Regional Variations in Entrepreneurship in the U.K

Posted: 17 Nov 2009

See all articles by David J. Storey

David J. Storey

Independent

Steven G. Johnson

affiliation not provided to SSRN

Date Written: 1987

Abstract

Demonstrates the role of national public policy in reinforcing economic divisions between regions in the UK. In this study, entrepreneurship is measured by the birth rate of new firms. Using Peter Johnson's shift-square technique of separately analyzing structural factors and fertility factors of regional variations, data of number of firm births for 11 U.K. regions over the period 1966-77 are studied. Results show that fertility factors (i.e., factors related to differences in formation rates within industries) are more important than differences in industrial structure in explaining regional variation. While public policy actively works to create jobs in the small firm sector, it does not differentiate between regions. Thus, despite recent initiatives to promote the small firm sector, the data shows that new firm formation rates are higher in prosperous areas and lower in less prosperous areas. To examine entrepreneurship on a more general basis that considers growth rates, a regional entrepreneurship index - based on Storey's six factors which have been shown to be positively or negatively associated with entrepreneurship - is then formulated. The results support the hypothesis of regional divisiveness strengthened by four specific enterprise policies, which tend to reinforce growth where it is already occurring. Both studies show that public policy is actually reinforcing gaps between the prosperous and less prosperous regions by providing the same aid, implying that regional policy should be reevaluated so as not to remain regionally divisive. (CJC)

Keywords: Industry structure, Firm births, Public policies, Startups, Firm survival, Firm growth, Regional differences, Regional expansion, Firm size, Regional markets

Suggested Citation

Storey, David J. and Johnson, Steven G., Regional Variations in Entrepreneurship in the U.K (1987). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1506337

Steven G. Johnson

affiliation not provided to SSRN

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