Spatial heterogeneity, industry heterogeneity, and entrepreneurship

Hien Tran, Enrico Santarelli

Research output: Contribution to journalArticle

8 Citations (Scopus)
37 Downloads (Pure)

Abstract

The prevalence of entrepreneurship varies not only across regions but also among industries. Using a unique panel dataset of 60 two-digit industries across 64 provinces from 2000 to 2010 in Vietnam, we investigate the importance of spatial and sectoral heterogeneity in an analysis of the determinants of entrepreneurship and empirically explore the interaction effect of geographic conditions and industry dynamism. Overall, our results confirm the significance of industry structural variables and their joint effect with geographic conditions in fostering new firm formation. Particularly, (i) growth-driven entries are generally higher in provinces that offer higher salaries; (ii) technology-intensive industries within regions that have strong knowledge spillover effects are appealing to new entries. Others noteworthy findings include: (i) ‘necessity entrepreneurship’ is prevalent in Vietnam, but limited to extractive and service industries that are typically labor intensive; (ii) firms tend to concentrate more in agglomerated locations. This effect, however, evaporates for high-tech industries; and (iii) industry profitability and niche dynamism all play a crucial role in stimulating new start-ups. We apply the system generalized method of moments to obtain empirical evidence in the study.
Original languageEnglish
Pages (from-to)69-100
JournalThe Annals of Regional Science
Volume59
Issue number1
Early online date28 Feb 2017
DOIs
Publication statusE-pub ahead of print - 28 Feb 2017

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