۱- Introduction

۲- Conceptual framework & theory

۳- Data & methodology

۴- Empirical results

۵- Discussion

References

Abstract

Investments in physical infrastructure induce environmental changes that serve both an enabling and disabling function, potentially acting to simultaneously stimulate new business establishment and provoke exit by some incumbent establishments. The opening of a new establishment results in the creation of jobs that did not previously exist. Similarly, the closing of an establishment results in the permanent loss of jobs. I develop a theoretical model that depicts this external enabler/disabler process and test the model’s predictions empirically tested using annual state-level data spanning the period 1993–۲۰۱۵٫ The results from dynamic panel system GMM estimation suggest that public and private infrastructure investments exert opposite effects on dynamism. Whereas private infrastructure investment is positively and significantly associated with the creation of businesses and jobs, public infrastructure investments are associated with the destruction of businesses and jobs. These results point to private infrastructure investment serving primarily an entrepreneurial enabler role and public infrastructure investment an entrepreneurial disabler role.

Executive summary

Scholars are increasingly interested in how the environmental context affects entrepreneurial activity across regions (Fritsch and Storey, 2014; Sternberg, 2009). One aspect of the environment that has received sparse attention is investment in physical infrastructure development. Audretsch et al. (2015, p. 226), authors of the only study to explicitly explore the relationship between physical infrastructure and entrepreneurship, found that regional start-up activity is positively and significantly associated with physical infrastructure within the context of Germany. They concluded by declaring, “infrastructure may be one of the most overlooked influences of entrepreneurial activity.” In this paper, I fill several gaps in this infant literature. First, I develop a theoretical framework linking infrastructure development to entrepreneurship that considers the potential for infrastructure development to both stimulate entrepreneurial action and adversely affect incumbent businesses. Building on the external enabler concept (Davidsson, 2015), my model links changes in the external environment such as those engendered by infrastructure investments to the enablement and disablement of entrepreneurial opportunities, which manifest as the creation and destruction of business establishments and jobs associated with their operation. My framework predicts that infrastructure investments will serve both an enabling and disabling role, encouraging business entry and exit as well as the organic creation of new jobs and the permanent destruction of jobs. Second, I account for the cost of developing infrastructure. Audretsch et al.