Sander Wennekers

Linking Entrepreneurship and Economic Growth

In the 1980s stagflation and high unemployment caused a renewed interest in supply side economics and in factors determining economic growth. Simultaneously, the 1980s and 1990s have seen a reevaluation of the role of small firms and a renewed attention for entrepreneurship. The goal of this survey is to synthesize disparate strands of literature to link entrepreneurship to economic growth. This will be done by investigating the relationship between entrepreneurship and economic growth using elements of various fields: historical views on entrepreneurship, macro-economic growth theory, industrial economics (Porters competitive advantage of nations), evolutionary economics, history of economic growth (rise and fall of nations) and the management literature on large corporate organizations. Understanding the role of entrepreneurship in the process of economic growth requires the decomposition of the concept of entrepreneurship. A first part of our synthesis is to contribute to the understanding of the dimensions involved, while paying attention to the level of analysis (individual, firm and aggregate level). A second part is to gain insight in the causal links between these entrepreneurial dimensions and economic growth. A third part is to make suggestions for future empirical research into the relationship between (dimensions of) entrepreneurship and economic growth.

Economic Development and business Ownership: An Analysis Using Data of 23 OECD Countries in the Period 1976-1996

In the present paper we address the relationship between business ownership and economic development. We will focus upon three issues. First, how is the equilibrium rate of business ownership related to the stage of economic development? Second, what is the speed of convergence towards the equilibrium rate when the rate of business ownership is out-of-equilibrium? Third, to what extent does deviating from the equilibrium rate of business ownership hamper economic growth? Hypotheses concerning all three issues are formulated in the framework of a new two-equation model. We find confirmation for the hypothesized economic growth penalty on deviations from the equilibrium rate of business ownership using a data panel of 23 OECD countries. An important policy implication of our exercises is that low barriers to entry and exit of businesses are necessary conditions for the equilibrium seeking mechanisms that are vital for a sound economic development.

An Eclectic Theory of Entrepreneurship: Policies, Institutions and Culture

The level of entrepreneurship differs considerably across countries and periods. Both thecauses and consequences of entrepreneurship are a matter of extensive scientific debate aswell as of great policy importance. A high level of entrepreneurial activity is assumed andshown to contribute to innovative activities, competition, economic growth and job creation.The present paper deals with the determinants of entrepreneurship. An eclectic theory ofentrepreneurship is introduced. This eclectic theory provides an integrated framework,drawing on disparate strands of literature, to create a better understanding of the different rolethat entrepreneurship plays in different countries and time periods. This framework isdesigned to guide future empirical research in this area and to provide insights forpolicymakers striving to promote entrepreneurship.

Entrepreneurship, small business and economic growth

Looks at the relationship between small business and entrepreneurship and also the differences between the two. Stresses that both are important separately and, in addition, notes where they overlap. Posits that in the early part of the last century small businesses were both vehicles for entrepreneurship and sources of employment and income but, although still important in the post‐war years, large firms made great inroads in the 1960s and 1970s. Concludes that government’s central role in entrepreneurialism for the economy is, by its very nature, enabling. Furthermore, entrepreneurship is acknowledged as a driver for economic growth, competitiveness and job creation.

The Role of Dissatisfaction and per Capita Income in Explaining Self‐Employment across 15 European Countries

This article deals with explaining the sizable differences in the rate of self–employment (business ownership) across 15 European countries in the period 1978–2000, within a framework of occupational choice, focusing on the influence of dissatisfaction and of per capita income. Using two different measures of dissatisfaction, in addition to the level of economic development and controlling for several other variables, we find that, in addition to a negative and significant impact of per capita income, dissatisfaction at the level of societies has a positive and significant influence on self–employment levels. Both dissatisfaction with life and dissatisfaction with the way democracy works are found to influence self–employment. It is concluded that these are proxies for job dissatisfaction and at the same time represent other negative “displacements” known to promote self–employment. The findings indirectly point at the potential importance of push factors within the incentive structures of modern economies.

The relationship between economic development and business ownership revisited

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the ‘equilibrium’ rate of business ownership play a central role in determining both the growth of business ownership and that of economic development. Two extensions of the original set-up are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the ‘equilibrium’ rate and we allow for different penalties for being above or under the ‘equilibrium’ rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped ‘equilibrium’ relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not for having too many.

Entrepreneurial Behavior in Organizations: Does Job Design Matter?

We take a first step to explore how organizational factors influence individual entrepreneurial behavior at work, by investigating the role of job design variables. Drawing on multiple–source survey data of 179 workers in a Dutch research and consultancy organization, we find that entrepreneurial behavior, indicated by innovation, proactivity, and risk–taking items, is a higher order construct. Job autonomy is positively related with entrepreneurial behavior, as well as its innovation and proactivity subdimensions, while job variety is not. This suggests that interventions related to the vertical scope of jobs will promote entrepreneurial behaviors more than horizontal job expansion.

Entrepreneurial Culture and its Effect on the Rate of Nascent Entrepreneurship

This paper investigates the relationship between entrepreneurial culture and the rate of nascent entrepreneurship. Embedded in trait research, we develop a new composite measure of entrepreneurial culture using data from the World Values Survey. To corroborate the results obtained when regressing this newly developed measure on 2002 levels of nascent entrepreneurship in a sample of 28 countries, we also employ existing indicators of entrepreneurial culture, i.e. McClelland’s N achievement index (The achieving society, Princeton, NJ: D. van Nostrand Company, 1961), Granato et al. Achievement motivation index (American Journal of Political Science, 40(3):604–631, 1996), Lynn’s Competitiveness index (The secret of the miracle economy; different National attitudes to competitiveness and money. Social Affairs Unit, Exeter, 1991), and GLOBE’s (2004) performance orientation measure. In contrast with the existing measures we find a significant positive effect of our new measure of entrepreneurial culture, leading us to (1) discuss the strengths and weaknesses of these existing measures, and (2) interpret the wider implications of our findings for the research into the role of entrepreneurial culture in explaining international differences in entrepreneurship rates.