Mediating role of research and development on entrepreneurial activities and growth

Abstract

Purpose – The purpose of this paper is to investigate to what extent the level of human development affects the relationships between entrepreneurial activities (EAs) and total factor productivity (TFP). The paper's objectives are threefold. First, it seeks to examine the effect of EA on TFP. Second, it attempts to test for the moderating effect of human development on the relation between EA and TFP, using the generalized methods of moments (GMM), in a panel data across two groups of countries based on their human development index during the period 2000-2008. Third, it tests the causality between TFP, EA, research and development (R&D), unemployment and inflation across countries. Design/methodology/approach – Cross-countries study using a panel GMM for two groups of countries based on their human development index during the period 2000-2008. Findings – Empirical evidence provides that EA have a positive significant relation across countries on TFP in the higher human development levels. The outcomes point toward the role of policies supporting EA as a vital tool to accelerate development and growth via channels such as: better education levels, enhancing R&D, creating more jobs, and stable monetary policy. Research limitations/implications – From the paper limitation is it focusses only on very high human and high human development countries and not studying medium and low-development countries but this limitation is refereed to source of the entrepreneurship data. Practical implications – This paper provides a comparative analysis of the empirical results and presents prospective explanations for the observed relationships between different groups of countries to study the dynamics of change with relative short time series. Originality/value – The study is of value for policy makers of the important relation between levels of development among countries as engine to growth via EA. Moreover, the findings provide a set of policies for governments to undertake tenable actions to accelerate the effectiveness of the institutional setting.

Entrepreneurial Activity in the EU: An Empirical Evaluation of Its Determinants

“…The level of tax rate can attract potential entrepreneurs so that they become self-employed, or it can push workers out of wage jobs and into self-employment. This result is in agreement with our expectations and also with the findings of some studies [25,28,[42][43][44][45][46].…”

“…The tax policy of a country has a major influence on the decision of a person to become entrepreneur, because it can make this activity more or less attractive compared with the wages offered for their work. In accordance with the studies analyzing this indicator [19,25,[42][43][44][45][46], high tax rates lead to lower self-employment, because they are seen as an obstacle for starting new business and lead to a decrease in business activity. Thus, we expect a negative relationship between tax rates and entrepreneurial activity.…”

“…Thus, according to some studies [28,42,47,48] if inflation increases, it can be recorded an increase in business opportunities because higher price levels for products and services can lead to increased expectations of the earnings of entrepreneurs. On the other hand, inflation can discourage entrepreneurship because the business environment is considered riskier, it increases costs for starting a business [19,46], and increases the population's income inequality and reduces the reward entrepreneurship, becoming an obstacle to entrepreneurship [49]. Also, high rates of inflation reduce the access to financial resources of firms due to higher borrowing costs and, thus, reduce the likelihood of entrepreneurship [50].…”

How Digitalization Changes the Internationalization of Entrepreneurial Firms: Theoretical Considerations and Empirical Evidence

“…Some empirical studies (Sayed & Slimane, 2014;Vidal-Suñé & Lopez-Panisello, 2013), show that if the inflation increases, on the market can appear more business opportunities because when the prices of goods and services are higher the expectations of the earnings of entrepreneurs are increasing. On the other hand, inflation can have a negative relationship with entrepreneurship because it increases the costs for creation a new business on the market (Salman, 2014). Therefore, we formulated the following hypothesis:…”

“…Total tax rate (tax) is another important macroeconomic indicator which might affect entrepreneurial activity. Other studies (Djankov, Ganser, McLiesh, Ramalho, & Shleifer, 2010;Salman, 2014;Vidal-Suñé & Lopez-Panisello, 2013) analyzing the tax rate have shown that high tax rates have a negative impact on entrepreneurship because are an obstacle for creating new businesses and can lead to a decrease in business activity. Consequently:…”