Abstract

Local economies benefit from entrepreneurial activity in many ways from new job creation to economic growth to innovation as well as poverty alleviation. Accordingly, attraction, support and retention of entrepreneurial talent are arguably of strategic concern for the region’s well-being. Rates of new venture formation and failure are important determinants of the entrepreneurial landscape. Yet, entrepreneurial ventures migration (transience) – both inflow and outflow of new firms in the region – may substantially affect the amount and quality of entrepreneurial capital and the likelihood that the region will capture the full economic benefits of local entrepreneurial activity.

In this sense, business transience should be of serious concern for regional policy makers, perhaps more so than business failure per se. Unlike failed entrepreneurs that might start yet another business locally, transient entrepreneurs take local resources with them when migrating to other regions. In that, transient entrepreneurship generates problems similar to “brain drain.” Also, since transience may involve successful ventures, the region is deprived of the employment and income stream generated by these locally grown businesses. Attracting businesses from other locations, in contrast, may substantially improve economic situation in the region.

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