Drivers of entrepreneurial aspirations at the country lever: the role of start-up motivations and social security

This paper investigates whether start-up motivations and the level of social security can explain entrepreneurial aspirations. We use country-level data from the Global Entrepreneurship Monitor (GEM) for the year 2005. We distinguish between the necessity motive, independence motive and increase wealth motive and look at entrepreneurial aspirations in terms of innovativeness, job growth expectations and export orientation. As an indicator of a country?s level of social security we take the social security contribution rate (for employer?s and employees) from the World Competitiveness Yearbook. Previous research has found a negative relationship between the level of entrepreneurial activity and social security contributions, suggesting that social security increases the opportunity costs for entrepreneurship. The results of this study complement these previous findings by indicating that social security contributions have a negative influence on the supply of ambitious entrepreneurship in terms of new product or service introductions, job growth and export orientation. Furthermore, our findings indicate that entrepreneurial aspirations in terms of job growth and export relate positively to the increase wealth motive, whereas no significant relationship is found between our aspiration variables and the independence and necessity motives. On the basis of our findings policy directions are presented for an entrepreneurial economy. This is an update of paper H200627.