Novice, Portfolio, and Serial Founders in Rural and Urban Areas
Westhead, Paul, Wright, Mike, Entrepreneurship: Theory and Practice
Bruno and Tyebjee (1982, p. 307) asserted that much of the research literature exploring the environment for independent business initiation is "wisdom-based and observational". Moreover, ". . . much of the current knowledge about environmental influence on entrepreneurial activity is based on anecdotal evidence, case histories and folklore. There is a notable absence of theoretical frameworks. Correspondingly, there is a dearth of empirical verification. The lack of a theoretical paradigm has three consequences: a lack of constructs by which to conceptualize the environment; a lack of theoretically based hypotheses regarding the functional relationship between the environment and entrepreneurship; and a lack of impetus for collecting suitable data, measuring and testing (Bruno & Tyebjee, 1982, p. 302). Supporting this viewpoint, Pennings (1982, p. 308) has argued that, "Research on the environment for entrepreneurship has been comparatively limited. . . . most studies do not deal with the environment in its own right but treat it instead as one of many factors to be considered in the study of entrepreneurs. . . . Environmental factors may impede or enhance entrepreneurial vigor, but rarely are they analyzed in a central way."
This paper adds to a recently growing body of research that has explored the relationship between environmental conditions and the nature of entrepreneurial activity (for a summary see Aldrich, 1979; Birley & Westhead, 1993a; and Gnyawali & Fogel, 1994). Studies, for example, have explored the relationship between environmental conditions and new venture creation (Westhead & Moyes, 1992; Keeble & Walker, 1994; Reynolds, Storey, & Westhead, 1994), business survival (Romanelli, 1989; Stearns, Carter, Reynolds, & Williams, 1995), business closure (Westhead & Birley, 1994), the competitive strategies pursued by businesses (Miller & Friesen, 1983; Covin & Slevin, 1989, 1990; Romanelli, 1989; Venkatraman & Prescott, 1990; Smallbone, North, & Leigh, 1993a; Zahra, 1996) and business performance (Prescott, 1986; Covin & Slevin, 1989, 1990; Eisenhardt & Schoonhoven, 1990; Birley & Westhead, 1992; Vaessen & Keeble, 1995). This paper comprises two linked but separate studies of different types of entrepreneurs in two distinct environments, that is, rural and urban areas. In the first study, the characteristics and performance of independent firms in rural areas owned by novice, portfolio, and serial founders are compared. In the second, the characteristics and performance of independent firms in urban areas owned by novice, portfolio, and serial founders are then compared. Presented evidence that is sensitive to environmental conditions will allow policy makers and practitioners to understand the backgrounds and objectives of entrepreneurs who own businesses. Moreover, this appreciation should encourage policy-makers and practitioners to develop more appropriate policies towards the formation and development of businesses located in rural as well as urban areas.
The characteristics and performance of businesses in rural and urban areas has attracted research and policy attention both in the United States (Dandridge, 1982; Banks, 1991; Buss & Popovich, 1991) and the United Kingdom (Keeble, Tyler, Brown, & Lewis, 1992; Keeble, 1993, 1996; Smallbone et al., 1993a; Westhead, 1995a). Conflicting evidence has been presented surrounding the job generation and wealth creation records of rural and urban businesses. In the United States, Buss and Popovich (1991) found that rural and urban firms reported very similar levels of job generation. Drawing upon a survey of mature independent manufacturing firms, Smallbone et al. (1993a) reported that rural firms located in northern England were more growth orientated and more profitable than urban firms located in Greater London. In marked contrast, Westhead (1995a) found no significant differences between matched-paired new independent firms located in rural and urban areas in selected locations in Great Britain with regard to sales revenue and reported profitability levels. …