What Is The Most Entrepreneurial Place In America?
What is the most entrepreneurial place in America? Many have longed to claim this mantle, but we now know the answer: the American West.
For the first time, researchers have mapped America’s entrepreneurial spirit. They found the most entrepreneurial states and cities in America, while also showing how their personalities and traits actually lead to the creation of more businesses and opportunity. In today’s economy, entrepreneurship is absolutely central to growth and renewal, not to mention innovation and job creation. There are enormous spillover benefits to society, mobility, and culture too. For these reasons, this study’s findings are worth a close look, not to mention much further study.
The report’s authors are a diverse lot, drawn from universities in Texas and Germany alongside a researcher from Massachusetts. They pursued this work because economists and social scientists know surprisingly little about where to find entrepreneurial traits in our states and cities or even how they inform the surrounding region—we just know it when we see it. Starting with the hypothesis that the entrepreneurial spirit varies significantly from place to place—with a resulting impact on entrepreneurial activity— the researchers compared a data-set of 619,397 U.S. residents and their personalities with statistics from Kauffman, the U.S. Census, and the Small Business Foundation of Michigan.
Their first finding was that entrepreneurial personality traits were indeed linked to entrepreneurial activity. Successful entrepreneurs were found to be more socially engaged, creative, and capable of handling stress. That’s not all though—they were more likely to be neurotic too.
They also confirmed that entrepreneurial types are geographically clustered, with the highest concentrations existing in the American West and parts of the South. Colorado came out on top among all the states, with Utah, Nevada, and Arizona following closely behind. In a surprising twist, the District of Columbia actually ranked No. 1 if counted as a state. The areas with the least concentrations were found in the Rust Belt and East South Central states, with Mississippi, Indiana, and Ohio falling behind.
Some American cities clearly came out ahead as well. The residents of Miami and Seattle had the highest fit with the profile of an entrepreneur. Shockingly, Boston and New York City brought up the rear among the 15 largest metro areas. It must be noted though that the correlation between personality and entrepreneurial activity was a little weaker at the metro level than at the state level.
These findings may, first of all, tell us a lot about why some countries are more entrepreneurial than others. Applying this same study to other countries would allow us to see where the entrepreneurial spirit exists across the world.
Moreover, this work helps us know why some regions in America seem to be persistently more entrepreneurial than others over time. It turns out that a large part of these differences may be due to how the residents of particular states and cities have been socialized. Selective migration led to a particular gene pool that passed on entrepreneurial traits, which was then reinforced by and spread through society to others. More “entrepreneurial” early settlers took a risk and ventured from the East (or Asia) into the West. The Rust Belt, on the other hand, attracted non-entrepreneurial workers for orderly, structured labor in mass production. In these regions, residents were socialized through their work as well as their related values and norms. That, at least, is the thinking of the report’s authors.
What about regional business conditions, you ask? Doesn’t infrastructure, access to capital, or the legal and regulatory environment matter for a state or city’s entrepreneurial vitality? Come to find out, the answer is a definitive “yes”—these factors, according to the report’s authors, “have a stronger effect on entrepreneurial vitality within a region when more entrepreneurs are there.”
In thinking through these findings, it seems that three areas are worth looking into further:
- How can a state or city with large reserves of entrepreneurial spirit encourage others into also being entrepreneurial? How to do the same in a place with few such reserves?
- Can we see what other spillovers may occur—societally, politically, and economically—from a preponderance of entrepreneurial traits?
- Where might we find latent potential in particular states or cities, where perception, attitudes, skills, and networks with regard to entrepreneurship could translate into entrepreneurship with the right ingredients in place (such as access to capital, labor, and the necessary infrastructure)?
Finding such a close connection between the entrepreneurial spirit and economic activity in very particular areas of the country should directly inform the thinking of policymakers and planners as they look to foster economic growth and job creation. For those states and cities that fall behind in this study’s rankings, it’s worth realizing that there aren’t overnight changes that can be implemented to change these situations. It’s a matter of fostering a society that welcomes and encourages entrepreneurship, not to mention a broader business environment that does the same. It’s worth pointing out too that this study only further makes the case for a continued focus on human capital formation for the long-term health and vitality of every state and city in America.
America’s entrepreneurial spirit remains strong and widespread—that should give us all the more reason to foster it in the years ahead.