Rugged Entrepreneurs: The Geographic and Cultural Contours of New Business Formation
How do geographic and historical-cultural factors shape new business formation? Using novel data on new business registrations, we document that 75% of the variation in new business formation is explained by time-invariant county-level factors and examine the extent to which such variation is driven by historical, cultural, and geographic factors. Current-day new business formation is positively related to historical attributes that presage individualist culture: frontier experience and historical birthplace diversity, as well as the county’s topographical features. The relation holds when we exploit plausibly exogenous variation in frontier experience driven by shocks to the settlement process that arise from historical immigration flows. Our study points to the fundamental role of geographic and historical-cultural features, especially rugged individualism, in explaining contemporary new business formation in the U.S.
We are grateful to the Startup Cartography Project and Jorge Guzman for the provision of data used in this project. All errors are our own. Corresponding Author: John M Barrios (firstname.lastname@example.org), Washington University in St Louis, Olin School of Business. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.