Governments around the world want to promote entrepreneurship. Though most business start-ups will never amount to much, each little company is an experiment, and a great deal of experimentation is necessary to produce the occasional firm that can transform a nation’s economy – or even rise to international significance. In short, entrepreneurship is an incubator, and one that is essential to long-term economic success.
In explaining the variation in levels of entrepreneurship across countries, much attention is devoted nowadays to differences in national attitudes and policies. But there are also significant differences in levels of entrepreneurship within individual countries. People from Shanghai are said to be more entrepreneurial than people in Beijing. People in the Ukrainian town of Kherson are more entrepreneurial than people from Kiev.
In a recent study, Mariassunta Giannetti and Andrei Simonov of the Stockholm School of Economics show the magnitude of differences in levels of entrepreneurship across Swedish municipalities. They define entrepreneurs as people who report income from a company that they control and work in at least part-time, and find that the proportion of entrepreneurs in the population differs substantially across the 289 municipalities that they studied, ranging from 1.5% to 18.5%.
What can these differences tell us about the real causes of entrepreneurship?