Determinants of new firm formation in the Netherlands:

During the first trimester of this year I followed the course Economics of Entrepreneurship. For this course you had to read a number of articles with respect to the topic entrepreneurship. The last article that you had to read for this course was “Creativity and entrepreneurship: A regional analysis of new firm formation” (Lee, Florida and Acs, 2004). This study explores whether connections exist among regional social characteristics, human capital and new firm formation. The basic hypothesis of this study is that entrepreneurship is positively associated with regional environments that promote diversity and creativity. The empirical results support this main hypothesis. New firm formation is associated with creativity and one dimension of diversity, the diversity index, but not with other types of diversity, like the melting pot index. This study was very interesting in my opinion, because it clearly made a distinction between the two types of academic approaches with respect to entrepreneurship. 1 The focus is on the entrepreneur and tries to explain why a person decides to be an entrepreneur and starts a new firm. 2 Regional variation in new firm formation is explained at an aggregate level by looking at structural variations in geographical areas. The second approach was relatively new and interesting to me, because almost all the articles you had to read during the study Economics & Business, regarding the topic entrepreneurship, were based on the first approach. That is why I wanted to know more about this second approach and how I could use it for writing my thesis. The main objective of this thesis is to conduct a similar research as mentioned above, but this time in the Netherlands. So the central question regarding this thesis is: What determinants explain new firm formation per COROP-area in the Netherlands for the years 1996-2004?