Entrepreneurial opportunities in peripheral versus core regions in Chile

Abstract

Governmental policies tend to support and boost entrepreneurship in peripheral regions in many countries. This research revives the debate about specific regional policies designed to foster local new business creation, and the entrepreneurial framework conditions needed at the regional level for emerging regions such as Latin America. We applied one of the Global Entrepreneurship Monitor’s methodologies, the National Experts Survey, to a sample of 695 key informants in Chile at eight regions of which six are classified as peripheral. Using non-parametric statistics we compared the differences between peripheral and core regions. The main results indicate that peripherally located entrepreneurship experts perceive their regions as in a worse position than centrally located experts in terms of finance access and physical infrastructure. On the other hand, the results indicate that peripheral entrepreneurship experts detect more market dynamism in their regions and surprisingly perceive general policy and government programs as supporting entrepreneurship although the Chilean government had not promoted many regional policies.

Appendices

Appendix 1: Chilean geography and demography indicators

2009 population and economic indicators in Chile by selected regions

	Male	Female	Total	Regional GDPa	% National GDP
Peripheral
Región de Arica y Parinacota	64,615	65,915	130,530	1,005,615	1.75
Región de Antofagasta	175,586	160,253	335,839	3,977,533	6.94
Región de Coquimbo	197,546	209,499	407,045	1,451,801	2.53
Región del Bío- Bío	617,054	657,319	1,274,373	5,586,218	9.74
Región de la Araucanía	284,412	298,792	583,204	1,548,006	2.70
Región de los Ríos	119,906	122,183	242,089	1,134,975	1.98
Total	1,459,119	1,513,961	2,973,080	14,704,148	25.65
Central
Región de Valparaíso	519,991	566,009	1,086,000	4,993,682	8.71
Región Metropolitana	2,016,093	2,232,285	4,248,378	27,731,486	48.37
Total	2,536,084	2,798,294	5,334,378	32,725,168	57.08

1. ^aMillions of Chilean pesos (2003 constant prices)

Appendix 2: Experts characteristics and numbers per region

Some examples of people that can act (or be adequate) as an expert in each EFC:

• 1. Financing: bankers, public managers of financial programs or subsides, venture capitalists, business angels, entrepreneurs or business people in general.

• 2. Policies: public charges related to economics and enterprises environment, with taxes, development agencies or entrepreneurs subject to these policies.

• 3. Programs: public charges related to government programs, public agencies, business associations, development agencies, entrepreneurs and people to whom the programs are addressed.

• 4. Education: all types of professors/teachers (school, college, university, professional or vocational education), public charges related with education or entrepreneurs.

• 5. R&D transfer: personnel of industry, innovation, development and growth public or private agencies, scientific parks personnel, university researchers, engineers, some types of entrepreneurs.

• 6. Commercial and business services: lawyers, accountants, advisors/consultants, economists, market analysts, survey vendors, entrepreneurs that need them, providers of them in general.

• 7. Market openness: market analysts, some researchers at universities or business schools, business associations, chambers of commerce, government agencies related to the economy and its development, entrepreneurs.

• 8. Physical infrastructure: all types of businesses and enterprises providers (gas, water, phone, electrics…), engineering, real estate, government agencies related to infrastructure, industrial parks, entrepreneurs.

• 9. Cultural and social norms: business associations, press, media in general, customers, providers, sociologists, entrepreneurs, foundations, trade unions.

Primary entrepreneurial framework condition specializations sub-samples by region.

Region	Financial support	Government policies	Government programs	Education and training	R&D transfer	Commercial and professional infrastructure	Market openness	Access to physical infrastructure	Cultural and social norms	Total
Antofagasta	16	14	15	17	17	15	15	14	16	139
Coquimbo	9	8	9	10	9	9	8	9	10	81
Valparaíso	9	7	11	11	11	28	21	7	6	111
Bío- Bío	13	12	12	13	8	13	13	13	12	109
Araucanía	5	5	7	10	6	10	6	7	7	63
Metropolitana	12	10	8	12	13	14	11	9	11	100
De Los Ríos	3	4	3	4	3	4	3	3	4	31
Arica y Parinacota	5	7	7	8	7	8	6	5	8	61
Total	72	64	71	85	74	107	83	65	74	695

Appendix 3: Description of GEM entrepreneurial framework conditions and principal component analysis

This appendix contains a brief description of the nine different entrepreneurial framework conditions (EFCs) recognized by the GEM Consortium Research Committee (based on Bosma et al. 2008, p. 41; Bosma et al. 2009, p. 33). After each description there are the specific questions modified for regional approach for each of the EFCs that should be answered by a five-point Likert scale where 1 is “complete false” to 5 that is “complete true” and the principal component analyses results (communalities extraction, component matrix and total variance explained) for each EFC.

