History determines regional entrepreneurship and innovation

There is a long debate about the role of cultural attitudes in favor of entrepreneurship for actual start-up behavior. Places like the Silicon Valley are often cited as fertile breeding grounds for start-ups because of widespread entrepreneurial values among people working and living in the area. Based on such success stories, local policy makers around the world aim at creating a local entrepreneurship culture, which includes promoting an entrepreneurial mentality among locals. Mounting evidence shows that the presence of an entrepreneurship culture can be helpful to harness economic development in periods of structural and socioeconomic changes. For example, it is likely that the structural challenge in the northern Netherlands induced by stopping the extraction of natural gas by 2022 can be more successfully coped with entrepreneurial and innovative initiative and effort.

In a recent set of studies, I have investigated with different teams of co-authors whether there is indeed a relationship between the share of people with an entrepreneurial mindset in a region and the local level of start-up and innovation activity. For example, we combined historical self-employment data from the early 20th century with the current entrepreneurial attitudes of more than 70,000 German respondents. [1] The results reveal a positive relationship between the historical level of self-employment in a region and the presence of people with an entrepreneurial personality today. This personality structure is positively related to the level of new business formation and the amount of innovation activity measured by patents.

This finding resonates with my earlier research for the United Kingdom (UK).[2] Here we showed that the presence of large-scale manufacturing in the late 19th century corresponds with low levels of start-up activity and a low share of people with an entrepreneurship-prone personality profile today. These results suggest that there is a long-term imprinting of history.  My on-going research suggests that German regions that belonged to the Roman Empire 2,000 years ago have higher levels of entrepreneurship, innovation and a higher share of people with an entrepreneurship-prone personality profile as compared to other German regions.[3] Thus, history can have a deep imprint on entrepreneurship and innovation. Place and history matters! Also in the Netherlands?

The above-described analyses are based on the global Gosling–Potter Internet project, which collects personality data in a number of countries including the Netherlands (http://www.outofservice.com). This allows calculating to which degree the personality of the respondent is prone to entrepreneurship. The database for the Netherlands comprises more than 100,000 individuals but was not yet examined.

Historical long-term imprinting effects may also shape the relationship between local mentalities and entrepreneurship and innovation activity in the Netherlands. For example, the regions in North and South Holland such as the Randstad around Amsterdam have a mercantile tradition, which should imply a high prevalence of people with an entrepreneurial personality profile. However, Limburg is marked by a mining tradition and facing economic decline. This may imply a relatively low prevalence of people with an entrepreneurial personality profile. A first assessment of the Dutch data from the Gosling-Potter internet project reveals that the northern and eastern provinces have a relatively low average entrepreneurial personality score while the Randstad provinces are at the top. In my future research, I will investigate historical determinants of regional differences in the Netherlands.

An important question arising from my own and related research is about the scope of policies to promote entrepreneurship and to raise the entrepreneurial attitude of the local population if history has such a deep imprint. A positive portraying of entrepreneurs in the media and entrepreneurship-facilitating local awareness campaigns could be fruitful starting points. This notwithstanding, policies that aim at raising the level of regional entrepreneurship and stimulating an entrepreneurial culture may require rather long periods before remarkable changes can be observed. Facilitating an entrepreneurship culture and enhancing the entrepreneurial attitude of the local population is a long-term strategy. However, once established it may generate long-lasting positive effects on entrepreneurship and innovation.

For further details, please contact:

Dr. Michael Wyrwich m.wyrwich rug.nl

[1] Historical Roots of Entrepreneurial Culture and Innovation Activity―An Analysis for German Regions (Michael Fritsch & Martin Obschonka, Michael Wyrwich), Regional Studies, 2019, Vol. 53, 1296-1307, https://doi.org/10.1080/00343404.2019.1580357.

[2] Industry structure, entrepreneurship, and culture: An empirical analysis using historical coalfields (Michael Stuetzer, Martin Obschonka, David B. Audretsch, Michael Wyrwich; P.J. Rentfrow, L. Shaw-Taylor, M. Coombes & M. Satchell), European Economic Review, 2016, Vol. 86, 52-72, https://doi.org/10.1016/j.euroecorev.2015.08.012,

[3] The Long-lasting Imprint of Roman Sandals? Evidence of Large-Scale Cultural Effect of Roman Rule in Germany (Michael Fritsch, Martin Obschonka; Fabian Wahl; Michael Wyrwich), mimeo.