|Ph.D Student||Taylor Thomas|
|Subject||Spatial Aspects of Entrepreneurial Behaviour|
|Department||Department of Architecture and Town Planning||Supervisor||Professor Daniel Czamanski|
Conventional studies of entrepreneurship explain behaviour in terms of simple factors. At the backdrop of the proposed research is the idea that a simple framework is insufficient to understand entrepreneurial activity, especially not in institutionary sparse economies, i.e., economies characterized by great spatial variation in both business supporting institutions and entrepreneurial activity. To overcome this, the research utilizes transactions costs framework to analyze the basic entrepreneurial impulses. Spatial variations in entrepreneurial behaviour are thus framed within the transactions cost framework.
Entrepreneurship is an economic activity determined by various factors. Conventional factors, i.e., rent-seeking, utility maximization, self-control and self-esteem, objective probability of carrying out business successfully, n-ach, v-ach, internal locus of control etc. almost invariably occupy the attention of researchers. The role of institutions in promoting entrepreneurial actions or business transactions is yet to be exploited.
The research is intended to explain institutional infrastructure as a major determinant that affects entrepreneurial choice decision. The approach, however, combines the element of space, in terms of distance to testify empirically such a relationship. The motive for the proposed approach stems from several observed regularities. Amongst these regularities are; (a) transactions types are spatially differentiated, (b) transactions costs vary over space, (c) rates and types of entrepreneurial activities vary over space, (d) rates of business formation as indices of entrepreneurship and intrapreneurship are correlated with levels of economic development.
A number of hypotheses are formulated to be tested empirically. It is hypothesized that institutional development promotes and facilitates business transactions thereby increasing the number, rate of transactions and consequently economic development. Furthermore, it is also hypothesized that proximity to markets improves the probability of successfully carrying out business transactions. The two hypotheses together provide a hint of a question; Can institutional development compensate for distance from market? In other words, is there a possibility that a lagged economic region will experience high success rates of business transactions if institutional innovations are promoted?
Separate analysis on the two constraints indicate that both relationship exhibit the laws of logistic function. Such relationship tends to exhibit three distinct stages. First, improvement in proximity to markets or improvement in institutional infrastructure have limited effect on economic activity. Beyond a certain threshold level, improvements in proximity to markets or improvement in institutional infrastructure have a great effect. The results from the two analyses give rise to a third proposition, i.e., improved institutional development compensates for distance from markets thus reducing transactions costs. To ascertain the validity of the latter proposition, art examination of the joint effect of the two constraints is needed, with respect to the probability of successful business transactions.
It is therefore the main purpose if this research to present a theoretical model that exposes this relationship in the context of Baumol’s concept of cross-additivity, and to develop consequent policies.