New Zealand's regions exhibit marked spatial variations in firm formation, with the urban areas being less entrepreneurial than the rest of the country, when the analysis controls for the varying sizes of regions. This empirical finding reflects differences in industry structures, with a greater presence of firm births in manufacturing industries and business services in more peripheral and less urbanised areas, especially on the South Island of New Zealand. Using the business demographic statistics (BDS) database by Statistics New Zealand we develop a regression model to explain spatial variations in firm formations over the period 2000-2005. The following explanatory factors are found to be of central importance for firm formations in the New Zealand context: concentration, firm size, population, population growth, income growth and specialisation. Implications of the findings for policy makers and politicians in New Zealand are discussed. Copyright (c) 2008 by the Royal Dutch Geographical Society KNAG.