New firm formation in the USA: corporate structure, venture capital, and local environment*

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Abstract
New firm formation in the USA has been geographically uneven, but little analysis has been undertaken to examine this unevenness. The entrepreneurial environment or climate of places is the set of conditions which help-or hinder-new firm formation. These conditions include aspects of the business community, the cultural and social milieu, actions of government, and the availability of venture capital, which has enormous variations from place to place. A set of statistical analyses of firm formation in the USA from 1978 to 1983 suggests that branch plants inhibit the formation of new manufacturing firms, but spark new service firms. Venture capital and the technological base are part of a supporting climate for firms in high technology sectors. The bottom line is that places vary greatly in their ability to stimulate and nurture new firms.