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Operationalizing the Entrepreneurial Pipeline Theory: An Empirical Assessment of the Optimal Size Distribution of Local Firms

Author

Listed:
  • Scott Loveridge

    (Michigan State University)

  • Denys Nizalov

    (Michigan State University Kyiv School of Economics)

Abstract

This article analyzes the relationship between local economic growth and the distribution of businesses across size categories. The distribution is measured by the employment share in businesses of various sizes and by a business distribution index. The index provides a measure of the extent to which the local economy deviates from an equal employment share in each of nine business-size categories. The authors find strong links between a county's business-size distribution and its economic growth rate and also a difference between the optimal income and job growth-enhancing distributions. In addition, the results indicate that the optimal growth-enhancing distribution of employment has a higher share of the smallest businesses (with one to four employees) than the current average. The results support increased policy emphasis on encouraging small business start-ups and development; however, the optimal development strategy depends on the initial distribution of businesses within a local economy.

Suggested Citation

  • Scott Loveridge & Denys Nizalov, 2007. "Operationalizing the Entrepreneurial Pipeline Theory: An Empirical Assessment of the Optimal Size Distribution of Local Firms," Economic Development Quarterly, , vol. 21(3), pages 244-262, August.
    • Handle: RePEc:sae:ecdequ:v:21:y:2007:i:3:p:244-262
    DOI: 10.1177/0891242407301449
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    Cited by:

    1. Timothy M. Komarek & Scott Loveridge, 2014. "Too Big? Too Small? Just Right? An Empirical Perspective on Local Firm Size Distribution and Economic Growth in U.S. Counties and High-Poverty Rural Regions," Economic Development Quarterly, , vol. 28(1), pages 28-41, February.
    2. Goetz, Stephan J. & Fleming, David A. & Rupasingha, Anil, 2012. "The Economic Impacts of Self-Employment," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 44(3), pages 315-321, August.
    3. Sarah A. Low & Stephan Weiler, 2012. "Employment Risk, Returns, and Entrepreneurship," Economic Development Quarterly, , vol. 26(3), pages 238-251, August.
    4. David A. Fleming & Stephan J. Goetz, 2011. "Does Local Firm Ownership Matter?," Economic Development Quarterly, , vol. 25(3), pages 277-281, August.
    5. M. Rose Olfert & Mark D. Partridge, 2010. "Best Practices in Twenty‐First‐Century Rural Development and Policy," Growth and Change, Wiley Blackwell, vol. 41(2), pages 147-164, June.
    6. Partridge, Mark & Betz, Mike, 2012. "Country Road Take Me Home: Migration Patterns in the Appalachia America and Place-Based Policy," MPRA Paper 38293, University Library of Munich, Germany.
    7. Betz, Michael R. & Partridge, Mark D. & Farren, Michael & Lobao, Linda, 2015. "Coal mining, economic development, and the natural resources curse," Energy Economics, Elsevier, vol. 50(C), pages 105-116.
    8. Mark D. Partridge & M. Rose Olfert, 2011. "The Winners' Choice: Sustainable Economic Strategies for Successful 21st-Century Regions," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(2), pages 143-178.
    9. Michael R. Betz & Mark D. Partridge, 2013. "Country Road Take Me Home," International Regional Science Review, , vol. 36(3), pages 267-295, July.
    10. Sherrill Shaffer & Iftekhar Hasan & Mingming Zhou, 2015. "New Small Firms and Dimensions of Economic Performance," Economic Development Quarterly, , vol. 29(1), pages 65-78, February.
    11. Rahman, Fathony & Norman, Ruth T., 2016. "The effect of firm scale and CSR geographical scope of impact on consumers' response," Journal of Retailing and Consumer Services, Elsevier, vol. 28(C), pages 189-198.
    12. Goetz, Stephan J. & Partridge, Mark D. & Deller, Steven C. & Fleming, David A., 2010. "Evaluating U.S. Rural Entrepreneurship Policy," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 40(1), pages 1-14.
    13. repec:rre:publsh:v:40:y:2010:i:1:p:71-97 is not listed on IDEAS
    14. Jacqueline Chattopadhyay, 2018. "State Health Insurance Regulation and Self-Employment Rates After the Great Recession: The Role of Guaranteed Issue Mandates," Economic Development Quarterly, , vol. 32(1), pages 78-92, February.
    15. Joshua Drucker, 2009. "Trends in Regional Industrial Concentration in the United States," Working Papers 09-06, Center for Economic Studies, U.S. Census Bureau.
    16. Heather M. Stephens & Mark D. Partridge, 2011. "Do Entrepreneurs Enhance Economic Growth in Lagging Regions?," Growth and Change, Wiley Blackwell, vol. 42(4), pages 431-465, December.

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