Northerners more successful entrepreneurs, study finds

Management - News

Thursday, 01 May 2008

There are fewer entrepreneurs in the North of England but they are more successful than their Southern counterparts according to new research.

The study was conducted by Hull University Business School, Cranfield School of Management and the University of St Andrews.

It shows that 23 per cent of men and 11 per cent of women are self-employed in the South, compared with 17 per cent of men and 8 per cent women in the North.

Despite being fewer in number, Northern entrepreneurs perform better as indicated by how many employees a self-employed person has.

In the South each self-employed male has on average 2.65 people working for him, females in the South create an average of 3.08 further jobs.

Self-employed men in the North create an average of 3.53 jobs, 3.48 for Northern women.

This is not the case with self-employed females in Greater London however, each self-employed female in London creates on average a further 7.82 jobs.

The overall findings seem at odds with the well established North-South divide where the South has better economic performance, lower unemployment and higher gross domestic product per capita.

The team of economics experts – Professor Burke of Cranfield School of Management, Professor FitzRoy of St Andrews University and Dr Nolan of Hull University Business School – investigated possible reasons behind the self-employment gap.

They found it may be due to structural factors rather than any differences in personality traits between Northerners and Southerners.

Education seemed to play a part amongst males in the South. More attain a first degree (16 per cent compared with 10 per cent) and there is a negative link between higher education and the probability of self-employment.

This may be due to better employment opportunities for relatively well educated men in the South.

Less well-educated males in the South may be pushed to self-employment due to being at a relative disadvantage in the labour market.

The job market in the North, with fewer job opportunities for relatively-well educated men, may have an effect pushing well-educated individuals into self-employment.

Self-employment is associated with lower ability and motivation among southern males. The same is not true, however, when it comes to self-employed females.

Whilst females in the South are also more highly educated than those in the North, there is little evidence that academic qualifications have an impact on probability of women becoming self-employed.

Dr Michael Nolan of the Centre for Economic Policy at Hull University Business School, said that the findings were sufficiently different between North and South England as to require corresponding regional variation in enterprise policy, particularly regarding education and finance.

“The North-South economic divide is not merely a traditional industrial phenomenon but a hallmark of self-employment too,” he added.

Professor Andrew Burke, founding director of the Bettany Centre for Entrepreneurial Performance & Economics at Cranfield School of Management, believes there has always been a worry among policy makers that the North permanently lags behind the South in terms of economic performance.

“Since entrepreneurship is usually mooted as means through which less developed regions can catch–up, our research results are encouraging as they appear to indicate that this process is indeed taking place in the North of England,” he concluded.