Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship at the Periphery: Exploring Framework Conditions in Core and Peripheral Locations

Academic journal article Entrepreneurship: Theory and Practice

Entrepreneurship at the Periphery: Exploring Framework Conditions in Core and Peripheral Locations

Article excerpt

This paper reports the findings of the first academic study in Latin America, and one of the few in any emerging economy, to explore entrepreneurial perceptions and activity in peripheral geographic locations. A survey of experts included 139 respondents from three peripheral regions and two core regions in Chile. A key finding is that those located at the periphery perceived critical entrepreneurial resources and access to markets less favorably than their counterparts at the core, but surprisingly, they perceived greater business opportunity in their area. A further survey of 2,200 respondents concerning actual entrepreneurial activities among the total adult population revealed no differences between peripheral and core regions. This study revives the debate about specific regional policies for fostering the growth of local business, and the entrepreneurial framework conditions required at the regional level in emerging economies.

Introduction

Recent research studies have focused on the role of new businesses in regional economic growth (Acs, 2010; Acs & Armington, 2004; Feldman, Francis, & Bercovitz, 2005; Glaeser & Kerr, 2009; Haltiwanger, Jarmin, & Miranda, 2009). Moreover, empirical studies have highlighted the role of entrepreneurship and the establishment of new ventures as a mechanism for innovation, economic growth, and the creation of employment (Thurik & Wennekers, 2004). The relative contribution of new ventures and business growth to economic development is controversial (Fritsch & Mueller, 2004) and may vary over time and from country to country (Acs, Amoros, Bosma, & Levie, 2008; Henrekson & Johansson, 2008). Also, the role of entrepreneurship as a remedy for economic underperformance in some regions of Europe has been a key strategy of national and European Union (EU)-wide governmental policy for many years (European Commission, 2003; OECD, 1998).

The seminal work on economic location of industries (Marshall, 1895; Weber, 1909) distinguished "core" from "peripheral" economies on the basis of geographic location. Recent literature suggests that uneven distribution of human, social, and financial capital in a nation, reinforced by the effects of social and cultural identification and migration, can set up a virtuous circle of entrepreneurship at the core and a vicious cycle of dependence at the periphery (Acs & Armington, 2004; GEM, 2009; Malecki, 1994; Mueller, Van Stel, & Storey, 2008; Westlund & Bolton, 2003). Some studies have also suggested that this dependence can result in unintended negative effects of regional policy for the peripheral regions in a country (Mueller et al.), though on the basis of limited evidence. This mismatch between theory, practice, and policy, and the gaps in the evidence, are the starting point of this study.

According to the Global Entrepreneurship Monitor's (GEM) National Report on Chile (GEM, 2007), a high level of entrepreneurial activity yields above average economic growth; even more among nations with similar economic structures, the correlation between entrepreneurship and economic growth is highly significant. For this study, the term "entrepreneurial framework conditions" describes the economic factors and public policies that affect the perceived opportunities for entrepreneurship and the capabilities of the entrepreneurs themselves. The GEM report noted that perceived opportunities and capabilities are "fairly high" in most Latin American countries, where starting a business is a more common event than in high-income countries. The particular situation in Chile, which was a fast-growing emerging economy through the 1990s and early years of the twenty-first century, is no longer encouraging. There has since been a decline in entrepreneurship, despite government efforts to promote entrepreneurial activity, increased opportunities arising from economic development, and a significant number of free-trade agreements with the United States, the UK, the EU, and several emerging and developed economies in South East Asia. …

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