Beyond the concept of human and social capital: the impact of the regional environment on high-tech venturing

Emerging industries, like the information and communication technology (ICT), have become a major source of entrepreneurship and job generation. Most literature focuses on human and social capital approaches to explain the emergence of high-tech entrepreneurship, but little attention is given to the effect of the regional environment on new firm formation. The main objective of this study is to fill in this gap and compares the impact of human and social capital in a region with other supply and demand side factors. Another objective is to advance the knowledge of a very heterogeneous ICT sector. For this purpose, the three main divisions are analysed separately (high-tech industries; computer and telecommunication services; other knowledge intensive services). Supply and demand side factors are analysed and significant differences between the three subdivisions revealed. Our study is a longitudinal empirical analysis that covers all 84,535 newly created ICT firms between 1993 and 2001 in the 348 labour markets of France. Human capital and proximity effects are the main factors for the two service subdivisions. High-tech entrepreneurship in the industry shows a different pattern underlining the importance of industry specific environments (R&D facilities, diversified industry structure) drawing little competitive advantage from human capital variables. In all three subdivisions, proximity effects (localisation economies including dimensions of social capital like network opportunities and interaction) are the most important regional factor for ICT entrepreneurs.