DISSERTATION NEW BUSINESS FORMATION in NORTHERN COLORADO – a TIME-SERIES CROSS-SECTIONAL ANALYSIS Submitted by Henrique Barre
Total Page:16
File Type:pdf, Size:1020Kb
DISSERTATION NEW BUSINESS FORMATION IN NORTHERN COLORADO – A TIME-SERIES CROSS-SECTIONAL ANALYSIS Submitted by Henrique Barreto School of Education In partial fulfillment of the requirements For the Degree of Doctor of Philosophy Colorado State University Fort Collins, Colorado Spring 2011 Doctoral Committee: Advisor: Carole Makela Co-Advisor: John Grant Rich Feller James Folkestad Raymond Hogler Copyright by Henrique Barreto, 2011 All Rights Reserved ABSTRACT NEW BUSINESS FORMATION IN NORTHERN COLORADO – A TIME-SERIES CROSS-SECTIONAL ANALYSIS This research represents an effort to fill a specific gap in new business formation studies: a study of neighboring variations in new business formation in small-to-medium size cities such as Fort Collins, Greeley and Loveland, Colorado. Specifically, this research explores eleven cities-wide factors as determinants of new business formation for 1998-2008. Four different time-series cross-sectional models of new business formation and location of new single establishment businesses for four industry sectors are produced, plus all industrial sectors combined. A comprehensive annotated bibliography of empirical and non-empirical based studies is part of this dissertation. There are three main reasons to include a bibliography. The first reason is to fill another gap in the literature, as it appears that no new business formation annotated bibliography has been produced; the second reason is to give readers a one-stop source of citations with information to look up the material, if interested. This annotated bibliography allows the reader to compare one or more citations by 1) full citation, 2) objectives, 3) ii methodology, 4) dependent variables, 5) independent variables, and 6) results. The third reason is to provide the basis for the validity of the research to this researcher and serve as an opportunity to develop greater skill as a literature reviewer and article appraiser. This dissertation research explores 11 predictors judged to exert influence on new business formation in Northern Colorado. The obtainable and significant variables (based on the literature) are studied. New business formation is central to economic growth and development. New businesses bring industry diversity and job growth to a region and are a major engine for economic growth. Research has shown a positive relationship between levels of entrepreneurial activity and economic growth across a myriad of countries. Among many significant findings, the following stand out when described by industrial sector and time lag: In the retail industrial sector, one year lag: the data show a positive and significant relationship with average age of population, percentage of population (ages 15 to 24), average per capita income, percentage of females in the population, and percentage of Whites in the population; a negative and significant impact of percentage of population (25 to 64), average housing price, percentage of households with income less than $100,000 per year, percentage of Hispanics in population, cubic root of total population, and cubic root of unemployment rate. In the manufacturing industrial sector, one year lag: the data show a positive and significant impact of average age of population, percentage of iii population (15 to 24), percentage of population (25 to 64), percentage of households with income less than $100,000 per year, percentage of Hispanics in population, percentage of Whites in population, and cubic root of unemployment rate; negative and significant impact of average housing price, average per capita income, percentage of females in the population, and cubic root of total population. In the distributive industrial sector, two year lag: the data show a positive and significant impact of percentage of population (15 to 24), average per capita income, percentage of households with income less than $100,000 per year, percentage of females in the population, and percentage of Whites in the population; negative and significant impact of average housing price, cubic root of total population, and cubic root of unemployment rate. In the service industrial sector, two year lag: the data show a positive and significant impact of average age of population, percentage of population (25 to 64), percentage of females in the population, percentage of Hispanics in population, and percentage of Whites in the population; negative and significant impact of percentage of population (15 to 24), average housing price, average per capita income, percentage of households with income less than $100,000 per year, cubic root of total population, and cubic root of unemployment rate. In all industrial sectors, one and two year lags: the data show a positive and significant impact of average age of population, percentage of population (15 to 24), percentage of population (25 to 64), percentage of Hispanics in population, and percentage of Whites in the population (one year lag); negative iv and significant impact of average housing price, average per capita income, percentage of households with income less than $100,000 per year, percentage of females in the population, cubic root of total population, and cubic root of unemployment rate (one-year lag); a positive and significant impact of average age of population, percentage of population (25 to 64), percentage of females in the population, percentage of Hispanics in population, and percentage of Whites in the population (two-year lag); negative and significant impact of percentage of population (25 to 64), average housing price, average per capita income, percentage of households with income less than $100,000 per year, cubic root of total population, and cubic root of unemployment rate (two-year lag). The results are of practical significance to policy makers, economists, and would-be entrepreneurs for the purpose of new business formation policies and economic growth. Research studies deserving exploration include investigating the high level of spatial autocorrelation found in the analysis, refining the industrial sectors into more specific business categories (lowering sector levels), adding more variables to the models, and comparing these results to other cities of similar attributes. v ACKNOWLEDGEMENTS I am indebted to my committee members who have provided much helpful advice as I journeyed toward my goal. Thank you Dr. Carole Makela, Dr. John Grant, Dr. Raymond Hogler, Dr. Folkestad, Dr. Rich Feller, Dr. Jerry Gilley, and Dr. Dennis Cole! I would like to thank Dr. Grant for being a role model on proactive and progressive business practices and for not giving up on me. I welcome and thank Dr. Hogler for accepting to serve as the outside committee member just a few months ago. I also would like to thank Dr. Folkestad for his encouragement and all his work on the EDUC-331 classes! I am also thankful to Dr. Feller for agreeing to be part of the committee and for his insight into the need for an entrepreneurial society. I thank Dr. Gilley for “down to earth” advice and “kicks in the pants” to get me to complete this project. I thank you Dr. Cole for expressing the desire to use the findings of this research to bring new businesses to his own hometown. And to all: Thank you for your support, friendship, and the vast knowledge you have imparted to me. As I pass on the knowledge to others, your names, reputation, and wisdom will live indefinitely. A special thank you goes to Dr. Makela – I will always be indebted to her for her stable and continuing professional and character support. She has not vi only been my (outstanding) principal (plus methodologist) advisor, but also my editor and a friend. I simply will never be able to thank you enough… I also thank you my spouse, Christine, and my daughter Alisa, for their willingness to endure my focus on this project and unending support. Christine read and reread drafts, thus making the words much better. She kept my body and soul nourished and reminded my of my topic when I could no longer remember it. She did many extra chores around the house and provided strong shoulders for me to lean on when the journey seemed long and arduous. She is a fantastic person in many ways – thank you and my love to you! To my daughter Alisa, although you are still too young to understand the full implications of this journey, I want to apologize and thank you. I want to apologize for missing so many moments with you and I hope I can make them up to you, now that this phase of my professional life is over. I also want to thank you for being the special person you already are. I am always proud of you and forever you will be daddy’s girl. I love you so. Many friends also gave me endless encouragement and much assistance. There are so many of them… I also thank you very much and I hope that if you ever need support, I will be as capable, loving, and understanding as you have been to me during these years. … and I really look forward to the rest of my academic journey – it will be great! Henrique Barreto vii DEDICATION I dedicate this dissertation to three special people: my daughter Alisa, my spouse Christine, and my advisor Dr. Makela. These pages would be blank without them. viii TABLE OF CONTENTS ABSTRACT ...........................................................................................................ii ACKNOWLEDGEMENTS.....................................................................................vi DEDICATION .....................................................................................................viii