EFC1 Financial support: the availability of financial resources, equity, and debt, for new and growing firms including grants and subsidies.

Statement	Communalities extraction	Component matrix
In my region, there is sufficient equity funding available for new and growing firms	0.583	0.763
In my region, there is sufficient debt funding available for new and growing firms	0.537	0.733
In my region, there are sufficient government subsidies available for new and growing firms	0.429	0.655
In my region, there is sufficient funding available from private individuals (other than founders) for new and growing firms	0.436	0.660
In my region, there is sufficient venture capitalist funding available for new and growing firms	0.573	0.757
In my region, there is sufficient funding available through initial public offerings (IPOs) for new and growing firms	0.326	0.571

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.883	48.051	48.051	2.883	48.051	48.051
2	1.007	16.778	64.829
3	0.715	11.912	76.741
4	0.554	9.231	85.973
5	0.439	7.319	93.291
6	0.403	6.709	100.000

EFC2 Government policies: the extent to which government policies reflected in taxes or regulations or the application of both are either size-neutral or encourage new and growing firms. Subsequent empirical studies have shown that there are two distinct dimensions, or sub-divisions of this EFC. The first covers the extent to which new and growing firms are prioritized in government policy in general.

Statement	Communalities extraction	Component matrix
In my region, government policies (e.g. public procurement) consistently favour new firms	0.628	0.792
In my region, the support for new and growing firms is a high priority for policy at the local government level	0.751	0.867
In my region, the support for new and growing firms is a high priority for policy at the national government level	0.794	0.891

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.173	72.423	72.423	2.173	72.423	72.423
2	0.529	17.641	90.064
3	0.298	9.936	100.000

The second refers to regulations for new and growing firms:

Statement	Communalities extraction	Component matrix
In my region, taxes and other government regulations are applied to new and growing firms in a predictable and consistent way	0.397	0.630
In my region, the amount of taxes is NOT a burden for new and growing firms	0.520	0.721
In my region, new firms can get most of the required permits and licenses in about a week	0.351	0.593
In my region, coping with government bureaucracy, regulations, and licensing requirements it is not unduly difficult for new and growing firms	0.566	0.752

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	1.834	45.860	45.860	1.834	45.860	45.860
2	0.967	24.172	70.031
3	0.645	16.119	86.150
4	0.554	13.850	100.000

EFC3 Government programs: the presence and quality of direct programs to assist new and growing firms at all levels of government (national, regional, municipal).

Statement	Communalities extraction	Component matrix
In my region, a wide range of government assistance for new and growing firms can be obtained through contact with a single agency	0.272	0.521
In my region, science parks and business incubators provide effective support for new and growing firms	0.309	0.556
In my region, there are an adequate number of government programs for new and growing businesses	0.508	0.712
In my region, the people working for government agencies are competent and effective in supporting new and growing firms	0.516	0.718
In my region, almost anyone who needs help from a government program for a new or growing business can find what they need	0.607	0.779
In my region, government programs aimed at supporting new and growing firms are effective	0.628	0.792

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.839	47.309	47.309	2.839	47.309	47.309
2	0.855	14.252	61.561
3	0.779	12.991	74.552
4	0.605	10.086	84.638
5	0.490	8.164	92.803
6	0.432	7.197	100.000

EFC4 Education and training: the extent to which training in creating or managing small, new, or growing business is incorporated within the educational and training system at all levels. There are two distinct sub-dimensions to this EFC: Primary and secondary school level entrepreneurship education and training:

Statement	Communalities extraction	Component matrix
In my region, teaching in primary and secondary education encourages creativity, self-sufficiency and personal initiative	0.687	0.829
In my region, teaching in primary and secondary education provides adequate instruction in market economic principles	0.746	0.864
In my region, teaching in primary and secondary education provides adequate attention to entrepreneurship and new firm creation	0.779	0.883

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.211	73.704	73.704	2.211	73.704	73.704
2	0.460	15.332	89.036
3	0.329	10.964	100.000

The second dimension includes post-school (vocational-professional, college or university) entrepreneurship education and training:

Statement	Communalities extraction	Component matrix
In my region, the vocational, professional, and continuing education systems provide good and adequate preparation for starting up and growing new firms	0.676	0.822
In my region, colleges and universities provide good and adequate preparation for starting up and growing new firms	0.654	0.809
In my region, the level of business and management education provide good and adequate preparation for starting up and growing new firms	0.756	0.869

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.086	69.538	69.538	2.086	69.538	69.538
2	0.532	17.739	87.277
3	0.382	12.723	100.000

EFC5 Research and development transfer: the extent to which national research and development will lead to new commercial opportunities and whether or not these are available for new, small and growing firms.

