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AbstractUrban residential neighbourhoods in the Netherlands increasingly function as incubation zones for small‐scale businesses. Despite this development, little is known about whether and how the local production environment in these neighbourhoods shapes firm mobility behaviour. This article studies how two aspects of the local production environment — the built neighbourhood environment and zoning regulations — affect firm mobility of small‐scale businesses in urban residential neighbourhoods. To achieve this aim, we contrast two sets of urban neighbourhoods, pre‐ and post‐second world war neighbourhoods with a comparable low socio‐economic profile, but with distinct built environments and zoning regulations. We combine quantitative and qualitative methods to analyse available trade register data from the Dutch regional Chambers of Commerce, study neighbourhood zoning regulations, and conduct focus‐group and individual interviews with neighbourhood experts and entrepreneurs. The local built environment and its regulations appear to have a small but significant effect on the firm mobility behaviour of entrepreneurs in the neighbourhoods studied. Relocation intentions are higher among entrepreneurs in post‐war than in pre‐war neighbourhoods, which may (in part) be attributed to less favourable local institutional settings for businesses, but actual firm mobility does not differ between these neighbourhoods.

As a result of economic transitions and several societal developments over the past 50 years, residential neighbourhoods have developed from being places where people predominantly live into places where people also work. A growing number of small- and medium-sized firms are located in residential neighbourhoods, many of which are home-based. Triggered by relatively high levels of turbulence in residential neighbourhoods and inter-locality variation in firm survival, firm growth and firm relocation, this study concerned whether and how neighbourhood characteristics influence the success of local firms and the strategic options of their entrepreneurs. The research demonstrates that some 'neighbourhood effects' on firm success and strategy do exist, especially for the growing group of solo entrepreneurs and firms in locally-oriented sectors. In particular the social context in which entrepreneurs are embedded matters, as cohesive neighbourhoods trigger both firm growth and entrepreneurial investments. Furthermore, the accumulation of liveability-related problems in disadvantaged neighbourhoods seems to contribute to an unfavourable business climate