Entrepreneurship and the determinants of firm survival within regions: human capital,growth motivation and locational conditions

Abstract

Despite a growing body of research on firm survival, little is known about the factors impacting upon survival rates at a micro-spatial level. This study, therefore, analyses firm survival across local environments in the context of a peripheral region; namely, the case of Wales in the UK. It examines how theories relating to human capital, growth motivation and locational conditions may explain survival within a region. Drawing on data of survival patterns for a cohort of firms, it is found that each of the three theories at least partly explain firm survival, with it being clear that human capital relating to the experience of entrepreneurs, as well as the growth motivation of their firms resulting from the strategic choices they make, impact upon rates of survival. It is also found that the local environment contributes to the likelihood of survival. In particular, it is found that locational factors have a potential influence on the human capital allocated to enterprises, as well as how this capital is utilised via growth motivation. This suggests that not only do locational factors contribute to differing rates of entrepreneurship, but that such factors also impact on the durability of firms over time.