By Haifeng Qian
I have studied entrepreneurship in cities for about a decade. Although not a very risk-taking person myself, I always admire the courage of entrepreneurs to startup their own businesses in an increasingly fast-changing market. It is a risky career choice, as most startup companies cannot survive the first five years. As an urban economics scholar, I became fascinated with entrepreneurship because risk-taking entrepreneurs contribute to urban development through various mechanisms: they create jobs; their profit-seeking efforts drive the market towards greater efficiency; and they often introduce new products or new ways of production. Like many others who are impressed with the entrepreneurial, technology-based economy in Silicon Valley, I am mostly interested in the last mechanism here, that is, the innovative process led by entrepreneurs. In my earlier research, I have widely explored urban factors that contribute to high technology entrepreneurship, and typically found the importance of technological knowledge bases, human capital, agglomeration economies, and horizontal industry organization (i.e., with a large presence of small businesses).
Almost two years ago, Shiqin Liu, a graduate student at the University of Iowa’s Urban and Regional Planning program (where I have been teaching since 2014) who had just completed my economic development class and was considering applying for a Ph.D. program, told me she would like to do some research with me. She had an interest in the creative/cultural economy, a topic covered in my class. I said I have this nice dataset on business startups by industry and by geography from the Census Bureau, so why don’t we do a spatial analysis on cultural entrepreneurship in U.S. cities. That was how this research started. We presented our preliminary results at the 2017 UAA conference in Minneapolis. Following that, we completed the paper and submitted it to the Journal of Urban Affairs. We are certainly happy that this research eventually won the UAA Best Conference Paper Award and was accepted for publication in JUA. It is a nice achievement for my co-author Shiqin Liu, who is currently a first-year doctoral student at Northeastern University.
This research is unique in that, to our best knowledge, it is the first study that systematically examines urban factors associated with cultural entrepreneurship. Earlier related studies, including quite a few done by myself, focused commonly on regional variations in general or high technology entrepreneurship. Cultural entrepreneurship is an interesting topic, because both the cultural economy and entrepreneurship require lots of creativity, and therefore the combination of the two, i.e., cultural entrepreneurship, is expected to be the most creative component of the creative economy. Policy makers who want to adopt the creative economy strategy will benefit from such a study identifying urban environmental factors associated with the startup activity in the cultural/creative sector.
In our paper, we present the spatial variations of startup activity in the cultural industries (normalized by total metropolitan employment) during 2010-2012 across all metropolitan areas in the lower 48 states and D.C. The distribution pattern is actually similar to what was shown in my earlier studies on high technology entrepreneurship, implying the spillovers of entrepreneurial activity across sectors in the same region. The hotspots (i.e., clustering of cities with high-level of cultural entrepreneurship) are mostly found in Arizona, California, Colorado, Florida, New Mexico, and Utah, and the cold spots (i.e., clustering of cities with low-level of cultural entrepreneurship) are in the Midwest.
We also run multivariate regression analysis to identify regional factors associated with cultural entrepreneurship in metropolitan areas. A large portion of the findings are consistent with what I found in my earlier studies on high technology entrepreneurship. For instance, population density, clustering of cultural businesses, (design) knowledge, human capital, and urban amenities positively predict cultural entrepreneurship in U.S. cities. These results provide some rationale for considering the cultural economy as part of the broadly-defined knowledge economy. Interesting and different from earlier studies is the role of racial/ethnic diversity. We found a positive association between the share of Hispanic population and cultural entrepreneurship, and a negative association between the share of Asian population and cultural entrepreneurship. Existing literature we cited in our paper suggests opposite results in the context of high technology entrepreneurship.
We discuss policy recommendations based on the positive associations of clustering, human capital, and urban amenities with cultural entrepreneurship found in our regression results. We highlight local economic development practitioners’ roles in building social networks among different stakeholders in the cultural economy (so as to strengthen regional cultural clusters), addressing the needs by artists and other cultural talent, and improving urban amenities (while paying attention to inclusiveness and diversity). Overall, it makes sense to combine two economic development strategies: a cultural economy-based development strategy and a place-based, amenities-improving development strategy. After all, cultural products and services are not only part of the regional economic output but also represent one major component of urban amenities.
Haifeng Qian, Ph.D., is an Assistant Professor in the School of Urban and Regional Planning at the University of Iowa. The article, “Cultural entrepreneurship in U.S. cities,” is currently available online ahead of print.