What do they look like? Where are they located? For many of us our mental picture will be a male in an urban office. And, in many cases, this view would be right, writes Stephen Roper, co-director of NICRE.
The urban element of our mental picture of an entrepreneur may well be misplaced, however. In a recent NICRE research report Understanding levels of rural entrepreneurial activity in the UK we examined levels of entrepreneurship in rural and urban locations across the UK. Based on data which provides a representative picture of early-stage entrepreneurship activity among the adult population, we found that entrepreneurship is actually more common in rural rather than urban areas. In fact, controlling for a range of other personal characteristics, individuals in rural areas are about a quarter more likely to be engaging in entrepreneurial activity than those in urban areas.
This finding is not new. Previous reports have also emphasised that on a per capita basis there are actually more businesses located in rural areas of the UK than in urban areas, and that both males' and females’ levels of entrepreneurial activity are often higher in rural areas. So why is this? One aspect of this is the concentration of public sector and public service activity (e.g., hospitals, schools) in urban areas, and therefore people employed in more rural areas tend to be employed within the private rather than the public sector. The lack of public sector and public service activity in many rural areas also shapes job opportunities in those areas and may encourage people into starting their own business.
Differences in the structure of employment opportunities do not, however, seem to translate into individuals’ perceptions of the opportunities of starting a business in urban and rural areas. In our data, which comes from the period prior to the pandemic, around 1:4 adults in the UK in both rural and urban areas saw good opportunities for starting a business in their locality. Those in rural areas were slightly more confident that they have the skills to start a business than those in urban areas, and rural residents were marginally less fearful of the consequences of business failure.
Is the stereotype of lifestyle businesses in rural areas true? One aspect of the data we use looks at the ambition of rural and urban entrepreneurs in terms of job creation. In other words, do rural entrepreneurs have different growth aspirations to those in urban areas? The short answer is “no”. In both urban and rural areas a similar proportion of firms aspire to grow their businesses over the next five years.
All of this suggests a need to revisit our stereotype of the entrepreneur, at least in terms of location. Rural entrepreneurship can have advantages both for individuals, linked closely into their local economies, and for communities in terms of creating local jobs and opportunities. Other aspects of the entrepreneurial stereotype sadly remain true. Across both urban and rural areas, we still see notably higher rates of entrepreneurial activity among male than among females. Immediately prior to the pandemic, 11.2% of the adult population in rural areas were engaged in early-stage entrepreneurship compared to 7.7% of females. In urban areas the same figures were 9.6% for males and 6.2% for females.
As the worst effects of the Covid pandemic recede, new business opportunities will become evident in both urban and rural areas. Our analysis suggests that the entrepreneurial spirit is particularly strong in rural communities, suggesting the potential for a strong recovery in these areas. At this point it is not clear, however, how other impacts of the pandemic, such as the urban to rural shift in population, will influence future entrepreneurship activity in rural communities. Will those newly located in rural area start local businesses? Or, will they remain working remotely for urban or more distant employers? The next few years should bring an answer to both questions.
Find out more about the research.
I’m Co-Director of NICRE, Professor of Enterprise at Warwick Business School and Director of the Enterprise Research Centre (ERC). I am an economist with over 30 years’ experience of researching issues related to small and medium enterprises, innovation and innovation policy in the UK and internationally and have published widely in both areas. I have led over 70 externally funded projects, have been a member of a number of government advisory boards, and I regularly act as a consultant for OECD and the World Bank on issues related to small business development and innovation policy including projects in Austria, Abu Dhabi, Mexico, Israel, Columbia and Poland, Austria and Canada over the last four years. I am an Academician of the Academy of Social Sciences and a Fellow of the RSA.
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