Academic journal article Journal of Urban and Regional Analysis

Enterprise Support Policy and Territorial Cohesion: The Czech Republic (2007-2013)

Academic journal article Journal of Urban and Regional Analysis

Enterprise Support Policy and Territorial Cohesion: The Czech Republic (2007-2013)

Article excerpt

Introduction

A number of studies have demonstrated a positive relationship between new business formation and regional development. It is claimed that new businesses are a source of innovation and of new employment opportunities (Henry et al. 2003, Lee et al. 2004, Qian et al. 2013), also stimulating structural change and strengthening regional competitiveness (Wang 2006). Other studies have emphasized the importance of fast-growing businesses and of the existing stock of SMEs for job creation and regional growth (Audretsch 2004, Stam 2005). Not surprisingly, these arguments have spurred governments to be interested in enterprise support policies.

The theoretical rationale of enterprise support policies is based on market imperfections, arising from information and knowledge asymmetries, from financial constraints, and from a divergence between private and social interests (Henry et al. 2003, Acs et al. 2016). Additionally, Acs and Szerb (2007), Huggins and Williams (2009), and Dolinská and Ambrozová (2015) describe another motivation for employing enterprise support policies, by emphasizing the importance of entrepreneurial climate (culture) for entrepreneurship and SME development. In both these approaches, space is a crucial element of the theory due to the presence of spatial externalities. In this regard, Audretsch (2015) mentions at least four types of spatial externalities: (a) network externalities stemming from social relations in space; (b) spatially embedded tacit knowledge spillovers; (c) information and knowledge externalities arising from firm exits; and (d) externalities based on the demonstration effect of successful entrepreneurs. A location close to their sources is needed to secure access to these types of externalities, resulting in a disadvantage of some - primarily peripheral - regions (Smallbone et al. 2003).

Traditionally, enterprise support policies have been understood to be a compensation for market imperfections and for a weak entrepreneurial climate (culture). In this case, policy interventions are targeted at regions where the need is greatest. However, what has attracted increasing attention over recent years is an approach that emphasizes the importance of spatial externalities for economic growth and that also prefers policy interventions targeted at regions with high development potential. These considerations may relate to the recent debate on territorial cohesion and on the interplay between balanced development and spatial competitiveness (Servillo 2010, Colomb and Santinha 2014). It is therefore of high political significance, as also indicated by the content analysis of strategic documents of the Czech Republic in the programming period 2007-2013. The territorial cohesion objectives listed in these documents relating to enterprise support policy include both supporting peripheral and supporting core regions. The relationship of the innovation-oriented SMEs and core regions is noteworthy (Table 1).

The focus of this paper is embedded in this discussion and it evaluates the spatial distribution of enterprise support interventions among Czech Republic's micro-regions, taking the territorial cohesion objectives into account. In this regard, what is analysed is the Structural Fund (hereafter referred to as SF) expenditures earmarked for the Convergence and Regional Competitiveness and Employment Objectives in the programming period 2007-2013 and also categorized as enterprise support interventions. Note the crucial importance of SF for financing the enterprise support policy in the Czech Republic in the programming period 2007-2013. The main research aim is to evaluate whether the spatial distribution of SF follows the territorial cohesion objectives specified in the strategic documents of the Czech Republic in the programming period 2007-2013, notably: (1) the competitiveness objective; (2) the objective of balanced development; and (3) the objective of coherence between regional and structural policies (Table 1). …

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