Determinants of Entrepreneurial Activity in Regions of Europe

The agenda of the paper responds to the long-standing yet unresolved problem in entrepreneurship research that different metrics of entrepreneurial activity capture different facets of entrepreneurship and to the limited knowledge about determinants of regional entrepreneurial activity in Europe. By using panel data for 2010–2021, the paper studies determinants behind the spatial distribution of the level and fluctuations in entrepreneurial activity in European NUTS 2 regions. Four metrics of entrepreneurial activity are considered in a non-spatial and spatial simultaneous equations framework, and confronted with a number of factors of regional labour market and economic conditions as well as regional development. Inter alia, the results suggest that enterprise activity and self-employment are driven by different factors, and that regional unemployment is negatively associated with entrepreneurial activity. Most emerging and perishing enterprises likely fall within the Kirznerian tradition. Ultimately, the results yield distinct implications for regional enterprise versus self-employment policy.