The geography of new business formation in the Czech Republic: a cross-section analysis (2003-2014)

The intent of this paper is to provide empirical evidence of determinants on new business formation in the Czech Republic’s regions in the period 2003 to 2014. The results suggest that the regions with strong entrepreneurial culture, measured by a high proportion of entrepreneurs in the population, and with a strong presence of foreigners, had higher rates of new business formation. A positive influence of agglomeration economies was observed, and the impact of unemployment was negative. However, the results were not consistent when more advanced legal business forms (especially limited liability and joint-stock companies) had been used in the dependent variable. In this case, human capital was the overriding factor determining regional differences in new business formation rates, while entrepreneurial culture and the presence of foreigners were not significant. Finally, the importance of the industrial structure of regions was confirmed regardless of the dependent variable form.