Central city vibrancy and new business venturing
| DOI | https://doi.org/10.1108/JEPP-01-2014-0002 |
| Pages | 257-271 |
| Date | 17 August 2015 |
| Published date | 17 August 2015 |
| Author | Stephen Gross,Noel Campbell |
| Subject Matter | Strategy,Entrepreneurship,Business climate/policy |
Central city vibrancy and
new business venturing
Stephen Gross
Department of Economics, Florida State University,
Tallahassee, Florida, USA, and
Noel Campbell
Department of Economics, Finance, Insurance & Risk Management,
University of Central Arkansas, Conway, Arkansas, USA
Abstract
Purpose –Researchers have identified the “vibrancy”of living in a spatially defined area as having
a positive impact on entrepreneurial activity, measured as new business start-ups. Vibrant areas
attract and facilitate would-be entrepreneurs, and attract other entrepreneurs and the skilled people
and other resources who can take advantage of the opportunities other entrepreneurs create. A vibrant
locale, then, can trigger a virtuous cycle of entrepreneurially led economic and social development.
The purpose of this paper is to test this hypothesis.
Design/methodology/approach –The unit of observationis the county of the US Census-designated
central city of metropolitan statistical areas. The authors use principal components analysis to recover
scores froma variety of measures of urban vibrancy.The authors embed thesescores in an OLS model of
new business venturi ng.
Findings –Within a standard model of new business launches that is designed to be comparable
across time and space, the inclusion of principal components scores based on urban vibrancy measures
adds little explanatory power.
Social implications –Policies designed to make an urban area “more vibrant”as a means to the end
of attracting new establishment launches may be less successful than policymakers hope.
Originality/value –To the best of our knowledge, this is the first paper to apply principal
components analysis to measures of urban vibrancy within a general model of new business venturing.
Keywords Start-ups, New ventures, Creative class, Principal components analysis, Vibrancy
Paper type Research paper
Introduction
Especially in mature economies wherein the external margins for growth have been
largely exhausted, continued economic growth will be the result of innovation and
entrepreneurship, leading to new products, the discovery of new resources, and the
adoption of new patterns of production and exchange. The locus of innovative and
entrepreneurial behavior will be newly created businesses. These new businesses will
provide employment and income opportunities. Common to the literature developing this
concept is the notion that networks or clusters of economic activity –often defined
spatially –exhibit external network economies (e.g. see Ellison and Glaeser, 1997, 1999;
Glaeser et al., 1992, 2001, 2010; Glaeser and Mare, 2001; Henderson, 1974, 2003; Jaffe et al.,
1993; Lucas, 1988; Marshall, 1920; Moretti, 2003; Rauch, 1993; Rosenthal and Strange,
2001; Shapiro, 2006; Simon et al., 2002; Wheaton and Lewis, 2002). Although the sources
of network economies vary across the literature, at the simplest example, the more
innovative and entrepreneurial a city or region is, the more attractive it becomes for other
entrepreneurs and innovators and the more conducive it becomes for “follow-up”
innovation and entrepreneurship. These innovative entrepreneurs launch new business
ventures to take advantage of the opportunities around them, creating jobs and income.
Journal of Entrepreneurship and
Public Policy
Vol. 4 No. 2, 2015
pp. 257-271
©Emerald Group Publis hing Limited
2045-2101
DOI 10.1108/JEPP-01-2014-0002
Received 13 January 2014
Revised 29 March 2014
Accepted 2 April 2014
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/2045-2101.htm
257
New business
venturing
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