The Effects of Industrial Structure and Resources upon the Distribution of Fast-growing Small Firms among US Urbanised Areas

Abstract

The organisational structure of a community, especially the local mix of industries and the stock of organisations able to provide resources useful to small firms, affects the community's ability to generate and to sustain small, fast-growing business firms. Several business magazines identify 'top' small public firms annually. This paper uses tobit analysis to compare the number of such firms generated within each of 208 urbanised areas during the 1980s. The number of new 'top' firms in an urbanised area increases with industrial diversity, the extent of growth industries, economic growth, overall economic size and the extent of local venture capital. Urbanised areas with a major university, with a highly-educated population, or with sports organisations also have more 'top' firms. Thus diverse aspects of the community's mix of organisations help to explain the generation and the growth of additional small business organisations.