Explaining differences in entrepreneurs’ ICT use frequency between urban and rural regions

Abstract

We investigate if and how the degree of urbanization of an entrepreneur’s living area influences its ICT use frequency at work. Earlier research has shown that more intensive ICT use by entrepreneurs is associated with stronger entrepreneurial performance. At the regional level this implies that a higher ICT use frequency by the region’s entrepreneurs is associated with stronger regional performance and more scope for regional development. Hence it is important to understand entrepreneurs’ ICT use frequency and the role of regional context. Using survey data for 305 NUTS-2 regions in 35 European countries, and controlling for the regional level of digital infrastructure, we find that ICT use frequency by entrepreneurs is substantially higher in urban areas compared to rural territories. Importantly, when investigating various moderation effects, we also find that the impact of urbanization on entrepreneurs’ ICT use frequency at work is smaller in regions with a higher level of general human capital and/or a higher level of digital infrastructure, that is, the lower ICT use frequency of entrepreneurs living in rural areas can partly be compensated for by higher regional levels of general human capital and digital infrastructure. Moreover, we also identify compensating effects related to entrepreneurs’ characteristics such as age and household’s income level. Policy implications for the economic development of rural areas are discussed.