What Kind of Entrepreneurship Drives Regional Development in European Non-core Regions? A Literature Review on Empirical Entrepreneurship Research

Abstract

Regional policies across Europe aim at stimulating regional development in non-core regions through fostering entrepreneurship. However, the policies applied in non-core regions and the concepts of entrepreneurship these policies are based on differ. Therefore, the goal of this review is to identify different understandings of entrepreneurship and their role for regional development processes in European non-core regions. To this end, empirical studies investigating entrepreneurship in European non-core regions from 1999 to 2011 were analysed. The results of the analysis are presented along three drivers and outcomes of entrepreneurship identified inductively from the literature: innovation, social capital and institutional change. We made out seven different types of entrepreneurship in European non-core regions. These seven types of entrepreneurship comprise particular mechanisms through which they stimulate regional development. Further research should study the interplay between these different mechanisms of regional development in non-core regions which may induce a more territorial approach to understand entrepreneurship in non-core regions across Europe.

Acknowledgements

This research was supported by the Swiss National Science Foundation (SNSF), Grant Number 100013-118012. Silvia Dingwall and Blake Alcott helped to improve the English language of this manuscript.

Notes

In this article, endogenous regional development is used to encompass a variety of concepts based on the new economic growth theory. All these concepts assume that valorization of resources, institutions or processes within a particular region is the crucial driver for regional development (see e.g. Martin and Sunley (1998), Pike et al. (2006, p. 106) or Toedtling (2011) for an overview).

In general terms, research from the small-business-and-firm-foundation perspective highlights the role of the “entrepreneur” ignored for a long time in neoclassical economics (Bianchi & Henrekson, 2005; Casson, 2003; Kirzner, 1973), and it focuses on abilities and activities associated with “the entrepreneur” (Drucker, 1994; Gartner, 1985, 1988), with firm foundation in general (Shane, 2003; Shane & Venkataraman, 2000), and with business creation as a process (Reynolds & White, 1997).

The evolutionary-institutional perspective goes back to Schumpeter (2000 [1942]), who defines entrepreneurs as “creative destructors” of organizational structures over time. This may not just concern commercial entities (Aldrich & Ruef, 2006; Alvarez & Busenitz, 2001; Bruyat & Julien, 2001; DiMaggio, 1988).

The chosen inductive procedure allows for an iterative selection of literature along with the development of a framework for the analysis. It also permits to cover a broad variety of studies of different disciplines and methods. Using such an inductive approach, however, does not enable to test causal relationships or hypotheses regarding the relationship of entrepreneurship and endogenous regional development. Also the chosen research design does not allow for bibliometric analyses, as realized, for example, by Trettin and Welter (2008) or McElwee and Atherton (2005).

The econometric studies of Audretsch and Keilbach (2004, 2005, 2007) introduce a particular kind of social capital labelled “entrepreneurship capital”, which is “the capacity of a society to generate new firms” (Audretsch & Keilbach, 2005, p. 458). The authors operationalize this type of capital in numbers of new founded firms per region (seen as production factor) to explain regional economic growth.

Studies with a quantitative research approach mostly focus the regional scale or compare regions in order to obtain sufficient observations to apply analytical statistical methods. In contrast, studies with a more qualitative research approach mainly focus the local scale, where social interactions may be better analysed and understood compared to the regional scale.

Entrepreneurship in agriculture is the main focus of most of the reviewed studies. No studies have been found of other first sector activities such as forestry or the fishing industry. Exceptions may be the investigation of Lunnan et al. (2006) that focuses the forest industry in Norway or Felzensztein et al.’s (2010) study of determinants for inter-firm marketing activities in the salmon industry.

Birch and Whittam (2008) point out that the degree of public withdrawal from social services may be peculiar to the UK.