Entrepreneurship and regional development: the role of clusters

Rocha, Hector (2005) Entrepreneurship and regional development: the role of clusters. Doctoral thesis, University of London: London Business School.

Abstract

This dissertation develops and tests the first theoretical model to understand and explain the differential impact of clusters and industrial agglomerations on both entrepreneurship and the relationship between entrepreneurship and development at the regional level. Clusters and entrepreneurship face high visibility among academics and policyrnakers, given that similar historical conditions explain their resurgence, and similar potential impacts on employment and innovation highlight their socio-economic importance. Yet conceptual, theoretical, and methodological constraints prevent the study of their relationship and joint impact on regional development. This dissertation aims to make theoretical and practical contributions addressing these constraints. Defining entrepreneurship as the creation of new organisations and a cluster as a geographically proximate group of interconnected firms and institutions in related industries, this study creates an intrinsic paradigm in which clusters, creation of organisations, and regional development are distinguished from industrial agglomerations, entry, and industry growth, respectively. Based on this intrinsic paradigm and a socio-economic approach, it elaborates a theoretical model that hypothesises a synergy between the liability of newness faced by new firms and the provision of external economies, established relationships, legitimisation processes, and complementary linkages by clusters. To empirically test the model, this study uses the 97 German Planning Regions as units of analysis, a multiple method and data approach to measure and identify clusters, and an OLS fixed-effect model to test the hypotheses. Clusters are measured using both quantitative secondary data and qualitative data from the existing literature on clusters and a survey of German regional experts in 31 regions. Entrepreneurship is measured using a four-year (2000-2003) pooled data taken from the German GEM dataset. The results show that clusters matter to entrepreneurship and to the relationship between entrepreneurship and regional development, but industrial agglomerations do not. Based on the theoretical elaboration and these results, this dissertation outlines theoretical contributions, practical implications for academics and policyrnakers, and directions for future research. To