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Industry structure, entrepreneurship, and culture: An empirical analysis using historical coalfields

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  • Stuetzer, Michael
  • Obschonka, Martin
  • Audretsch, David B.
  • Wyrwich, Michael
  • Rentfrow, Peter J.
  • Coombes, Mike
  • Shaw-Taylor, Leigh
  • Satchell, Max

Abstract

There is mounting evidence demonstrating that entrepreneurship is spatially clustered and that these spatial differences are quite persistent over long periods of time. However, especially the sources of that persistence are not yet well-understood, and it is largely unclear whether persistent differences in entrepreneurship are reflected in differences in entrepreneurship culture across space as it is often argued in the literature. We approach the cluster phenomenon by theorizing that a historically high regional presence of large-scale firms negatively affects entrepreneurship, due to low levels of human capital and entrepreneurial skills, fewer opportunities for entry and entrepreneurship inhibiting formal and informal institutions. These effects can become self-perpetuating over time, ultimately resulting in persistent low levels of entrepreneurship activity and entrepreneurship culture. Using data from Great Britain, we analyze this long-term imprinting effect by using the distance to coalfields as an exogenous instrument for the regional presence of large-scale industries. IV regressions show that British regions with high employment shares of large-scale industries in the 19th century, due to spatial proximity to coalfields, have lower entrepreneurship rates and weaker entrepreneurship culture today. We control for an array of competing hypotheses like agglomeration forces, the regional knowledge stock, climate, and soil quality. Our main results are robust with respect to inclusion of these control variables and various other modifications which demonstrates the credibility of our empirical identification strategy. A mediation analysis reveals that a substantial part of the impact of large-scale industries on entrepreneurship is through human capital.

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  • Stuetzer, Michael & Obschonka, Martin & Audretsch, David B. & Wyrwich, Michael & Rentfrow, Peter J. & Coombes, Mike & Shaw-Taylor, Leigh & Satchell, Max, 2015. "Industry structure, entrepreneurship, and culture: An empirical analysis using historical coalfields," MPRA Paper 67424, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:67424
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    1. repec:kap:sbusec:v:49:y:2017:i:3:d:10.1007_s11187-017-9852-z is not listed on IDEAS
    2. repec:eee:poleco:v:51:y:2018:i:c:p:27-43 is not listed on IDEAS
    3. Michael Fritsch & Michael Wyrwich, 2017. "Persistence of Regional Entrepreneurship: Causes, Effects, and Directions for Future Research," Jena Economic Research Papers 2017-003, Friedrich-Schiller-University Jena.
    4. Michael Wyrwich & Michael Stuetzer & Rolf Sternberg, 2016. "Entrepreneurial role models, fear of failure, and institutional approval of entrepreneurship: a tale of two regions," Small Business Economics, Springer, vol. 46(3), pages 467-492, March.
    5. Obschonka, Martin & Stützer, Michael & Peter, Rentfrow & Jeff, Potter & Samuel, Gosling, 2017. "Did Strategic Bombing in the Second World War lead to ‘German Angst’? A large-scale empirical test across 89 German cities," MPRA Paper 83680, University Library of Munich, Germany.
    6. Sari Pekkala Kerr & William R. Kerr & Tina Xu, 2017. "Personality Traits of Entrepreneurs: A Review of Recent Literature," NBER Working Papers 24097, National Bureau of Economic Research, Inc.
    7. Frank M. Fossen & Thorsten Martin, 2016. "Entrepreneurial Spillovers over Space and Time," Discussion Papers of DIW Berlin 1618, DIW Berlin, German Institute for Economic Research.
    8. repec:kap:sbusec:v:50:y:2018:i:4:d:10.1007_s11187-017-9901-7 is not listed on IDEAS
    9. repec:kap:sbusec:v:48:y:2017:i:3:d:10.1007_s11187-016-9787-9 is not listed on IDEAS

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    Keywords

    Entrepreneurship; entrepreneurship culture; Industrial Revolution; industry structure; personality;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L64 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Machinery; Business Equipment; Armaments
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • N53 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Europe: Pre-1913
    • N94 - Economic History - - Regional and Urban History - - - Europe: 1913-

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