Why Butterflies Don't Leave : Locational evolution of evolving enterprises

Abstract

Entrepreneurship is seen as a crucial determinant of economic development. Entrepreneurs recognize and capitalize on opportunities so that a business organization can be created and evolve. The ability and willingness of entrepreneurs to take risks and start new companies, coupled with institutions that support entrepreneurship, has sparked economic growth and job creation. But it is not small firms per se that are the key; it is the relatively small number of fast-growing gazelles that account for the lion s share of net new jobs in small firms. In a quickly changing economy with a premium on innovation, the degree to which the economy is composed of new, rapidly growing firms is said to be indicative of innovative capacity. These enterprises often start in the home region of the entrepreneur, but when they grow they have to reconsider their location. Do they stay in their region of origin or do they move to or start branches in other regions and countries? The general purpose of this study is to improve our understanding of the dynamics of the spatial organization of evolving enterprises. A critical overview of theories on location and on the development of new enterprises shows that there is indeed a gap to be filled. This gap concerns a life course approach to the analysis of the spatial organization of evolving enterprises, including the role of networks and the role of the entrepreneur. A comprehensive theory of the spatial organization of evolving enterprises is still lacking. There are theories on the growth of new enterprises, but these have no spatial dimension and do not explain their spatial organization. And there are also theories on multinational enterprises, but these mainly focus on large, well-established enterprises. In addition, there are empirical approaches to the location decisions of small firms, but most of them lack a proper theory. To fill this gap we have made use of existing approaches that had not previously been related to research into the spatial organization of evolving enterprises, but which offered promising applications. However, as explained below, the spatial organization of enterprises as such refers to a state, but this state has to be explained by an underlying process. Understanding dynamics of the spatial organization of evolving enterprises involves the study of entrepreneurship in context. Although empirical and theoretical issues of this kind of research have been discussed quite intensively, there has been remarkably little discussion about meta-theoretical issues. While it is clear that positivism has died a long time ago that does not mean that we have to embrace the postmodern anything goes-principle . Our study is based on a post-positivist constructive realism. This will be discussed together with other meta-theoretical foundations of research on entrepreneurship in context. To fulfil the purpose of this study a confrontation between theory and particular empirical settings is considered. An empirical inquiry into the impact of both inter-organizational and personal - networks on the spatial organization of evolving enterprises, which is essentially about entrepreneurial behaviour, needs a research approach that takes into account cognitive, affective, and behavioural elements. These elements have been investigated in empirical research into the (location) strategies and histories of evolving enterprises in two young - knowledge services, and biomedicals and two mature industries - shipbuilding, and graphics-media, in contrasting regions (core/urbanized, peripheral/rural).