Explaining micro entrepreneurship in rural Vietnam—a multilevel analysis

In the literature on entrepreneurship, there is an ongoing debate about the impact of regional factors on the entrepreneurial process. To date, most of the empirical work on the influence of regional characteristics on entrepreneurship has focused on developed countries, while empirical work that analyses the regional determinants of micro entrepreneurship in rural areas of emerging markets remains scare. This paper uses three-level binary-logistic random intercept models to analyse the effects of explanatory factors at different levels on micro entrepreneurship in rural Vietnam. Our analyses show that identifying the motivation behind starting a micro enterprise is a good way to split entrepreneurship into two groups: namely opportunity- and necessity-driven entrepreneurship, which are influenced by very different explanatory factors at different levels. We find evidence that in rural areas of emerging markets, the individual level dominates with regard to explaining both opportunity- and necessity-driven entrepreneurship. Nevertheless, the regional level has a significant impact, albeit only on opportunity-driven entrepreneurship.