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Entrepreneurship and Economic Freedom: Do Objective and Subjective Data Reflect the Same Tendencies?

Author

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  • Burak Erkut

    (Dresden University of Technology, Germany)

Abstract

Objective: The paper addresses the question whether the same tendencies on entrepreneurship, innovation and economic freedom can be captured by subjective (Global Entrepreneurship Monitor) and objective (Index of Economic Freedom) data – and to which extent one can classify countries by different data sources in a theoretical framework based on the national competitiveness of each country. Research Design & Methods: Main method used was the direct discriminant analysis. Since this approach has shortcomings, selected variables from an exhaustive CHAID analysis (Erkut, 2016a) were used to predict the degree of economic freedom of the country based on the answers of experts. Findings: To determine the degree of economic freedom in a country, the effective enforcement of intellectual property rights legislation and quick access to utilities are the two variables with the most informational content. 86.8% of the original grouped cases was classified correctly – this is above the widely accepted threshold of 75%. Implications & Recommendations: A new trend in entrepreneurial research is to build compound indices based on different data sources. It is important to understand whether parts of a compound index reflect the same tendencies. This paper gives formal empirical evidence supporting this hypothesis. Contribution & Value Added: The contribution of this work lies in closing a research gap defined by Coduras and Autio (2013) concerning Global Entrepreneurship Monitor, suggesting that GEM results should be tested against objective data sources such as Index of Economic Freedom.

Suggested Citation

  • Burak Erkut, 2016. "Entrepreneurship and Economic Freedom: Do Objective and Subjective Data Reflect the Same Tendencies?," Entrepreneurial Business and Economics Review, Centre for Strategic and International Entrepreneurship at the Cracow University of Economics., vol. 4(3), pages 11-26.
    • Handle: RePEc:krk:eberjl:v:4:y:2016:i:3:p:11-26
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    References listed on IDEAS

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    1. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
    2. David B. Audretsch & A. Roy Thurik, 2000. "Capitalism and democracy in the 21st Century: from the managed to the entrepreneurial economy," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 17-34.
    3. von Hayek, Friedrich August, 1989. "The Pretence of Knowledge," American Economic Review, American Economic Association, vol. 79(6), pages 3-7, December.
    4. repec:bla:kyklos:v:53:y:2000:i:4:p:527-44 is not listed on IDEAS
    5. Jeffery S. McMullen & D. Ray Bagby & Leslie E. Palich, 2008. "Economic Freedom and the Motivation to Engage in Entrepreneurial Action," Entrepreneurship Theory and Practice, , vol. 32(5), pages 875-895, September.
    6. Coduras , Alicia & Autio, Erkko, 2013. "Comparing subjective and objective indicators to describe the national entrepreneurial context: the Global Entrepreneurship Monitor and the Global Competitiveness Index contributions," INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, Asociación Española de Ciencia Regional, issue 26, pages 47-74.
    7. Kuckertz, Andreas & Berger, Elisabeth S.C. & Mpeqa, Andrew, 2016. "The more the merrier? Economic freedom and entrepreneurial activity," Journal of Business Research, Elsevier, vol. 69(4), pages 1288-1293.
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    Citations

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    Cited by:

    1. Xuluo Yin & Xuan Xu & Qi Chen & Jiangang Peng, 2019. "The Sustainable Development of Financial Inclusion: How Can Monetary Policy and Economic Fundamental Interact with It Effectively?," Sustainability, MDPI, vol. 11(9), pages 1-14, May.
    2. Tuğberk Kaya & Burak Erkut & Nadine Thierbach, 2019. "Entrepreneurial Intentions of Business and Economics Students in Germany and Cyprus: A Cross-Cultural Comparison," Sustainability, MDPI, vol. 11(5), pages 1-18, March.
    3. Juan M. Dempere & Alexandrina M. Pauceanu, 2022. "The impact of economic-related freedoms on the national entrepreneurial activity," Journal of Innovation and Entrepreneurship, Springer, vol. 11(1), pages 1-20, December.
    4. Piotr Trąpczyński & Łukasz Puślecki & Michał Staszków, 2018. "Determinants of Innovation Cooperation Performance: What Do We Know and What Should We Know?," Sustainability, MDPI, vol. 10(12), pages 1-32, November.
    5. Jian Xu & Jae-Woo Sim, 2018. "Characteristics of Corporate R&D Investment in Emerging Markets: Evidence from Manufacturing Industry in China and South Korea," Sustainability, MDPI, vol. 10(9), pages 1-18, August.
    6. Sharma, Gagan Deep & Tiwari, Aviral Kumar & Erkut, Burak & Mundi, Hardeep Singh, 2021. "Exploring the nexus between non-renewable and renewable energy consumptions and economic development: Evidence from panel estimations," Renewable and Sustainable Energy Reviews, Elsevier, vol. 146(C).

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    More about this item

    Keywords

    entrepreneurship; economic freedom; innovation; discriminant analysis;
    All these keywords.

    JEL classification:

    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy

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