The Differential Impact of the Internet on Spurring Regional Entrepreneurship

Abstract

This paper studies the effect of the introduction of government–provided Internet technology to rural communities (Internet communities) on regional entrepreneurship. Entrepreneurship increases among larger Internet communities, as the Internet spurs entrepreneurial activities by enabling agglomeration across areas that have a preexisting cluster of real entrepreneurial activities. There is, however, a decrease in entrepreneurship among smaller and more geographically remote Internet communities, as the Internet facilitates the consumption of items and services not produced within such smaller communities. Overall, the key finding is that virtual entrepreneurial clusters are not independent of real entrepreneurial clusters.

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