Does firm creation depend on local context? A focus on the neighbouring effects

This paper seeks to shed some light on the influence that the characteristics of the local context in a given area and in adjacent ones exert on the entrepreneurial process. In order to make a distinction between the purely local factors and the role played by the neighbourhood, we mobilize the so-called Exploratory spatial data analysis which determines the degree of spatial dependence and its consequence on entry rate. We empirically address this question by considering the case of French employment areas from 2006 to 2010 using spatial econometric models adapted to panel data. Our results show that financial, material, human and organisational resources locally available are far from being the unique geographical determinants of firm creation. Instead, the entry rate in a given area also strongly depends on the propensity to create firms in the adjacent places. Spillover effects taking their origin in adjacent areas should thus be considered in explaining the local determinants of firm creation.