Statement	Communalities extraction	Component matrix
In my region, new technology, science, and other knowledge are efficiently transferred from universities and public research centers to new and growing firms	0.529	0.727
In my region, new and growing firms have just as much access to new research and technology as large, established firms	0.524	0.724
In my region, new and growing firms can afford the latest technology	0.449	0.670
In my region, there are adequate government subsidies for new and growing firms to acquire new technology	0.471	0.686
In my region, the science and technology base efficiently supports the creation of world-class new technology-based ventures in at least one area	0.408	0.639
In my region, there is good support available for engineers and scientists to have their ideas commercialized through new and growing firms	0.399	0.632

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.779	46.319	46.319	2.779	46.319	46.319
2	0.960	16.000	62.319
3	0.795	13.253	75.572
4	0.565	9.422	84.995
5	0.501	8.352	93.346
6	0.399	6.654	100.000

EFC6 Commercial, professional infrastructure: the presence of commercial, accounting, and other legal services and institutions that allow or promote the emergence of new, small, or growing businesses.

Statement	Communalities extraction	Component matrix
In my region, there are enough subcontractors, suppliers, and consultants to support new and growing firms	0.413	0.643
In my region, new and growing firms can afford the cost of using subcontractors, suppliers, and consultants	0.519	0.720
In my region, it is easy for new and growing firms to get good subcontractors, suppliers, and consultants	0.690	0.830
In my region, it is easy for new and growing firms to get good, professional legal and accounting services	0.667	0.817
In my region, it is easy for new and growing firms to get good banking services (checking accounts, foreign exchange transactions, letters of credit, and the like)	0.414	0.643

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.703	54.051	54.051	2.703	54.051	54.051
2	0.852	17.050	71.100
3	0.608	12.158	83.258
4	0.514	10.275	93.533
5	0.323	6.467	100.000

EFC7 Internal market openness: The extent to which commercial arrangements undergo constant change and redeployment as new and growing firms compete and replace existing suppliers, subcontractors, and consultants. There are two distinct sub-dimensions to this EFC: market change or dynamisms, that is, the extent to which markets change dramatically from year to year:

Statement	Communalities extraction	Component matrix
In my region, the markets for consumer goods and services change dramatically from year to year	0.905	0.951
In my region, the markets for business-to-business goods and services change dramatically from year to year	0.905	0.951

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	1.810	90.503	90.503	1.810	90.503	90.503
2	0.190	9.497	100.000

The second is market openness, or the extent to which new firms are free to enter existing markets.

Statement	Communalities extraction	Component matrix
In my region, new and growing firms can easily enter new markets	0.660	0.813
In my region, the new and growing firms can afford the cost of market entry	0.710	0.843
In my region, new and growing firms can enter markets without being unfairly blocked by established firms	0.515	0.717

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	1.885	62.848	62.848	1.885	62.848	62.848
2	0.674	22.475	85.323
3	0.440	14.677	100.000

EFC8 Access to physical infrastructure: Ease of access to available physical resources—communication, utilities, transportation, land or space—at a price that does not discriminate against new, small or growing firms.

Statement	Communalities extraction	Component matrix
In my region, the physical infrastructure (roads, utilities, communications, waste disposal) provides good support for new and growing firms	0.393	0.627
In my region, it is not too expensive for a new or growing firm to get good access to communications (phone, Internet, etc.)	0.591	0.769
In my region, a new or growing firm can get good access to communications (telephone, Internet, etc.) in about a week	0.603	0.776
In my region, new and growing firms can afford the cost of basic utilities (gas, water, electricity, sewer)	0.622	0.789
In my region, new or growing firms can get good access to utilities (gas, water, electricity, sewer) in about a month	0.452	0.672

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	2.661	53.226	53.226	2.661	53.226	53.226
2	0.819	16.386	69.612
3	0.648	12.965	82.577
4	0.460	9.196	91.773
5	0.411	8.227	100.000

EFC9 Cultural, social norms: The extent to which existing social and cultural norms encourage, or do not discourage, individual actions that may lead to new ways of conducting business or economic activities and may, in turn, lead to greater dispersion in personal wealth and income.

Statement	Communalities extraction	Component matrix
In my region, the national culture is highly supportive of individual success achieved through own personal efforts	0.538	0.733
In my region, the national culture emphasizes self-sufficiency, autonomy, and personal initiative	0.725	0.851
In my region, the national culture encourages entrepreneurial risk-taking	0.700	0.837
In my region, the national culture encourages creativity and innovativeness	0.625	0.790
In my region, the national culture emphasizes the responsibility that the individual (rather than the collective) has in managing his or her own life	0.437	0.661

Total variance explained

Component	Initial eigenvalues			Extraction sums of squared loadings
	Total	% of variance	Cumulative %	Total	% of variance	Cumulative %
1	3.024	60.486	60.486	3.024	60.486	60.486
2	0.721	14.417	74.902
3	0.663	13.260	88.162
4	0.309	6.171	94.333
5	0.283	5.667	100.000