Economic geography and entrepreneurial diversification in the agricultural sector

Abstract

Taking concepts from economic geography, this study decomposes locational factors as ‘first-nature’ and ‘second-nature’ geography, and argues that the second-nature geography, which is the concentration of entrepreneurial activities, helps entrepreneurs to discover entrepreneurial opportunities and gives them an incentive to integrate business with supporting activities in close proximity due to pecuniary and technological externalities. This study has taken the agricultural sector as the context of its research, and finds that the agricultural entrepreneurship literature has neglected the impact of the second-nature geography. Findings from the Netherlands show that the higher the concentration of entrepreneurial diversification in a region, the greater the likelihood that a farmer undertakes entrepreneurship on the farm.