Skip to main content
SpringerLink
Log in

Entrepreneur location decisions across industries

  • Published:
International Entrepreneurship and Management Journal Aims and scope Submit manuscript

Abstract

In this paper we analyse whether entrepreneur location decisions differ across industries and identify the factors determining the choice of location between rural and urban environments. Firm location is based on a new taxonomy developed over the influential three dimensions of Hayter’s (1997) approach. The paper uses data from sample of one thousand Portuguese firms. We present a stylized theoretical model to determine how these new five dimensions influence firm’s location and test the model through a logistic regression. Our results show that that the location decisions depend on the sector of activity, type of area (urban vs. rural) and the characteristics of the entrepreneur. We find that companies engaged in knowledge intensive business services prefer to locate in urban areas. From an institutional point of view, firms prefer to locate in rural areas.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. There has been a constantly rising level of interest in entrepreneurship due to its relevance to governments (NCOE 2001), business managers, directors and other decision makers (Galbraith 1985; Hansen 1987; Felsenstein 1996; Sternberg and Arndt 2001) as well as for the research community (Hisrich et al. 2007; Audretsch 2007; Mahbubani 2008).

References

  • Agarwal, S., Rahman, S., & Errington, A. (2009). Measuring the determinants of relative economic performance of rurak areas. Journal of Rural Studies, 25(2009), 309–321.

    Article  Google Scholar 

  • Arauzo, J. M., & Manjón, M. C. (2004). Firm size and geographical aggregation: an empirical appraisal in industrial location. Small Business Economics, 22, 299–312.

    Article  Google Scholar 

  • Arauzo, J. M., & Viladecans, E. (2006). Industrial location at the intra-metropolitan level: A negative binomial approach. Estudos de Ecnomia Espanhola, 224, FEDEA.

  • Audretsch, D. B. (2007). The entrepreneurial society. New York: Oxford University Press.

    Book  Google Scholar 

  • Audretsch, D. B., & Fritsch, M. (2002). Growth regimes over time and space. Regional Studies, 36(2), 113–124.

    Article  Google Scholar 

  • Audretsch, D. B., Lehmann, E., & Warning, S. (2005). University spillovers and new firm location. Research Policy, 34, 1113–1122.

    Article  Google Scholar 

  • Autant-Bernard, C., Mangematin, V., & Massard, N. (2006). Creation of Biotech SMEs in France. Small Business Economics, 26, 173–187.

    Article  Google Scholar 

  • Birley, S. (1985). The role of networks of cities and growth in regional urban. Journal of Business Venturing, 1, 107–117.

    Article  Google Scholar 

  • Bryden, J. M., & Hart, K. J. (2001). Dynamics of rural areas: International comparative analysis. Aberdeen: The Arkleton Centre for Rural Development Research, University of Aberdeen.

    Google Scholar 

  • Capello, R. (2007). Regional economics. Nova Iorque: Routledge advantage texts in economics and finance.

    Google Scholar 

  • Chiles, T. H., Vulture, D. M., Gupta, V. K., Greening, D. W., & Tuggle, C. S. (2010). The philosophical foundations of a radical Austrian approach to entrepreneurship. Journal of Management Inquiry, 19(2), 138–164.

    Article  Google Scholar 

  • Christaller, W. (1933). Die Zentralen Orte in Südeuschland (in Deutch). Darmstad: Wissenschaftlische Buchgesellschaft.

    Google Scholar 

  • Costa, M. T., Segarra, A., & Viladecans, E. (2004). The location of new firms and the life cycle of industries. Small Business Economics, 22, 265–281.

    Article  Google Scholar 

  • Davidsson, P., Delmar, F., & Wiklund, J. (2006). Entrepreneurship as growth; Growth as entrepreneurship. In P. Davidsson, F. Delmar, & J. Wiklund (Eds.), Entrepreneurship and the growth of firms (pp. 21–38). Cheltenham: Edward Elgar Publisher.

