Entrepreneurship in Deprived Urban Communities: The Case of Wales

The potential of entrepreneurial activity for rejuvenating deprived communities has been recognised by policymakers, especially with regard to reducing unemployment. Utilising data from the Global Entrepreneurship Monitor (GEM) in conjunction with the Welsh Index of Multiple Deprivation (WIMD), this study examines the relationship between early stage entrepreneurial activity and entrepreneurial attitudes and attributes, with the different domains of deprivation. It is found that those living in the more deprived urban areas of Wales have a much lower level of entrepreneurial activity. Most domains of deprivation have a negative influence on entrepreneurship, although a lack of services has a positive effect and makes individuals more likely to start a business without the requirement for an existing business community. However, the environment influence disappears as more individual characteristics are accounted for. This implies that whilst entrepreneurship is lower in deprived urban areas, the primary reason for this is the characteristics of those living in these areas, rather than any environmental effects. Controlling for the choice of location, an environmental effect is found to exist, negatively influencing entrepreneurial social capital. This casts doubt on the potential for enterprise to alleviate the deprivation of an area if success is likely to result in out-migration.