A Note on Entrepreneurship, Small Business and Economic Growth

The aim of the present short paper is to show that since the 1970s the world has changed considerably, and that this change has had consequences for the current policy debate on the determinants of economic growth. Our paper deals with some aspects of the recent scientific literature on the relation between entrepreneurship and small business, on the one hand, and economic growth, on the other. In particular, it gives a summary of some work of the EIM/CASBEC research group in the Netherlands. It refers to scientific analyses showing that countries that are lagging behind in the process of restructuring will pay a penalty in terms of forgone growth. It also pays attention to the Global Entrepreneurship Monitor (GEM), a new and large multinational project focusing on the collection and analysis of internationally comparable data on the rate of entrepreneurial activity.entrepreneurship;growth;economic development;market structure;small firms

Uncertainty Avoidance and the Rate of Business Ownership Across 21 OECD Countries, 1976-2004

Persistent differences in the level of business ownership across countries have attracted the attention of scientific as well as political debate. Cultural as well as economic influences are assumed to play a role. This paper deals with the influence of cultural attitudes towards uncertainty on the rate of business ownership across 21 OECD countries. First, the concepts of uncertainty and risk are elaborated, as well as their relevance for entrepreneurship. An occupational choice model is introduced to underpin our reasoning at the macro-level. Second, regression analysis using pooled macro data for 1976, 1990 and 2004 and controlling for several economic variables, yields evidence that uncertainty avoidance is positively correlated with the prevalence of business ownership. According to our model, a restrictive climate of large organizations in high uncertainty avoidance countries pushes individuals striving for autonomy towards self-employment. Regressions for these three years separately show that in 2004, this positive correlation is no longer found, indicating that a compensating pull of entrepreneurship in countries with low uncertainty avoidance may have gained momentum in recent years. Third, an interaction term between uncertainty avoidance and GDP per capita in the pooled panel regressions shows that the historical negative relationship between GDP per capita and the level of business ownership is substantially weaker for countries with lower uncertainty avoidance. This suggests that rising opportunity costs of self-employment play a less important role in this cultural environment, or are being compensated by increasing entrepreneurial opportunities.Entrepreneurship;Business Ownership;Comparative Analysis of Economies;Cross Country Study;Cultural Economics;Uncertainty Avoidance

A Note on Entrepreneurship, Small Business and Economic Growth

The aim of the present short paper is to show that since the 1970s the world has changed considerably, and that this change has had consequences for the current policy debate on the determinants of economic growth. Our paper deals with some aspects of the recent scientific literature on the relation between entrepreneurship and small business, on the one hand, and economic growth, on the other. In particular, it gives a summary of some work of the EIM/CASBEC research group in the Netherlands. It refers to scientific analyses showing that countries that are lagging behind in the process of restructuring will pay a penalty in terms of forgone growth. It also pays attention to the Global Entrepreneurship Monitor (GEM), a new and large multinational project focusing on the collection and analysis of internationally comparable data on the rate of entrepreneurial activity

Entrepreneurship at Country Level: Economic and Non-Economic Determinants

Deze studie beziet ondernemerschap als het werken voor eigen rekening en risico. Macro-economisch kan het worden gemeten als het percentage zelfstandige ondernemers in de beroepsbevolking of als het percentage starters. Deze kengetallen verschillen tussen landen en veranderen ook in de tijd. Na een lange periode van neergang is er nu een comeback van het zelfstandig ondernemerschap. Voor doeltreffend beleid moeten we weten welke determinanten inwerken op het ondernemerschap. Na een veldverkenning middels historische case studies, wordt een multidisciplinair verklaringskader voor de prevalentie van het zelfstandig ondernemerschap op landenniveau gepresenteerd. Dit kader verbindt drie analyseniveaus met elkaar. Technologische, economische en maatschappelijke krachten werken in op de individuele beroepskeuze voor ondernemerschap, terwijl de behaalde bedrijfsresultaten leiden tot leereffecten en de vorming van rolmodellen. Enkele empirische onderzoekingen die zijn uitgevoerd tegen de achtergrond van dit denkmodel laten zien hoe demografische ontwikkelingen, cultuur en instituties de mate van ondernemerschap beïnvloeden. Voorts is er een negatief dan wel U-vormig verband met het niveau van economische ontwikkeling. Tenslotte zijn er aanwijzingen voor een positieve invloed op het zelfstandig ondernemerschap van structurele trends zoals deregulering, de ICT-revolutie en de opkomst van een netwerkeconomie.Occupational entrepreneurship refers to individuals owning and managing a business for their own account and risk. This book investigates the rate of occupational entrepreneurship at country level, either measured by the number of business owners as a percentage of the labor force, or by some metric of the dynamics of entrepreneurship such as 'nascent entrepreneurship' and business start-ups. The rate of entrepreneurship differs widely across countries and over time. It is important to know more about the causes of this variety. An exploration of the field through historical case studies sets the stage for a multidisciplinary framework for explaining the rate of entrepreneurship. Based upon several strands of literature, this framework is built around an occupational choice model while linking the individual, the firm and the aggregate level. Technological, economic, demographic, cultural and institutional factors act as entrepreneurial framework conditions. In addition, feedback mechanisms are elaborated. Empirical investigations carried out against the background of this framework show how various demographic, social, cultural and institutional characteristics affect the rate of entrepreneurship. In addition, either a negative or a U-shaped influence of the level of economic development is found, while dummy variables for recent decades suggest a positive impact of global trends such as the ICT revolution, deregulation and the onset of a ‘network economy’

