Central city vibrancy and new business venturing

Purpose – Researchers have identified the “vibrancy” of living in a spatially defined area as having a positive impact on entrepreneurial activity, measured as new business start-ups. Vibrant areas attract and facilitate would-be entrepreneurs, and attract other entrepreneurs and the skilled people and other resources who can take advantage of the opportunities other entrepreneurs create. A vibrant locale, then, can trigger a virtuous cycle of entrepreneurially led economic and social development. The purpose of this paper is to test this hypothesis. Design/methodology/approach – The unit of observation is the county of the US Census-designated central city of metropolitan statistical areas. The authors use principal components analysis to recover scores from a variety of measures of urban vibrancy. The authors embed these scores in an OLS model of new business venturing. Findings – Within a standard model of new business launches that is designed to be comparable across time and space, the inclusion of principal components scores based on urban vibrancy measures adds little explanatory power. Social implications – Policies designed to make an urban area “more vibrant” as a means to the end of attracting new establishment launches may be less successful than policymakers hope. Originality/value – To the best of our knowledge, this is the first paper to apply principal components analysis to measures of urban vibrancy within a general model of new business venturing.