    Chapter  Google Scholar 

  • Dawe, S., & Bryden, J. M. (1999). Competitive advantage in the rural periphery: Redefining the global–local nexus. In H. Lithwick & Y. Gradus (Eds.), Urban development in frontier regions. The Netherlands: Kluwer Academic Publishers.

    Google Scholar 

  • Eberts, D., & Randall, J. (1998). Producer services, labor market segmentation and peripheral regions: the case of Saskatchewan. Growth & Change, 29, 401–422.

    Article  Google Scholar 

  • Elgen, J., Goottschalk, S., & Rammer, C. (2004). Location decisions of Spin-Offs from public research institutions. Industry and Innovation, 11(3), 207–223.

    Article  Google Scholar 

  • Felsenstein, D. (1996). High technology firms and metropolitan locational choice in Israel; a look at the determinants. Geografiska Annaler Series B, Human Geography, 78(1), 43–58.

    Article  Google Scholar 

  • Ferreira, J., Marques, C., & Fernandes, C. (2010). Decision-making for location of New Knowledge Intensive Businesses on ICT sector: Portuguese Evidences. International Journal of E-Entrepreneurship and Innovation, 1(1), 60–82.

    Article  Google Scholar 

  • Figueiredo, O., Guimarães, P., & Woodward, D. (2002). Home-field advantage, location decision of portuguese entrepreneurs. Journal of Urban Economics, 52, 341–361.

    Article  Google Scholar 

  • Fuentes, M., Ruiz, M., Bojica, A., & Fernandez, V. (2010). Prior knowledge and social networks in the exploitation of entrepreneurial opportunities. International Entrepreneurship and Management Journal, 6(4), 481–501.

    Article  Google Scholar 

  • Fuller-Love, N. (2009). Formal and informal networks in small businesses in the media industry. International Entrepreneurship and Management Journal, 5(3), 271–284.

    Article  Google Scholar 

  • Galbraith, C. S. (1985). High-technology location and development, the case of Orange County. California Management Review, 28(1), 98–109.

    Article  Google Scholar 

  • Greene, W. (2003). Econometric analysis fifth edition Upper River, New Jersey

  • Grimes, S. (2000). Rural areas in the information society: diminishing distance or increasing learning capacity? Journal of Rural Studies, 16(1), 13–21.

    Article  Google Scholar 

  • Groot, H. L. F., Nijkamp, P., & Stough, R. R. (2004). Entrepreneurship and regional economic development – a spatial perspective. Massachuetts: Edward Elgar Publishing Limited.

    Google Scholar 

  • Hansen, E. (1987). Industrial location choice in Sao Paulo, Brazil: a nested logit model. Regional Science and Urban Economics, 17, 89–108.

    Article  Google Scholar 

  • Hayter, R. (1997). The dynamics of industrial location: the factory, the firm and the production system. New York: Wiley.

    Google Scholar 

  • Hisrich, R., Langan-Fox, J., & Grant, S. (2007). Entrepreneurship research and practice: a call to action for psychology. American Psychologist, 62, 575–589.

    Article  Google Scholar 

  • Holl, A. (2004). Manufacturing location and impacts of road transport infrastructure: empirical evidence from Spain. Regional Science and Urban Economics, 34, 341–363.

    Article  Google Scholar 

  • Hoover, E. (1948). The location of economic activity. New York: McGraw – Hill.

    Google Scholar 

  • Jacobs, J. (1969). The economy of cities. New York: Vintage Books.

    Google Scholar 

  • Jovanovic, B. (1982). Selection and the evolution of industry. Econometrica, 50(3), 649–670.

    Article  Google Scholar 

  • Kahneman, B., & Tversky, A. (1979). Prospect theory: an analysis of decision under risk. Econometrica, 47(2), 263–291.

    Article  Google Scholar 

  • Keeble, D. (1998). North–south and urban–rural variations in SME growth, innovation and networking in the 1990s. In A. D. Cosh & A. Hughes (Eds.), Enterprise Britain: Growth, innovation and public policy in the small and medium sized enterprise sector 1994–1997. Cambridge: ESRC Centre for Business Research, University of Cambridge.

