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Entrepreneurship Capital - Determinants and Impact

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  • Audretsch, David B
  • Keilbach, Max

Abstract

Since the early 1980s, the role and general perception of entrepreneurship and start-up activities has changed drastically. In this paper, we investigate what determines regions’ entrepreneurial behaviour and the impact of it on regional economic performance. We argue that economic knowledge not only differs from traditional factors of production due to its public goods characteristic but it is also uncertain. With that perspective, the role of entrepreneurship is to take on the corresponding risk by starting up a new firm and thus to ‘test’ uncertain economic knowledge. This implies that knowledge spills over to the start-up firm and therefore entrepreneurship can be expected to have a positive impact on economic performance in a knowledge-based economy. We test this hypothesis using a production function approach. Using data on German regions, we estimate a two-equation system that regresses on both variables, entrepreneurship and economic performance, simultaneously, thus correcting for an endogeneity bias. We find a significant impact of entrepreneurship capital on economic output. On the other hand, spatially-specific entrepreneurship capital is shaped by regional-specific factors. However, the extent of this is different for knowledge based and non-knowledge based measures of entrepreneurship. We derive policy conclusions from our findings.

Suggested Citation

  • Audretsch, David B & Keilbach, Max, 2005. "Entrepreneurship Capital - Determinants and Impact," CEPR Discussion Papers 4905, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:4905
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Aloysius Gunadi, Brata, 2007. "Spatial Concentration of the Informal Small and Cottage Industry in Indonesia," MPRA Paper 12622, University Library of Munich, Germany, revised 2008.
    2. Minniti, Maria & Lévesque, Moren, 2008. "Recent developments in the economics of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 603-612, November.
    3. Alessandro STERLACCHINI, 2006. "Innovation, Knowledge and Regional Economic Performances: Regularities and Differences in the EU," Working Papers 260, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    4. Christine Tamásy & Richard Le Heron, 2008. "The Geography Of Firm Formation In New Zealand," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 99(1), pages 37-52, February.
    5. Guiso, Luigi & Schivardi, Fabiano, 2005. "Learning to be an Entrepreneur," CEPR Discussion Papers 5290, C.E.P.R. Discussion Papers.
    6. Pontus Braunerhjelm & Zoltán J. Ács & David B. Audretsch & Bo Carlsson, 2015. "The missing link: knowledge diffusion and entrepreneurship in endogenous growth," Chapters,in: Global Entrepreneurship, Institutions and Incentives, chapter 6, pages 108-128 Edward Elgar Publishing.
    7. Feldman, Maryann & Lowe, Nichola, 2015. "Triangulating regional economies: Realizing the promise of digital data," Research Policy, Elsevier, vol. 44(9), pages 1785-1793.
    8. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers DYNREG02, Economic and Social Research Institute (ESRI).
    9. Jacques Poot, 2007. "Demographic Change and Regional Competitiveness: The Effects of Immigration and Ageing," Population Studies Centre Discussion Papers dp-64, University of Waikato, Population Studies Centre.
    10. André van Stel & Roy Thurik & Chantal Hartog & Simon Parker, 2010. "The two-way relationship between entrepreneurship and economic performance," Scales Research Reports H200822, EIM Business and Policy Research.
    11. Berthold, Norbert & Gründler, Klaus, 2012. "Entrepreneurship and economic growth in a panel of countries," Discussion Paper Series 118, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    12. Audretsch, David B. & Bönte, Werner & Keilbach, Max, 2008. "Entrepreneurship capital and its impact on knowledge diffusion and economic performance," Journal of Business Venturing, Elsevier, vol. 23(6), pages 687-698, November.
    13. Petrakos, George & Dimitris, Kallioras & Ageliki, Anagnostou, 2007. "A Generalized Model of Regional Economic Growth in the European Union," Papers DYNREG12, Economic and Social Research Institute (ESRI).

    More about this item

    Keywords

    economic output; endogeneity bias; entrepreneurship; production function; three stage least squares;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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