On the Institutional Foundations of the Varieties of Entrepreneurship in Europe

Abstract

For decades, research into the link between national institutions and entrepreneurship has been characterized by three shortcomings: First, clear-cut concepts of institutions are rare. Second, a parsimonious understanding of how a few core institutions influence entrepreneurship is missing. Third, scholars often ignore that incrementally innovative ventures constitute a distinct (and under-researched) type of entrepreneurship next to the (over-researched) form of radically innovative, highgrowth or high-tech entrepreneurship. This chapter seeks to illustrate how the application of the "Varieties-of-Capitalism" (VoC) reasoning does not only enable focused rather than eclectic analyses of institutional influences on entrepreneurship but also reveals the institutionally induced equifinality of the varieties of entrepreneurship across Europe. These insights invite future entrepreneurship research to move away from the ideology that displays radically innovative entrepreneurship as, by far, the most desirable form of entrepreneurship. This finding also invites policymakers to target entrepreneurial support measures more specifically to their economy's institutional environment. Keywords Entrepreneurship • Varieties-of-Capitalism • National institutions • Institutional complementarities This chapter summarizes some of the core findings of Work Package 5 of the FIRES research project (https://projectfires.eu), which received funding from the European Union's Horizon 2020 research and innovation program under grant agreement No 649378. The theoretical foundations for this work package published earlier in Herrmann (2019) were reiterated-largely verbatim-in Sects. 4.1 and 4.2. While Sects. 4.1 and 4.2 are therefore no original work, the remainder of the chapter is original work to the extent that it provides a systematic overview over how this argument is based on a set of papers that have been published or are under review, in (Dilli et al. 2018; Held et al. 2018; Held et al. 2018a, b; Held 2019). I thank Selin Dilli for comments on earlier drafts of this chapter.

How does cluster location and intellectual capital impact entrepreneurial success within high-growth firms?

“…HGFs are estimated to constitute a small proportion of firms in highly advanced economies (e.g. UK, USA and Sweden) (Schreyer, 2000; Hoffman and Junge, 2006; Bravo Biosca, 2010; Herrmann, 2020; Lee et al ., 2020), and are noteworthy drivers of economic growth, including job creation, innovation and wealth creation (Acs et al ., 2008; BERR, 2008; OECD, 2002; El Hakioui and Louitri, 2020; Cruz et al ., 2020; Pletnev et al ., 2020). Studies of firm-level characteristics of HGFs indicate that they are more likely to be SMEs, younger firms – typically within five years of foundation, vary across industry and economic sector, and that HGFs are more likely to flourish within institutional environments conducive to their cultivation, which include supportive institutional, regional, cultural and regulatory contexts (Phan, 2004; Davidsson and Wiklund, 2006), specifically proper incentivization for innovation and knowledge creation, favourable tax structures, favourable labour market conditions and the ease of entry into the market (Pereira and Temouri, 2018).…”

A Historical Perspective on the Evolution of Finance, Knowledge, and Labor Market Institutions in Europe

“…In the FIRES project, using the Varieties of Capitalism framework, we presented how the different institutional constellations with regard to finance, knowledge, and labor market institutions support different forms of entrepreneurial activity (Dilli et al 2019; also discussed in Elert et al 2019 andHerrmann 2020). This chapter provides a long-term perspective on the historical evolution of such institutions.…”

From ‘Varieties of’ to ‘Variegated’ entrepreneurship: Understanding heterogeneous and interrelated contexts through a Polanyian lens

“…This 'sensible contextualization' (Welter et al, 2019) avoids the extreme relativism that threatens many contextual approaches (Baker & Welter, 2018). FIRES examined institutional factors behind national variations in types of entrepreneurship across 21 countries across Europe and identify a range of policies to increase innovation (Herrmann, 2020). This combined national level statistics and survey data to identify 15 indicators encompassing education level, research and development, employment protection, government support for enterprise, financial regulations and level of investment, levels of protection and reliability of the legal systems to show how distinct national configurations of institutions could be associated with distinct forms of entrepreneurship (Dilli et al, 2018).…”