacy effect of entrepreneurial tradition indicates the prevalence of a regional culture of entrepreneurship. Fritsch and Wyrwich (2014, 2017a) argue that persistence of entrepreneurship over time indicates the role of a region-specific Bculture^ understood as an informal institution that changes only gradually and over rather long periods of time (North 1994; Williamson 2000) It is, largely unclear what the main constituents of such an entrepreneurial culture are, how it emerges, and what other factors might contribute to the explanation of persistence of entrepreneurship. We want to contribute to answering the following question BWhy do some regions have better prospects of gaining from knowledge-based developments than others?^
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