Infrastructure required, skill needed: Digital entrepreneurship in rural and urban areas

Abstract

In this paper, we study the spatial implications of digital entrepreneurship. Leveraging detailed micro-data on the universe of new venture formations in Germany between 2011 and 2018, we illustrate regional determinants of digital entrepreneurship. Unlike conventional entrepreneurship, digital entrepreneurship demonstrates sustained growth rates throughout this time period, highlighting the policy importance of understanding the drivers of digital ventures’ location choices. The key insight of our study is that digital entrepreneurship requires both digital infrastructure and highly-skilled human capital. If both are present, digital entrepreneurship can flourish in rural areas, even if digital venture formations generally concentrate in urban centers.