Fostering entrepreneurial ecosystems and the choice of location for new companies in rural areas – the case of Germany

Abstract

Startup ecosystems have become a popular field of research in recent years, not only for researchers but also for regional policy makers. Contemporary research on startup ecosystems generally focuses on urban areas and hubs such as Silicon Valley, Berlin, or Tel Aviv. However, little is known about startup ecosystems in rural areas. To fill this research gap, the research objective of this paper is to analyse disparities between entrepreneurial ecosystems in urban and rural areas in general and specifically in Germany. The major aim of this study is to examine the importance and development of startups in urban and rural areas and to identify challenges and opportunities for rural areas in order to set the right impulses. The research focus of this paper is to discuss which stakeholders and determinants affect the founders in their location decision. Using German Startup Monitor (DSM) 2019 data, it is found that the lack of network ties and opportunities to collaborate with established corporations; availability of qualified personnel; access to venture capital; an investment and economic policy initiative appear to be obstacles that prevent founders from starting up in rural areas in Germany. The results also confirm the findings of other studies that entrepreneurship tends to be an urban event. This study also provides suggestions for future research.