Determinants of performance of new ventures located in Portuguese incubators and science parks with a focus on institutional factors: do rural and urban new ventures differ?

ABSTRACT

The literature focusing on rural and urban entrepreneurship has so far overlooked the conditions in which different institutional contexts can affect firms’ performance. The present study addressed this gap by investigating the extent to which institutional factors impact distinctively the performance of rural and urban newly created ventures. Based on data gathered through a direct questionnaire, we obtained 408 responses from newly created ventures located in Portuguese business incubators and science parks. Resorting to econometric binary (logit) models, we found that certain institutional factors, namely EU policy support, financial support from other sources than not banks, business advice for starting up/ ongoing activities, and collaboration to access new markets, are critical for new venture export performance, particularly those located in rural settings. To a larger extent than for urban, rural new venture economic-related performance positive and significantly depend on central government policy support, close relatives’ role models, and technological support at the R&D collaboration level. Given the relevance of embeddedness-related factors in rural municipalities, public authorities should follow strategies that involve a growing connection between rural entrepreneurs and a variety of actors from industry, academia and the public and private sectors in order to foster newly created venture performance.

KEYWORDS:

• Entrepreneurship
• determinants of performance
• rural
• urban
• institutional factors

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 Available from http://www.proder.pt/ResourcesUser/Documentos_Diversos/33/PDRc_Freg_ZRurais_NUTIIs_rev2_corrigido.pdf.

2 Two ‘intermediate’ municipalities, Valongo and Oliveira de Azeméis, have a population density above 150 inhabitants/ km² and were therefore classified as urban.

3 The questionnaire is provided as supplementary material.

4 This percentage is similar to the Portuguese overall average, where 73% of total firms operate in services (INE, 2016).