Geographical and Economic Factors Affecting the Spatial Distribution of Micro, Small, and Medium Enterprises: An Empirical Study of The Kujawsko-Pomorskie Region in Poland

Abstract

Micro, small, and medium-sized enterprises (MSMEs) are an essential part of economies at the national, regional, and local levels. Understanding the determinants of the development of this sector is interesting not only for researchers but also for local governments to support the development of this sector. This paper analyses micro, small, and medium enterprises at the gmina (local) level in one region, the Kujawsko-Pomorskie voivodship (NUTS2) in Poland. The authors use multivariate linear regression, spatial econometrics, and classification trees to model the influence of different factors on the number of enterprises relative to population size. The authors found that the most crucial factor in all cases, independently of the method used, is the local government’s revenue from personal income tax per capita. This finding, together with the lack of significance of variables related to the distance to technological parks or economic zones, indicates that the enterprises in the region produce mainly for local consumption and lack innovativeness. The authors also examined the influence of spatial context on the number of enterprises. The most important factor seems to be the percentage of built-up areas, but there are also others, depending on the model type; again, this confirms the local character of the activity of micro, small, and medium enterprises in the region. Variables representing the spatial context can explain the relative number of enterprises with coefficient of determination (R2) between 0.30 and 0.45, which shows that this context played a relatively significant role in the development of the MSME sector in the region. On the other hand, the econometric models (that include the neighborhood) are only significant (improving R2) for medium enterprises, which means that medium enterprises expand their activity beyond the local range.