How does Regional Entrepreneurship Transfer over Time? The Role of Household Size and Economic Success

Mounting empirical evidence shows that regional differences of
entrepreneurship are persistent over long periods of time that may reflect the
prevalence of an entrepreneurial culture. We explore three important
mechanisms behind the transmission of such an entrepreneurial culture. First,
we analyze the role model effects at the household level. We hypothesize that
the larger the households of self-employed, the greater the opportunities for
role model effects such as an intergenerational transfer of entrepreneurial
values and attitudes, and hence the higher the regional start-up rate in later
periods. Second, we investigate how the economic success of regional
entrepreneurs fuels the role model effects. Third, we analyze if and to what
extent the economic success in of regional entrepreneurship stimulates a
collective memory of historical entrepreneurship that spurs self-employment
in later periods. The analysis of entrepreneurship in German regions over a
period of more than 90 years provides support for the significance of all three
transfer channels.