    Google Scholar 

  • Kihlstrom, R. E., & Laffont, J. (1979). A general equilibrium entrepreneurial theory of firm formation based on risk aversion. Journal of Political Economy, 87(4), 719–748.

    Article  Google Scholar 

  • Kirchoff, B. A., & Phillips, B. D. (1988). The effect of firm formation and growth on job creation in the United States. Journal of Business Venturing, 11, 133–149.

    Google Scholar 

  • Kirzner, I. M. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.

    Google Scholar 

  • Knight, F. H. (1921). Risk, uncertainty and profit. Boston: Houghton Mifflin Company.

    Google Scholar 

  • Krugman, P. (1981). Trade accumulation and uneven development. Journal of Development Economics, 8, 149–161.

    Article  Google Scholar 

  • Krugman, P. (1991). Geography and trade. Leuven: Leuven University Press.

    Google Scholar 

  • Lafuente, E., Vaillant, Y., & Serarols, C. (2010). Location decisions of knowledge-based entrepreneurs: why some Catalan KISAs choose to be rural? Technovation, 30, 590–600.

    Article  Google Scholar 

  • Lösch, A. (1940). Die Raumliche Ordung der Witschoft. Tradução para The economics of location. Yale UP, 1954

  • Low, M. B., & MacMillan, I. C. (1988). Entrepreneurship: past research and future challenges. Journal of Management, 14(2), 139–161.

    Article  Google Scholar 

  • Lucas, R. E. (1978). On the size distributon of business firms. Bell Journal of Economics, 22(1), 3–42.

    Google Scholar 

  • Mahbubani, K. (2008). The new Asian hemisphere. New York: Public Affairs.

    Google Scholar 

  • Marshall, A. (1890). Princiles of economics. London: Macmillan.

    Google Scholar 

  • Marshall, A. (1920). Principles of Economics. London: MacMillan.

  • McClelland, D. C. (1961). The achieving society. New York: The Free Press.

  • Meyer, M. (2003). Academic entrepreneurs or entrepreneurial academics? Research-based ventures and public support mechanisms. R&D Management, 33, 107–115.

    Article  Google Scholar 

  • Mydral, D. (1957). Economic theory and underdeveloped regions. London: Duckworth.

    Google Scholar 

  • NCOE (2001). Embracing innovation: entrepreneurship and American Economic Growth. In National Commission on Entrepreneurship. White Paper, 1–11.

  • North, D., & Smallbone, D. (1995). The employment generation potential of mature SMEs in different geographical environments. Urban Studies, 32(9), 1517–1534.

    Article  Google Scholar 

  • OECD (2006). The new rural paradigm, policy and governance. Working Paper on Territorial Policy in Rural Areas. OECD, Paris.

  • Ouwersloot, H., & Rietveld, P. (2000). The geography of R&D: tobit analysis and a Bayesian approach to mapping R&D activities in the Netherlands. Environment and Planning, 32, 1673–1688.

    Article  Google Scholar 

  • Parker, S. C. (1996). A time series model of self-employment. Small Business Economics, 63, 459–475.

    Google Scholar 

  • Parker, S. C. (1997). The effects of risk on self employment under uncertainty. Small Business Economics, 9(6), 512–522.

    Article  Google Scholar 

  • Parker, S. C. (2004). The economics of self-employment and entrepreneurship. Cambridge: Cambridge University Press.

    Book  Google Scholar 

  • Poehling, R. (1999). Locating producer services in the rural South of the US: The case of Alabama, Florida and Georgia. Paper presented at the Meetings of the North American Regional Science Association, Montreal, Canada.

  • Schindehutte, M., & Morris, M. H. (2009). Advancing strategic entrepreneurship research: the role of complexity science in shifting the paradigm. Entrepreneurship Theory & Practice, 33(1), 241–276.

    Article  Google Scholar 

  • Schumpeter, J. A. (1934). The theory of economic development. Cambridge: Harvard University Press.

