Page 75 - 1-Entrepreneurship and Local Economic Development by Norman Walzer (z-lib.org)

64 Norman Walzer, Adee Athiyaman, and Gisele F. Hamm

Figure 4.1. The Effects of Contextual Factors on Entrepreneurship: Parameter Estimates

professional literature as well as in this volume (Dabson, et al. 2003;
Hustedde [chapter 3]; National Commission on Entrepreneurship 2002).
Christofides, Behr, and Neelakantan (2001), using 1987–1999 data, iden-
tified determinants of county employment levels. This study did not fo-
cus directly on small business creation or success; rather, it examined the
types of state programs contributing to gains in employment, income,
and number of business establishments in urban and rural Pennsylvania.
The results are interesting since they offer insights into the types of pro-
grams, as measured by state spending, associated with various countywide
economic indices. Since the project does not examine small business
growth patterns directly, it is not discussed in detail here.
In summary, the existing literature on entrepreneurship suggests the fol-
lowing causal sequence among variables. Entrepreneurship is affected by
business structure in a region and the potential for entrepreneurship in the
region (Acs and Armington 2005; IIC 2006). Business structure, however,
results largely from the overall economic condition of the region
(Christofides, Behr, and Neelakantan 2001). Similarly, the potential for en-
trepreneurship is determined by the natural amenities in the region (IIC
2006). Figure 4.1 is a schematic representation of the hypotheses and shows
the strength of the relationship.

The Hypotheses

The link between economic climate and business structure is based on the
following: