Entrepreneurship Capital and Economic Performance

Abstract

Die Discussion Papers dienen einer möglichst schnellen Verbreitung von neueren Forschungsarbeiten des ZEW. Die Beiträge liegen in alleiniger Verantwortung der Autoren und stellen nicht notwendigerweise die Meinung des ZEW dar.Discussion Papers are intended to make results of ZEW research promptly available to other economists in order to encourage discussion and suggestions for revisions. The authors are solely responsible for the contents which do not necessarily represent the opinion of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp0276.pdf Entrepreneurship Capital and Economic Performance AbstractThe neoclassical model of the production function, as applied by Robert Solow to build the neoclassical model of growth, linked labor and capital to output. More recently, Romer and others have expanded the model to include measures of knowledge capital. In this paper we introduce a new factor, entrepreneurship capital, and link it to output in the context of a production function model. This paper explains what is meant by entrepreneurship capital and why it should influence economic output. A production function model including several different measures of entrepreneurship capital is then estimated for German regions. The results indicate that entrepreneurship capital is a significant and important factor shaping output and productivity. These results suggest a new direction for policy that focuses on instruments to enhance entrepreneurship capital.

Entrepreneurship, innovation and regional growth: a network theory

“…Knowledge spillovers can be defined as the continuum between pure knowledge spillovers that are uncharged, unintended and not mediated by any market mechanism, and rent spillovers consisting of externalities that are at least partially paid for (Andersson and Ejermo 2005). In general, early incarnations of endogenous growth theory assumed that the spillover process is automatic; however, it is now recognised that it is a process driven by economic agents, in particular entrepreneurs (Audretsch and Keilbach 2004a;Braunerhjelm et al 2010). …”

“…With increasing globalisation, it can be argued that the regional level has become more important than nations in promoting and understanding innovation and economic growth (Storper 1997;Porter 2000;Camagni 2002;Scott and Storper 2003;Krugman 2005). Furthermore, entrepreneurship itself has a pronounced regional dimension, with differences in regional start-up rates, as well as differences in the success of start-ups and entrepreneurial attitudes, all indicating the role of the regional environment in fostering entrepreneurship (Armington and Acs 2002;Audretsch and Keilbach 2004a;Bosma and Schutjens 2011;Davidsson and Wiklund 1997;Fritsch and Mueller 2005;Fritsch and Wyrwich 2014;Huggins and Williams 2011;Mueller 2006;Mueller et al 2008). Regions, therefore, can become 'incubators of new ideas' and provide opportunities for entrepreneurship to take place, as well as for discovering valuable new knowledge (Glaeser 2002;Ikeda 2008;Huggins and Williams 2011).…”

“…Entrepreneurship forms a part of endogenous modes of economic development consisting of activities, investment and systems arising and nurtured within a region, as opposed to being attracted from elsewhere (Audretsch 1995;Audretsch and Keilbach 2004a;Audretsch and Keilbach 2008;Audretsch and Lehmann 2005;Stam 2010;Ghio et al 2014). …”

“…At the same time, it is increasingly suggested that entrepreneurship is also a key source of such growth (Audretsch and Thurik 2001;Audretsch and Keilbach 2004a;2004b;Audretsch et al 2006). Furthermore, alongside these perspectives there is a growing school of thought which suggests that the networks facilitating flows of knowledge within and across regions are a key source of innovation and growth (Huggins and Izushi 2007;Huggins and Johnston 2009).…”

“…The ability of regions to gain from the positive effects of entrepreneurship is likely to more than partly depend on their capability to turn knowledge into regional innovation and growth through the creation and dissemination of knowledge (Audretsch and Keilbach 2004a;2004b;. The innovation systems literature, especially the regional variety, highlights the flow of knowledge across organizations as a crucial factor for effective innovation (Freeman 1987;Lundvall 1995;Cooke 2004;Andersson and Karlsson 2007;Cooke et al 2011;Harris 2011).…”