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Entrepreneurial Regions: Do Macro-Psychological Cultural Characteristics of Regions Help Solve the "Knowledge Paradox" of Economics?

Obschonka M, Stuetzer M, Gosling SD, Rentfrow PJ, Lamb ME, Potter J, Audretsch DB - PLoS ONE (2015)

Bottom Line: However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates).A series of nine additional robustness checks underscored the robustness of these results.Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries.

View Article: PubMed Central - PubMed

Affiliation: Department of Psychology, Saarland University, Saarbrücken, Germany.

ABSTRACT
In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this "knowledge paradox" has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that "hidden" regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on "hidden" regional differences in entrepreneurial culture. To capture such "hidden" regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.

No MeSH data available.


Maps of entrepreneurship rates and the interaction between human capital, industry diversity, and entrepreneurial culture of GB regions (N = 375).(A) Fig 4A (left): Entrepreneurship rate in GB regions. (B) Fig 4B (middle): Interaction groups between human capital and entrepreneurial culture in GB regions. (C) Fig 4C (right): Interaction groups between industry diversity and entrepreneurial culture in GB regions. Fig 4B should be interpreted as follows: Both variables, human capital and the entrepreneurial culture were splitted at the median. Regions in bright have below median values in human capital and the entrepreneurial culture. Regions in light blue are above median in either human capital or the entrepreneurial culture. Regions in dark blue have above the median values in human capital and entrepreneurial culture. Fig 4C is interpreted in the same way as Fig 4B while interaction groups are created for the variables industry diversity and entrepreneurial culture. The shapefile underlying these maps was kindly provided ONS Geography. It contains Ordnance Survey data: Crown copyright and database right 2015.
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pone.0129332.g004: Maps of entrepreneurship rates and the interaction between human capital, industry diversity, and entrepreneurial culture of GB regions (N = 375).(A) Fig 4A (left): Entrepreneurship rate in GB regions. (B) Fig 4B (middle): Interaction groups between human capital and entrepreneurial culture in GB regions. (C) Fig 4C (right): Interaction groups between industry diversity and entrepreneurial culture in GB regions. Fig 4B should be interpreted as follows: Both variables, human capital and the entrepreneurial culture were splitted at the median. Regions in bright have below median values in human capital and the entrepreneurial culture. Regions in light blue are above median in either human capital or the entrepreneurial culture. Regions in dark blue have above the median values in human capital and entrepreneurial culture. Fig 4C is interpreted in the same way as Fig 4B while interaction groups are created for the variables industry diversity and entrepreneurial culture. The shapefile underlying these maps was kindly provided ONS Geography. It contains Ordnance Survey data: Crown copyright and database right 2015.

Mentions: Fig 3 (US) and 4 (GB) compare maps of the entrepreneurship rates (Figs 3A and 4A), of the interaction between human capital and entrepreneurial culture (Figs 3B and 4B), and of the interaction between industry diversity and entrepreneurial culture (Figs 3C and 4C). In both countries regions with a high/high pattern (high knowledge and high entrepreneurial culture) enjoy comparatively higher entrepreneurship rates. In the US these are regions in Florida, along the Pacific Coast and the Rocky Mountain Regions. The wealthiest region in the US, San Jose–home of Silicon Valley, not only exhibits relatively high entrepreneurship rates but also high levels in both knowledge (human capital, industry diversity) and entrepreneurial culture. In GB the picture is somewhat more nuanced, but London and regions in the South East stand out. In contrast, regions in the US and GB with a combination of low knowledge and a low entrepreneurial culture exhibit low entrepreneurship rates (e.g., many regions in the South and Midwest regions in the US and many regions in Wales, Scotland and the East of England).


Entrepreneurial Regions: Do Macro-Psychological Cultural Characteristics of Regions Help Solve the "Knowledge Paradox" of Economics?

Obschonka M, Stuetzer M, Gosling SD, Rentfrow PJ, Lamb ME, Potter J, Audretsch DB - PLoS ONE (2015)

Maps of entrepreneurship rates and the interaction between human capital, industry diversity, and entrepreneurial culture of GB regions (N = 375).(A) Fig 4A (left): Entrepreneurship rate in GB regions. (B) Fig 4B (middle): Interaction groups between human capital and entrepreneurial culture in GB regions. (C) Fig 4C (right): Interaction groups between industry diversity and entrepreneurial culture in GB regions. Fig 4B should be interpreted as follows: Both variables, human capital and the entrepreneurial culture were splitted at the median. Regions in bright have below median values in human capital and the entrepreneurial culture. Regions in light blue are above median in either human capital or the entrepreneurial culture. Regions in dark blue have above the median values in human capital and entrepreneurial culture. Fig 4C is interpreted in the same way as Fig 4B while interaction groups are created for the variables industry diversity and entrepreneurial culture. The shapefile underlying these maps was kindly provided ONS Geography. It contains Ordnance Survey data: Crown copyright and database right 2015.
© Copyright Policy
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4476658&req=5

pone.0129332.g004: Maps of entrepreneurship rates and the interaction between human capital, industry diversity, and entrepreneurial culture of GB regions (N = 375).(A) Fig 4A (left): Entrepreneurship rate in GB regions. (B) Fig 4B (middle): Interaction groups between human capital and entrepreneurial culture in GB regions. (C) Fig 4C (right): Interaction groups between industry diversity and entrepreneurial culture in GB regions. Fig 4B should be interpreted as follows: Both variables, human capital and the entrepreneurial culture were splitted at the median. Regions in bright have below median values in human capital and the entrepreneurial culture. Regions in light blue are above median in either human capital or the entrepreneurial culture. Regions in dark blue have above the median values in human capital and entrepreneurial culture. Fig 4C is interpreted in the same way as Fig 4B while interaction groups are created for the variables industry diversity and entrepreneurial culture. The shapefile underlying these maps was kindly provided ONS Geography. It contains Ordnance Survey data: Crown copyright and database right 2015.
Mentions: Fig 3 (US) and 4 (GB) compare maps of the entrepreneurship rates (Figs 3A and 4A), of the interaction between human capital and entrepreneurial culture (Figs 3B and 4B), and of the interaction between industry diversity and entrepreneurial culture (Figs 3C and 4C). In both countries regions with a high/high pattern (high knowledge and high entrepreneurial culture) enjoy comparatively higher entrepreneurship rates. In the US these are regions in Florida, along the Pacific Coast and the Rocky Mountain Regions. The wealthiest region in the US, San Jose–home of Silicon Valley, not only exhibits relatively high entrepreneurship rates but also high levels in both knowledge (human capital, industry diversity) and entrepreneurial culture. In GB the picture is somewhat more nuanced, but London and regions in the South East stand out. In contrast, regions in the US and GB with a combination of low knowledge and a low entrepreneurial culture exhibit low entrepreneurship rates (e.g., many regions in the South and Midwest regions in the US and many regions in Wales, Scotland and the East of England).

Bottom Line: However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates).A series of nine additional robustness checks underscored the robustness of these results.Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries.

View Article: PubMed Central - PubMed

Affiliation: Department of Psychology, Saarland University, Saarbrücken, Germany.

ABSTRACT
In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this "knowledge paradox" has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that "hidden" regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on "hidden" regional differences in entrepreneurial culture. To capture such "hidden" regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.

No MeSH data available.