Page 105 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

94 Jason Henderson, Sarah A. Low, and Stephan Weiler

Entrepreneurship has a strong relationship with infrastructure, especially
in terms of interstate highway and high-speed broadband Internet access.
Entrepreneurship depth measures have a positive relationship with both ac-
cess measures, indicating that such infrastructure raises the average income
and value-added of entrepreneurship. Entrepreneurship breadth has a neg-
ative relationship with interstate and Internet access, however. Small entre-
preneurs, those who contribute most to the breadth measure, may be hin-
dered by the lack of infrastructure access, forcing them to start and stay
smaller than their more networked counterparts. Interstate highways and
high speed broadband Internet access and are most common in urban re-
gions and provide vital transportation, communication, and information
networks for existing and potential growth businesses.

Local Economy
Entrepreneurship is expected to be stronger in locations with large, vi-
brant economies. Regional researchers have found that agglomeration is
key to stimulating economic growth (Krugman 1991). Density and size
tend to create substantial advantages in labor and product markets for both
workers and firms. Who are often attracted to metro places and locations
because there is a larger local market to test a wider range of their offerings
while also providing a much greater range of resource, financial, and labor
inputs. By contrast, smaller and more remote local economies limit the
ability of entrepreneurs to build economies of scale (Dabson 2001). Lack
of economies of scale limits the local demand for products and makes re-
source acquisition more difficult.
Even after accounting for human capital, natural amenities, financial cap-
ital, and infrastructure assets, the local economy metropolitan and micro-
politan dichotomous variables are still significantly related to entrepreneur-
ial depth and breadth. Relative to town counties, metropolitan counties are
characterized by higher levels of entrepreneurial depth, both in terms of in-
come and value added, and by lower levels of entrepreneurial breadth.
Micropolitan counties also have higher levels of entrepreneurial depth
and lower levels of breadth compared to town counties, although the rela-
tive differences are not as strong as the metropolitan differences. The results
suggest that regions with larger levels of agglomeration are better able to
support the creation of high-value entrepreneurs compared to regions with
low agglomeration levels.

Differences in Rural versus Metro Impacts
The initial analysis assumes that the impacts of human capital, natural
amenities, financial capital, and infrastructure assets would be similar