The Nonlinear Relationship Between Entrepreneurship and Natural Resource Rents

Abstract

To examine a nonlinear relationship between entrepreneurship density and natural resource rents, this study applies the panel-corrected standard errors (PCSE) estimator to a sample of 87 countries over the period of 2006–2016. Estimation results show strong evidence of the nonlinear relationship between the two variables. The influence of entrepreneurship density on natural resource rents is subject to two different regimes. In low- and upper-middle-income countries, an increase in entrepreneurship density increases natural resource rents to a certain level, but it reduces the rents afterwards. In high-income countries, the relationship is reversed. Policymakers should adapt their entrepreneurship policy to prevailing economic circumstances to enhance economic sustainability.

Is Entrepreneurship the Key to Achieving Environmental Sustainability? A Data-Driven Analysis from the Asia-Pacific Region

“…In return, attention has been given to the linkages between entrepreneurship and environmental issues [2,5]. The effects of entrepreneurship on environmental performance could be both positive and negative.…”

“…Furthermore, recent studies have explored the influence of excessive entrepreneurship on natural resource rent [4,5]. Excessive entrepreneurship increases the marginal costs of capital and labor, intensifying competition and reducing profit margins, which leads to a reduction in economic efficiency [59].…”

“…To compete with newly established firms that are relatively more flexible and efficient, incumbent firms may aim at opportunistic rather than productive practices to secure market positions, directing their investments toward low-cost technology and short-term goals [61]. Therefore, excessive entrepreneurship activities can cause natural resource rents [4,5].…”

“…Recent studies indicate that entrepreneurship activities could yield positive environmental outcomes [1,2], yet concerns persist regarding potential negative effects [3][4][5].…”

“…Meanwhile, only a few studies have analyzed the issue of environmental sustainability from an entrepreneurship perspective, such as Dean and McMullen [10], Hall, Daneke and Lenox [12], Pacheco, et al [17], Dhahri and Omri [11], Omri and Afi [13], Nguyen, Kim and Su [5], and most of these studies were conducted for developed countries. (The two exceptional cases here are Dhahri and Omri [11], which examined 20 developing countries, and Omri and Afi [13], which explored 32 developing countries).…”