Entrepreneurship is fundamental for a country's economic development through its positive effect on innovation, productivity growth, and job creation. In entrepreneurial research, one of the most important problems is to define the factors that actually determine entrepreneurial action. This study analyzes that question in the case of Germany by taking an aggregated approach that focuses on socio-demographic and economic determinants of regional entrepreneurship. Based on a literature review of German and international regional-level research, six hypotheses are developed and empirically tested using the most recent available data on 385 German regions as units of analysis. The results are surprising. In the case of household income, unemployment, education and marital status the relationship is significant but contrary to earlier research. Only regional age structure seems to be a stable predictor of regional entrepreneurship. The results indicate that in recent years there was a major shift in the determinants and characteristics of entrepreneurship in Germany.
If the inline PDF is not rendering correctly, you can download the PDF file here.
Aidis R. Estrin S. Mickiewicz T. (2012) Size matters: Entrepreneurial Entry and Government Small Business Economics 39 pp. 119-139.
Aldrich H.E. (1990) Using an Ecological Perspective to Study Organizational Founding Rates Entrepreneurship Teory and Practice 14 (3) pp. 7-24.
Amit R.H. Muller E. Cockburn I.M. (1995) Opportunity Costs and Entrepreneurial Activity Journal of Business Venturing 10 (2) pp. 95-106.
Audretsch D.B. Fritsch M. (1994) The Geography of Firm Births in Germany Regional Studies 28 pp. 359-365.
Audretsch D.B. (1995) Innovation and Industry Evolution MIT Press Cambridge MA.
Audretsch D.B. Fritsch M. (2002) Growth Regimes over Time and Space Regional Studies 36 (2) pp. 113-124.
Audretsch D.B. Dohse D. Niebuhr A. (2010) Cultural Diversity and Entrepreneurship: A Regional Analysis for Germany The Annals of Regional Science 45 (1) pp. 55-85.
Bates T. (1995) Self -Employment Entry Across Industry Groups Journal of Business Venturing 10 pp. 143-156.
Baumol W.J. (1990) Entrepreneurship: Productive Unproductive and Destructive Journal of Political Economy 98 (5) pp. 893-921.
Begley T. Boyd D. (1987) Psychological Characteristics associated with Performance in Entrepreneurial Firms and Smaller Businesses Journal of Business Venturing 2 pp. 79-93.
Bergmann H. Sternberg R. (2007) The Changing Face of Entrepreneurship in Germany Small Business Economics 28 (2-3) pp. 205-221.
Blau D.M. (1987) A Time Series Analysis of Self-employment in the United States Journal of Political Economy 95 (3) pp. 445-467.
Borjas G.J. Bronars S.G. (1989) Consumer Discrimination and Self-Employment Journal of Political Economy 97 (3) pp. 581-605.
Brixy U. Grotz R. (2007) Regional Patterns and Determinants of the Birth and Success of New Firms in Western
Germany Entrepreneurship and Regional Development 19 (4) pp. 293-312.
Brown S. Farrel L. Sessions J.G. (2006) Self-employment Matching - An Analysis of Dual Earner Couples and Working Households. Small Business Economics 26(2) pp. 155-172.
Bruce D. (1999) Do husbands matter? Married Women entering Self-employment Small Business Economics 13(4) pp. 317-329.
Bull I. Winter F. (1991) Community diferences in business births and business growths Journal of Business Venturing 6 (1) pp. 29-43.
Carree M.A. Turik A.R. (2003) The Impact of Entrepreneurship on Economic Growth in Acs Z.J. Audretsch D.B. (eds.) Handbook of Entrepreneurship Research Kluwer Academic Publishers Boston/Dordrecht pp. 437-471.
Carrol R. Holtz-Eakin D. Rider M. Rosen H.S. (1998a) Entrepreneurs Income Taxes and Investment NBER Working Paper 6374.
Carrol R. Holtz-Eakin D. Rider M. Rosen H.S. (1998b) Income Taxes and Entrepreneurs’ Use of Labor NBER Working Paper 6578.
Casson M. (1995) Entrepreneurship and Business Culture Edward Elgar Adlershot UK and Brooke-field US.
Djankov S. La Porta R. Lopez-de-Silanes F. Shleifer A. (2002) The Regulation of Entry Quarterly Journal of Economics 107 pp. 1-37.
Douhan R. Henrekson M. (2010) Entrepreneurship and Second-best Institutions: Going Beyond Baumol‘s Typology Journal of Evolutionary Economics 20 (4) pp. 629-643.
Estrin S. Mickiewicz T. (2011) Institutions and Female Entrepreneurship Small Business Economics 37 (4) pp. 397-415.
Evans D.S. Leighton L.S. (1989) Some Empirical Aspects of Entrepreneurship The American Economic Review 79 (3) pp. 519-535.
Forbes D.P. (1999) Cognitive Approaches to New Venture Creation International Journal of Management Reviews 1 (4) pp. 415-439.
Fossen F.M. Steiner V. (2009) Income Taxes and Entrepreneurial Choice: Empirical Evidence from two German
Natural Experiments Empirical Economics 36 (3) pp. 487-513.
Fölster S. (2002) Do Lower Taxes Stimulate Self-Employment? Small Business Economics 19 (2) 135-145.