    Google Scholar 

  • Shane, S., & Venkataraman, S. (2000). The promise of entrepreneurship as a field of research. Academy of Management Review, 25(1), 217–226.

    Google Scholar 

  • Shearmur, R., & Doloreux, D. (2008). Urban hierarchy or local buzz? High-order producer service and (or) knowledge-intensive business service location in Canada, 1991–2001. The Professional Geographer, 60(3), 333–355.

    Article  Google Scholar 

  • Silva, J. (2006). Acessibility and development in peripheral regions: The case for beira interior. 45th European Congress of Regional Science Association International, ERSA, Volos.

  • Smith, A. (1776). An inquiry into nature and causes of the wealth of nations. Britanic encyclopedic, 1952. London.

  • Sternberg, R., & Arndt, O. (2001). The firm or the region: what determines the innovation behaviour of European firms? Economic Geography, 7, 364–382.

    Article  Google Scholar 

  • Storey, D. J. (1994). Employment. In D. J. Storey (Ed.), Understanding the small business sector (pp. 160–203). London: Routledge. Chapther 6.

    Google Scholar 

  • Thurik, A. R., & Wennekers, A. (2004). Entrepreneurship, small business and economic growth. Journal of Small Business and Enterprise Development, 11(1), 140–149.

    Article  Google Scholar 

  • Trullén, J. (2001). Léconomia de Barcelona: cap a un nou model de desenvolupament. Revista Situación Catalunya, 2, 26–38.

    Google Scholar 

  • Van Praag, M. C., & Versloot, P. H. (2007). What is the value of entrepreneurship? A review of recent research. Small Business Economics, 29, 351–382.

    Article  Google Scholar 

  • van Stel, A. J. (2006). Empirical analysis of entrepreneurship and economic growth. International studies in entrepreneurship series, 13. New York: Springer Science.

  • Veciana, J. M., & Urbano, D. (2008). The institutional approach to entrepreneurship research. Introduction. International Entrepreneurship and Management Journal, 4(4), 365–379.

    Article  Google Scholar 

  • Von Thünen (1826). Der isolierte staat in bezeihungauf landwirtschaft und national ö konomie. In English by C. M. Wartenberg “Von Thünen’s isolated state”. Oxford: Pergamon Press, 1966.

  • Weber, A. (1909). Über den standort der industrien. In English by C. J. Friedrich as Theory of the location of industry. Chicago: University of Chicago Press, 1928.

  • Welter, F., & Lasch, F. (2008). Entrepreneurship research in Europe: taking stock and looking forward. EntrepreneurshipTheory & Practice, 32(2), 241–248.

    Article  Google Scholar 

  • Wennekers, S., & Thurik, R. (1999). Linking entrepreneurship and economic growth. Small Business Economics, 13(1), 27–56.

    Article  Google Scholar 

  • Wernerheim, M., & Sharpe, C. (2003). High-order producer services in metropolitan Canada: how footloose are they? Regional Studies, 37, 469–490.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Beira Interior and NECE - Research Unit in Business Sciences, Estrada do Sineiro, Pólo IV, 6200-209, Covilhã, Portugal

    João J. M. Ferreira

  2. Polytechnic of Castelo Branco & NECE - Research Unit in Business Sciences, Covilhã, Portugal

    Cristina I. Fernandes

  3. University of Beira Interior and NECE - Research Unit in Business Sciences, Covilhã, Portugal

    Mário L. Raposo

  4. Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, Netherlands

    Roy Thurik

  5. University of Texas at El Paso, El Paso, TX, USA

    João R. Faria

Authors
  1. João J. M. Ferreira
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Cristina I. Fernandes
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Mário L. Raposo
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Roy Thurik
    View author publications

    You can also search for this author in PubMed Google Scholar

  5. João R. Faria
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to João J. M. Ferreira.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Ferreira, J.J.M., Fernandes, C.I., Raposo, M.L. et al. Entrepreneur location decisions across industries. Int Entrep Manag J 12, 985–1006 (2016). https://doi.org/10.1007/s11365-015-0370-7

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11365-015-0370-7

Keywords

Search

Navigation