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Effects of Regional Human Capital Structure on Business Entry: A Comparison of Independent Startups and New Subsidiaries in Different Industries

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  • Kenta Ikeuchi
  • Hiroyuki Okamuro

Abstract

This paper aims to investigate the regional determinants of entry with special attention to the effects of regional human capital, using prefecture-level data from Japan. On the basis of some recent studies in the field, we investigate the effects of several regional factors on business entry, distinguishing between independent startups and new subsidiaries of existing firms on the one hand, and comparing different sectors on the other. Using pooled regional data at the prefecture level for our periods between 1996 and 2006, we estimate the impact of various regional factors, including human capital structure, on the number of independent startups and new subsidiaries for each industry sector, simultaneously. Estimation results demonstrate considerable differences between independent startups and subsidiaries as well as among different industry sectors with regard to the impact of regional human capital structure on business entry. First, the entry of independent startups in the manufacturing sector is positively related with regional human capital. Second, in contrast to our hypothesis, we found a positive relationship between regional human capital structure and the entry of new subsidiaries in the service sector. Third, the regional human capital structure is more important for regional entrepreneurship in more technology-intensive (high-tech) service industries. Considering the possible implications, we suggest that the regional policy to activate business startups should focus more on the differences between encouraging local entrepreneurship and attracting new subsidiaries, and recognize that these differences may vary even within the service sector, depending on what type of human capital is required.

Suggested Citation

  • Kenta Ikeuchi & Hiroyuki Okamuro, 2010. "Effects of Regional Human Capital Structure on Business Entry: A Comparison of Independent Startups and New Subsidiaries in Different Industries," Global COE Hi-Stat Discussion Paper Series gd09-113, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hst:ghsdps:gd09-113
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd09-113.pdf
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    Cited by:

    1. OKAMURO, Hiroyuki & IKEUCHI, Kenta & MATSUDA, Naoko & TSUCHIYA, Ryuichiro, 2017. "Who wishes to be an entrepreneur and who prepares for that? : Evidence from statistical micro data in Japan over 30 years," CCES Discussion Paper Series 65, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.

    More about this item

    Keywords

    entry; region; independent startup; subsidiary; entrepreneurial human capital;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis

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