Freytag A. Turik R. (2007) Entrepreneurship and its Determinants in a Cross-country Setting Journal of Evolutionary Economics 17 (2) pp. 117-131.
Fritsch M. Falck O. (2007) New Firm Formation by Industry over Space and Time: A Multi-Level Analysis Regional Studies 41 pp. 157-172.
Fritsch M. Kritikos A. Rusakova A. (2012) Who Starts a Business and who is Self-Employed in Germany Jena Economic Research Papers 2012-001 Friedrich-Schiller-University Jena Max-Planck-Institute of Economics 2012.
Fritsch M. Kritikos A. Sorgner A. (2013) Drivers of Self-Employment - A Multivariate Decomposition Analysis for the Case of Germany Jena Economic Research Papers 2013-006 Friedrich-Schiller-University Jena Max-Planck-Institute of Economics 2013.
Grant D. (1996) The Political Economy of New Business Formation across the American States 1970-1985 Social Science Quarterly 77 (1) pp. 28-42.
Grilo I. Irigoyen J.M. (2006) Entrepreneurship in the EU: To Wish and not to be Small Business Economics 26 (4) pp. 305-318.
Guesnier B. (1994) Regional variations in New Firm Formation in France Regional studies 28 (4) 347-358.
Hamilton R.T. Harper D.A. (1994) The Entrepreneur in Teory and Practice Journal of Economic Studies 21 (6) pp. 3-18.
Hurst E. Lusardi A. (2004) Liquidity Constraints Household Wealth and Entrepreneurship Journal of Political Economy 112 (2) pp. 319-347.
Johansson E. (2000) Self-employment and Liquidity Constraints: Evidence from Finland Scandinavian Journal of Economics 102 (1) pp. 123-134.
Johnson P. (1986) New Firms: An Economic Perspective Allen and Unwin London.
Johnson S. McMillan J. Woodruf C.M. (2002) Property Rights and Finance The American Economic Review 92 (5) pp. 1335-1356.
Kautonen T. Tornikoski E.T. Kibler E. (2011) Entrepreneurial Intentions in the Tird Age: the Impact of Perceived Age Norms Small Business Economics 37 (2) pp. 219-234.
Kautonen T. (2013) Senior Entrepreneurship OECD 2013.
Keh H. Foo M. Lim B. (2002) Opportunity Evaluation under Risky Conditions: the Cognitive Processes of Entrepreneurs Entrepreneurship Teory and Practice 27 (2) pp. 125-150.
Krueger N. (2000) The Cognitive Infrastructure of Opportunity Emergence Entrepreneurship Teory and Practice 24 (3) pp. 5-23.
Reynolds P. (1994) Autonomous Firm Dynamics and Economic Growth in the United States 1986-1990 Regional Studies 28 (4) pp. 429-442.
Ritsilä J. Tervo H. (2002) Efects of Unemployment on New Firm Formation: Micro-Level Panel Data Evidence from Finland Small Business Economics 19 pp. 31-40.
Robinson P.B. Sexton E.A. (1994) The Efect of Education and Experience on Self-Employment Success Journal of Business Venturing 9 (2) pp. 141-156.
Robson M.T. Wren C. (1999) Marginal and Average Tax Rates and the Incentive for Self-Employment Southern Economic Journal 65 (4) pp. 757-773.
Rocha H. Sternberg R. (2005) Entrepreneurship: The Role of Clusters. Teoretical Perspectives and Empirical Evidence from Germany Small Business Economics 24 (3) pp. 267-292.
Shane S. (2003) A General Teory of Entrepreneurship US Edward Elgar Publishing. Northampton.
Shaver K.G. Scott L.R. (1991) Person Process and Choice: the Psychology of New Venture Creation Entrepreneurship Teory and Practice pp. 23-42.
Simon M. Houghton S.M. (2002) The Relationship among Biases Misperceptions and the Introduction of Pioneering Products: Examining Diferences in Venture Decision Contexts Entrepreneurship Teory and Practice 27 (2) pp. 105-124.
Snee R.D. (1977) Validation of Regression Models: Methods and examples Technometrics 19(4) pp. 415-428.
Tamasy C. (2006) Determinants of Regional Entrepreneurship Dynamics in Contemporary Germany: a Conceptual and Empirical Analysis Regional Studies 40 pp. 365-384.
Taylor M. (1996) Earnings Independence or Unemployment: Why become Self-employed? Oxford Bulletin of Economics and Statistics 58 pp. 253-266.
Turik A.R. Carree M.A. van Stel A. Audretsch D.B. (2008) Does Self-employment reduce Unemployment? Journal of Business Venturing 23 (6) pp. 673-686.
Tonoyan V. Strohmeyer R. Habib M. Perlitz M. (2010) Corruption and Entrepreneurship: How Formal and Informal Institutions shape Small Firm Behavior in Transition and Mature Market Economies Entrepreneurship Teory and Practice 34 (5) pp. 803-831.
Venkataraman S. (1997) The Distinctive Domain of Entrepreneurship Research: An Editor's Perspective in Katz J. Brockhaus R. (eds.) Advances in entrepreneurship firm emergence and growth: Vol. 3 JAI Press Greenwich CT pp. 119-138.
Wennekers S. Turik R. (1999) Linking Entrepreneurship and Economic Growth Small Business Economics 13 (1) pp. 27-55.