Edinburgh Napier University

  Small growing firms are widely recognised to be a key determinant of economic growth, regional prosperity and sustainable development. This thesis investigates the role of continuing entrepreneurial activity, defined by the annual rate of new VAT registered businesses within Scotland in an attempt to identify the key determinants that underpin its development and hence the contribution of small growing firms to the Scottish economy.
A review of the theoretical and empirical literature reveals that the role of continuing entrepreneurship within Scotland is imperfectly understood, particularly at sub-regional level, and the empirical analysis undertaken in this thesis represents a step towards greater understanding in this area.
The role of the regional environment is investigated by testing a number of hypotheses reflecting the local socio-economic characteristics of a region and the extent to which these factors are able to explain variation in rates of continuing entrepreneurial activity. Panel data models are constructed for 32 regions over a 10 year period from which a variety of hypotheses are tested and conclusions drawn.
On the basis of the quantitative results and supporting qualitative interviews the research findings show that differences in rates of continuing entrepreneurial activity can most significantly be explained by population growth an indicator of local demand conditions and by the number of existing small businesses an indicator of attitudes and culture towards entrepreneurship. Human capital, access to finance and the presence of urbanisation economies were also found to significantly explain rates of continuing entrepreneurship across Scottish regions.
On the basis of the results reported in this study, enterprise policy should attempt to address the entrepreneurial deficit that exists between regions and be focussed on the creation of a positive culture towards entrepreneurship in Scotland. This should involve the continued development of institutions and levers that are capable of providing an environment which encourages and actively supports an entrepreneurial culture in order to promote economic growth, job creation and higher levels of investment.