Regional systems of entrepreneurship: The nexus of human capital, knowledge and new firm formation

Abstract

This article focuses on entrepreneurship in economic geography and aims at a systematic investigation of regional variation in knowledge-based entrepreneurial activity. We develop and test a three-phase structural model for regional systems of entrepreneurship after introducing a systems approach to entrepreneurship. The model is built upon the absorptive capacity theory of knowledge spillover entrepreneurship that identifies new knowledge as one source of entrepreneurial opportunities and human capital as the major source of entrepreneurial absorptive capacity. Based on data of US metropolitan areas, we find that entrepreneurial absorptive capacity is a critical driving force for knowledge-based entrepreneurial activity. We also find that high technology and cultural diversity contribute to the vibrancy of regional systems of entrepreneurship. © The Author (2012). Published by Oxford University Press. All rights reserved.