Historical roots of regional entrepreneurship: the role of knowledge and creativity

This paper analyzes the historical factors that shape current levels and regional differences in new firm formation in innovative industries. Drawing on the knowledge spillover theory of entrepreneurship, we propose and test the idea that regional knowledge and creativity affect entrepreneurial activity in the long term. We investigate this in Italy using data at the NUTS-3 geographical level, which goes back as far as 1100 on some items. Our results show that the historical knowledge base, measured as the presence of public universities, is strongly related to the current level of innovative start-ups. There is also a positive relationship between past creativity, measured by the presence of scientists and inventors in the area, and current intensity of new firm formation. Lastly, these long-term effects are complementary, because provinces with both a stronger knowledge base and higher levels of creativity have more current innovative start-ups. These findings suggest that a regional entrepreneurship culture and a social environment conducive to new firm formation can explain the path-dependency of regional entrepreneurship.