Dr Adriaan van Stel, Kozminski University Professor at the Department of Entrepreneurship and Business Ethics points at the urban-rural divide in ICT use among entrepreneurs.
Entrepreneurs differ in how often they use ICT in their work. This is important because a higher intensity of ICT usage at work is associated with better business results. But what determines how often entrepreneurs use smartphones, laptops, digital platforms, and other electronic tools in their daily work?
Our paper focuses on the role of regional contexts and finds that ICT use by entrepreneurs is substantially higher in urban areas compared to rural lands. Moreover, we find that this disadvantage in rural areas can be partly offset by investing in higher-educated populations. This means that regional policymakers in rural areas can foster long-term resilience levels of their regions by attracting higher-educated workers and citizens.
In today’s increasingly digital economies, the frequency with which entrepreneurs use information and communication technologies (ICT) in their daily work is closely linked to productivity, innovation, adaptability, and business performance. Entrepreneurs who frequently use ICT are often better equipped to access information, identify opportunities, communicate with clients, and respond to changing market conditions.
Yet entrepreneurs operate in different environments. Some work in densely populated urban regions characterized by the presence of universities, innovative firms, skilled workers, and extensive professional networks. Others operate in rural territories where such resources, interactions with high-skilled professionals, and learning opportunities may be less accessible. These different regional contexts may matter more than is often assumed.
At first glance, our data already points to a clear urban-rural digital divide: entrepreneurs operating in urban regions and regions with intermediate degrees of urbanization tend to use ICT more intensively in their daily work, whereas rural entrepreneurs are substantially more likely to be non-intensive ICT users.
This is why our study investigates more closely whether these territorial differences help explain variation in entrepreneurs’ ICT use frequency, and which regional conditions may account for these patterns.
We used survey data for almost 5,000 entrepreneurs from 305 regions in 35 European countries, and our econometric analysis confirms that entrepreneurs living in urban regions use ICT more frequently than entrepreneurs operating in rural areas, even after controlling for differences in education, age, sector of economic activity, household income, regional economic development, and access to broadband infrastructure.
Explaining the urban-rural digital divide
So why do entrepreneurs in urban regions use ICT more intensively than rural entrepreneurs? Part of the explanation is relatively straightforward. Urban and rural entrepreneurs often operate in different economic environments and sectors of economic activity. Access to digital infrastructure may also differ substantially between regions. Broadband availability, for example, remains more limited in many rural areas.
However, our study argues that the explanation goes beyond infrastructure alone. A key part of the story lies in the richer entrepreneurial learning environments typically found in urban regions. In the current economy, newly created knowledge is one of the most important sources of entrepreneurial opportunities, innovation, and economic growth. Entrepreneurs frequently identify business potential in ideas, technologies, and other forms of knowledge not yet fully adopted by firms or institutions. Urban regions generally provide more favourable conditions for these processes of entrepreneurial learning and experimentation to occur.
Another important advantage for urban regions lies in the fact that, despite the importance of ICT use, face-to-face interactions remain highly valuable for the transmission of tacit and complex knowledge. Although digital communication technologies are increasingly important, many forms of learning, collaboration, and creativity still benefit from personal contact and informal exchanges. In densely populated urban regions, such interactions occur more naturally and more frequently than in rural areas.
Urban regions also tend to concentrate universities, innovative firms, skilled workers, and professional networks. This increases the likelihood for entrepreneurs to encounter new ideas, technologies, and business practices that may stimulate innovation or encourage the adoption of digital tools. Labour mobility may further reinforce these dynamics. In contrast to rural areas, in urban environments workers move between firms and sectors more frequently, carrying knowledge, skills, and professional experience with them. These flows of knowledge contribute to the growth of dynamic entrepreneurial ecosystems in which innovation opportunities emerge more easily.
Universities and research institutions may also generate ideas and technologies from which local entrepreneurs can benefit. In this sense, urban regions provide a particularly fertile environment for knowledge spillovers and entrepreneurial experimentation. However, simply being located near new ideas and technologies is not sufficient. Entrepreneurs also require what researchers call entrepreneurial absorptive capacity: the ability to recognize, understand, and exploit new knowledge and technologies. We argue that ICT knowledge and digital skills form an important part of this absorptive capacity. Frequent ICT use at work helps entrepreneurs maintain and update these capabilities, allowing them to adapt more effectively to technological and market changes. This perspective also helps explain why urban entrepreneurs may have stronger incentives to maintain intensive ICT use.
In environments characterized by stronger competition, denser professional networks, and more abundant innovation opportunities, staying digitally connected and technologically updated is particularly valuable. By contrast, entrepreneurs in rural regions may operate in less dynamic innovation environments, with fewer opportunities for technological interaction, entrepreneurial learning, and knowledge exchange.
This does not imply that rural entrepreneurs are less capable or less innovative. Rather, it suggests that regional environments in which entrepreneurs operate may shape the incentives and opportunities associated with ICT adoption and use.
Implications for regional development policy
Importantly, our findings suggest that these regional differences in ICT use are not fixed or inevitable. One of the most interesting results of our study is that the digital gap between urban and rural entrepreneurs is smaller for rural areas that have a relatively higher education level of their population. Higher levels of human capital appear to partly compensate for the disadvantages associated with rurality. This finding has potentially important implications for regional development policy: it suggests that strengthening the educational profile and knowledge base of rural regions may contribute not only to regional economic development at large, but also to greater digital inclusion among entrepreneurs.
How might such processes be supported? One possible route is to attract innovative firms, research centers, public institutions, or university-related activities to rural areas. These organizations create high-quality jobs that may attract skilled workers and contribute to more dynamic local entrepreneurial ecosystems. Policymakers can also focus on highly educated individuals who had grown up in rural regions but moved to cities for education or employment opportunities. Some of these individuals may want to return to their home regions if suitable professional opportunities become available there. Improving transport accessibility and digital connectivity may also facilitate such return-migration processes.
Over time, these developments may strengthen local professional networks, stimulate entrepreneurial activity, and foster greater ICT adoption among entrepreneurs. Moreover, as large firms and public organizations often outsource complex tasks, this may generate additional demand for highly skilled freelancers and digital entrepreneurs, producing broader multiplier effects within local economies.
In addition, our findings highlight the importance of broadband infrastructure itself. Regions with better broadband access tend to display higher ICT use among entrepreneurs. Improving digital connectivity therefore remains an important and relatively direct policy tool for reducing the urban-rural digital divide. At the same time, our results suggest that infrastructure alone is unlikely to be sufficient. The broader regional environment, too – including education, knowledge networks, and entrepreneurial ecosystems – plays an important role in shaping how entrepreneurs adopt and use digital technologies.
Overall, our study contributes to a better understanding of how regional environments influence entrepreneurs’ digital behaviour in Europe’s knowledge economy. Digital transformation of entrepreneurship is not only a technological issue but also a regional development challenge. Both human capital and digital infrastructure play an important role in supporting long-term resilience, adaptability, and competitiveness of rural regions.
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The research article is available in Eurasian Business Review: https://doi.org/10.1007/s40821-025-00329-3.
