What's New About the New Economy? Sources of growth in the managed and entrepreneurial economies

The purpose of this paper is to document the fundamental shift that is taking place in OECD countries. This shift is from the managed economy to the entrepreneurial economy. While politicians and policy makers have made a plea for guidance in the era of entrepreneurship, scholars have been slow to respond. This paper attempts to make a first step identifying and articulating these differences. We do this by contrasting the most fundamental elements of the newly emerging entrepreneurial economy with those of the managed economy. We identify fourteen trade-offs confronting these two polar worlds. The common thread throughout these trade-offs is the increased role of new and small enterprises in the entrepreneurial economy. A particular emphasis is placed on changes in economic policy demanded by the entrepreneurial economy vis-?-vis the managed economy.entrepreneurship;Europe;government policy;industrial structure;new economy

Renascent Entrepreneurship

Why should individuals that have exited their firm consider re-entering into entrepreneurship, i.e. become renascent entrepreneurs? According to the logic of economic models of firm dynamics there is no reason to re-enter into entrepreneurship following termination of a previous firm. In contrast, research on nascent entrepreneurship has shown the positive effect of entrepreneurial experience on planning a new firm start. Based on the empirical evidence from a database consisting of ex-entrepreneurs, this study shows that renascent entrepreneurship is a pervasive phenomenon in current society. Especially entrepreneurial human and social capital induce renascent entrepreneurship. In addition, the nature of the firm exit also affects the probability of renascent entrepreneurship.Economics of Entrepreneurship;Entrepreneurial Preferences;Entrepreneurial Skills;Firm Exit;Renascent Entrepreneurship

Technological Regimes, Industrial Demography and the Evolution of Industrial Structures

The purpose of this paper is to weave together the new theories and empirical evidence analyzing firms and industries in motion, or what has been termed as industry demographics. In particular, the links between the technological regime underlying an industry and the observed patterns of industry demography are emphasized. Although a major conclusion of this new literature is that the structure of industries is perhaps better characterized by a high degree of fluidity and turbulence than stability, the patterns of industry demographics vary considerably from industry to industry. And what apparently shapes the evolution of firms particular to a specific industry is, as much as anything else, the knowledge conditions shaping the technological regime underlying that industry

What's New About the New Economy? Sources of growth in the managed and entrepreneurial economies

The purpose of this paper is to document the fundamental shift that is taking place in OECD countries. This shift is from the managed economy to the entrepreneurial economy. While politicians and policy makers have made a plea for guidance in the era of entrepreneurship, scholars have been slow to respond. This paper attempts to make a first step identifying and articulating these differences. We do this by contrasting the most fundamental elements of the newly emerging entrepreneurial economy with those of the managed economy. We identify fourteen trade-offs confronting these two polar worlds. The common thread throughout these trade-offs is the increased role of new and small enterprises in the entrepreneurial economy. A particular emphasis is placed on changes in economic policy demanded by the entrepreneurial economy vis-?-vis the managed economy

Institutions and entrepreneurship quality

Entrepreneurship contributes importantly to the economy. However, differences in the quality and quantity of entrepreneurship vary significantly across developing and developed countries. We use a sample of 70 countries over the period of 2005–2015 to examine how formal and informal institutional dimensions (availability of debt and venture capital, regulatory business environment, entrepreneurial cognition and human capital, corruption, government size, government support) affect the quality and quantity of entrepreneurship between developed and developing countries. Our results demonstrate that institutions are important for both the quality and quantity of entrepreneurship. However, not all institutions play a similar role; rather, there is a dynamic relationship between institutions and economic development

Does Entrepreneurship Reduce Unemployment?

The relationship between unemployment and entrepreneurship has been shrouded with ambiguity. There is assumed to be a two-way causation between changes in the level of entrepreneurship and that of unemployment-- a "Schumpeter" effect of entrepreneurship reducing unemployment and a "refugee" or "shopkeeper" effect of unemployment stimulating entrepreneurship. The purpose of this paper is to try to reconcile the ambiguities found in the relationship between unemployment and entrepreneurship. We do this by introducing a two equation model where changes in unemployment and in the number of business owners are linked to subsequent changes in those variables for a panel of 23 OECD countries over the period 1974-1998. The existence of two distinct and separate relationships between unemployment and entrepreneurship is identified including significant "Schumpeter" and "refugee" effects

Gibrat's Law: are the services different?

Several noted surveys on intra-industry dynamics have recently reached the conclusion from a large body of evidence that Gibrat's Law does not hold. However, almost all of these studies have been based on manufacturing. There are compelling reasons to doubt whether these findings hold for the services. In this paper we examine whether the basic tenet underlying Gibrat's Law - that growth rates are independent of firm size - can be rejected for the services as it has been for manufacturing. Based on a large sample of Dutch firms the evidence suggests that growth rates are, in fact, independent of firm size. Validation of Gibrat's Law in the services suggests that the dynamics of industrial organisation for services may not simply mirror that for manufacturing

Renascent Entrepreneurship

Why should individuals that have exited their firm consider re-entering into entrepreneurship, i.e. become renascent entrepreneurs? According to the logic of economic models of firm dynamics there is no reason to re-enter into entrepreneurship following termination of a previous firm. In contrast, research on nascent entrepreneurship has shown the positive effect of entrepreneurial experience on planning a new firm start. Based on the empirical evidence from a database consisting of ex-entrepreneurs, this study shows that renascent entrepreneurship is a pervasive phenomenon in current society. Especially entrepreneurial human and social capital induce renascent entrepreneurship. In addition, the nature of the firm exit also affects the probability of renascent entrepreneurship

SMEs in Europe 2003

Entrepreneurship and SMEs have emerged as the engine of economic and social development throughout the world. The role of entrepreneurship has changed dramatically and fundamentally, so that it is now seen as a requisite ingredient generating employment, economic growth and international competitiveness in the global economy. The purpose of this report is first to explain why the role of SMEs is crucial for international competitiveness and a strong economic performance in Europe, and then to document the role that SMEs play in Europe. Entrepreneurship and SMEs are related but certainly not identical concepts. Entrepreneurs, for example, are the main drivers of the firm creation process where young and small firms play a role. On the other hand, the entrepreneurial energy of a country, region or industry is often described using phenomena such as firm creation and turbulence (Carree and Thurik, 2003). The impact that SMEs have on economic performance in Europe is explained in Chapter 2. A careful measurement of the structure and role of SMEs is required to understand the different roles that SMEs play and how these roles are evolving throughout Europe. In particular, a measurement of SME activity in Europe provides (in Section 3.1) what the (static) role of SMEs is in Europe, how the role of SMEs varies across specific countries and how it is benchmarked against the other major areas in the world. How the economic role of SMEs has been changing over time is presented in Section 3.2. The way in which the measurement of the structure and role of SMEs is set up hinges on two views: first it attempts to illustrate the theory-based results surveyed in Chapter 2. Second, it is in line with the measurements given in earlier versions of the SME Observatory reports 'SMEs in Europe'. A report about SMEs in Europe would however not be complete if no attention is paid to the current economic setting. The European economy is recovering from an economic downturn. Very little information is available about the roles of SMEs in the business cycle and in particular how do SMEs respond to economic adversity. This issue is dealt with in Chapter 4. Finally a Synthesis is presented in Chapter 5

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