Entrepreneurship, Information, and Growth

Abstract

We examine the contribution to economic growth of entrepreneurial “marketplace information” within a regional endogenous growth framework. Entrepreneurs are posited to provide an input to economic growth through the information revealed by their successes and failures. We empirically identify this information source with the regional variation in establishment births and deaths, which create geographic information asymmetries that influence subsequent entrepreneurial activity and economic growth. We find that local establishment birth and death rates are significantly and positively correlated with subsequent entrepreneurship for US counties. To account for the potential endogeneity caused by forward-looking entrepreneurs, we utilize instruments based on historic mining activity. We find that the information spillover component of local establishment birth and death rates have significant positive effects on subsequent entrepreneurship and employment growth for US counties and metropolitan areas. With the help of these intruments, we show that establishment births have a positive and significant effect on future employment growth within all counties, and that in line with the information hypothesis, local establishment death rates have a similar positive effect within metropolitan counties.

Fueling Job Engines: Impacts of Small Business Loans on Establishment Births in Metropolitan and Nonmetro Counties

“…Like Bunten et al (), we include industry mix job growth to measure local demand shocks. Derived from the shift‐share model, the demand shock D i is the sum of each county's initial industry shares s ij , multiplied by its respective national growth rate for the period 2000–2007 G j : D i =∑ j G j * s ji .…”

“…The theoretical framework that follows extends the model developed by Bunten et al (2015). Similar to Stephens, Partridge, and Faggian (2013), they describe labor market dynamics in the context of an endogenous growth model.…”

Economic growth through entrepreneurship: Determinants of self‐employed income across regional economies

“…Future research could also include a better accounting for the motivation for self‐employment, by for example better determining whether individuals are drawn into self‐employment through opportunities or necessity. In this regard, Bunten et al () used business deaths and establishments to assess the impact of entrepreneurs on regional economies.…”

“…Prior U.S. entrepreneurial research has focused on regional growth in the number of self‐employed individuals rather than self‐employment income (Edmiston, ; Gallardo & Scammahorn, ; Henderson, ; Low & Weiler, ; Van Praag & Versloot, ), or on the relationship between the number of self‐employed individuals and various measures of regional economic activity (Acs, ; Bunten, Weiler, Thompson, & Zahran, ; Fleming & Goetz, ; Glaeser & Kerr, ; Low, ; McGranahan, Wojan, & Lambert, ). However, if entrepreneurs earn less than their salaried employment alternatives, increased entrepreneurship may not be an efficient regional development strategy.…”

Where Are the Women Entrepreneurs? Business Ownership Growth by Gender Across the American Urban Landscape

“…Previous studies of entrepreneurship in the microeconomic literature indicate that there are systematic differences between men and women business owners and those differences likely have implications for their respective local entrepreneurial activity. Women use processes different from men to identify opportunities (DeTienne and Chandler ) and make systematically different workforce management choices (Matsa and Miller ). Women entrepreneurs generally have less work experience in business and management, but more formal education than their male counterparts (Cowling and Taylor ).…”