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Modelling Entrepreneurship: Unifying The Equilibrium and Entry/Exit Approach

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  • Niels Bosma

    ()

  • Gerrit Wit

    ()

  • Martin Carree

    ()

Abstract

Two approaches can be distinguished with respect to modelling entrepreneurship: (i) the approach focusing on the net development of the number of entrepreneurs in an equilibrium framework and (ii) the approach focusing on the entries and exits of entrepreneurs. In this paper we unify these approaches to arrive at a model explaining the equilibrium and actual number of entrepreneurs and the entry and exit rate of entrepreneurs simultaneously and consistently. We apply our unified approach to the Netherlands using self-employment data for the 1960–1999 period. We find error-correction of about 20% per year and a very different situation in terms of disequilibrium before and after the early 1980s. Periods of high unemployment appear to be characterized by both high entry and high exit rates. Copyright Springer 2005

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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 25 (2005)
Issue (Month): 1 (08)
Pages: 35-48

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Handle: RePEc:kap:sbusec:v:25:y:2005:i:1:p:35-48

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Web page: http://www.springerlink.com/link.asp?id=100338

Related research

Keywords: entrepreneurship; entry and exit; error correction; C32; L11; M13;

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Cited by:
  1. Braunerhjelm, Pontus, 2010. "Entrepreneurship, Innovation and Economic Growth – Past experiences, current knowledge and policy implications," Working Papers 2010:2, Swedish Entrepreneurship Forum.
  2. Naude, Wim, 2008. "Entrepreneurship in Economic Development," Working Paper Series RP2008/20, World Institute for Development Economic Research (UNU-WIDER).
  3. André van Stel & Andrew Burke, 2008. "The Entrepreneurial Adjustment Process in Disequilibrium," Scales Research Reports H200809, EIM Business and Policy Research.
  4. André van Stel & Roy Thurik & Andrew Burke, 2008. "Investigating Blue Ocean v. Competitive Strategy: A Statistical Analysis of the Retail Industry," Scales Research Reports H200801, EIM Business and Policy Research.
  5. repec:dgr:uvatin:2009005 is not listed on IDEAS
  6. Burke, A.E. & van Stel, A.J. & Thurik, A.R., 2009. "Blue Ocean versus Competitive Strategy: Theory and Evidence," ERIM Report Series Research in Management ERS-2009-030-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  7. Katharina Pijnenburg, 2013. "Self-Employment and Economic Performance: A Geographically Weighted Regression Approach for European Regions," Discussion Papers of DIW Berlin 1272, DIW Berlin, German Institute for Economic Research.
  8. Gries, Thomas & Naude, Wim, 2008. "Entrepreneurship and Regional Economic Growth: Towards A General Theory of Start-Ups," Working Paper Series RP2008/70, World Institute for Development Economic Research (UNU-WIDER).
  9. Gries, Thomas & Naude, Wim, 2009. "When to Start a New Firm?: Modelling the Timing of Novice and Serial Entrepreneurs," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).

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