Entrepreneurship and economic performance: a macro perspective

The present paper provides a theoretical framework of the relationship between rate of entrepreneurship and n ational economic performance. The first part deals with some aspects of the recent economics literature on the relation between entrepreneurship and small business, on the one hand, and economic growth, on the other. In particular, it gives a summary of some work of the EIM/CASBEC research group in the Netherlands. In the second part a framework is presented linking entrepreneurship and growth at different levels of aggregation. The last part of the paper illustrates the framework with some historical case studies. The present paper supplements Wennekers, Uhlaner and Thurik (2002) which is concerned with the causes of the rate of entrepreneurship

Entrepreneurship and its Conditions: a Macro Perspective

The rate of entrepreneurship, a multidimensional concept including both the percentage of existing business owners in the labor force as well as the start-up rate of new enterprises, varies substantially across countries and over periods of time. Data for several modern Western nations including the United States, the United Kingdom and the Netherlands suggest a U-shaped recovery in rate of entrepreneurship (as measured by business ownership) toward the end of the 20th century. However, the timing, pattern and extent of this recovery vary substantially across nations. The reasons for this large variation in rate of entrepreneurship across time and by country are by no means straightforward. This paper provides a framework explaining the causes of the variation in rate of entrepreneurship across countries. The last part of the paper illustrates the framework with two historical case studies: the Dutch Golden Age of the 17th century and Britain’s First Industrial Revolution (1760-1830). The approach taken is eclectic, integrating various research streams in the social sciences. Policy implications are also proposed

An Eclectic Theory of Entrepreneurship: Policies, Institutions and Culture

The level of entrepreneurship differs considerably across countries and periods. Both the causes and consequences of entrepreneurship are a matter of extensive scientific debate as well as of great policy importance. A high level of entrepreneurial activity is assumed and shown to contribute to innovative activities, competition, economic growth and job creation. The present paper deals with the determinants of entrepreneurship. An eclectic theory of entrepreneurship is introduced. This eclectic theory provides an integrated framework, drawing on disparate strands of literature, to create a better understanding of the different role that entrepreneurship plays in different countries and time periods. This framework is designed to guide future empirical research in this area and to provide insights for policymakers striving to promote entrepreneurship

From nascent to actual entrepreneurship: the effect of entry barriers

This exploratory study focuses on the conversion from nascent to actual entrepreneurship and the role of entry barriers in this process. Using data for a sample of countries participating in the Global Entrepreneurship Monitor between 2002 and 2004, we estimate a twoequation model explaining the nascent entrepreneurship rate and the young business entrepreneurship rate, while taking into account the interrelationship between the two variables (i.e. the conversion). Furthermore various determinants of entrepreneurship reflecting the demand and supply side of entrepreneurship as well as government intervention are incorporated in the model. We find evidence for a strong conversion effect from nascent to actual entrepreneurship. We also find positive effects on entrepreneurial activity rates of labour flexibility and tertiary enrollment and a negative effect of social security expenditure. Concerning the effect of entry regulations we find mixed results. Using one set of entry regulation measures we find no effects whereas using data from a second source we find a weak negative effect of more burdensome entry regulations on the rate of entrepreneurship

Business Ownership and Economic Growth in 23 OECD Countries

In the present paper we address the relationship between the extent of business ownership (self-employment) and economic development. We will focus upon three issues. First, how is the equilibrium rate of business ownership related to the stage of economic development? Second, what is the speed of convergence towards the equilibrium rate when the rate of business ownership is out-of-equilibrium? Third, to what extent does deviating from the equilibrium rate of business ownership lead to less economic growth? Hypotheses concerning all three issues are formulated setting up a new two-equation model. We find confirmation for the hypothesised effects using a data panel of 23 OECD countries. An important policy implication of our exercises is that low barriers to entry and exit of self-employed/businesses are necessary conditions for the equilibrium seeking mechanisms that are vital for a sound economic development

Self-Employment Across 15 European Countries:

This paper deals with differences in the rate of self-employment (business ownership) in 15 European countries for the period 1978-2000, focusing on the influence of dissatisfaction and using the framework of occupational choice. Using two different measures of dissatisfaction, in addition to the level of economic development, the unemployment rate and income differentials, we find that dissatisfaction at the level of societies is the most significant factor for explaining differences in self-employment levels. Dissatisfaction with life and with the way democracy works are both found to be positively related to self-employment. It is concluded that these are proxies for job dissatisfaction and at the same time represent other negative ‘displacements’ known to promote self-employment