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Understanding the Drivers of an ‘Entrepreneurial’ Economy : Lessons from Japan and the Netherlands

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  • Okamuro, Hiroyuki
  • Van Stel, André
  • Verheul, Ingrid

Abstract

Globalization and an increasing importance of knowledge in the production process cause many developed countries to move from a more ‘managed’ to a more ‘entrepreneurial’ economy in recent decades. In the former type of economy, large and incumbent firms play a dominant role, exploiting economies of scale in a relatively certain economic environment. In the latter type, small and new firms play an increasingly important role, introducing new products and services in highly uncertain economic environments while quickly adapting to rapidly changing consumer preferences. The speed of adjustment in this transition process from a managed to an entrepreneurial economy varies by country. In this paper we investigate the differences between a more ‘managed’ economy, Japan, characterized by relatively low levels of entrepreneurial activity, and a more ‘entrepreneurial’ economy, the Netherlands. Building on earlier work by Hartog et al. (2010), who explain cross-country differences in three measures of entrepreneurial activity using five broad groups of explanatory variables, we apply a decomposition analysis to better understand the differences in entrepreneurial activity between Japan and the Netherlands. We find that, in spite of higher levels of entrepreneurial activity in the Netherlands, the institutional framework in the Netherlands is considerably less favourable to entrepreneurship, compared to Japan. On the other hand, cultural differences between the Netherlands and Japan explain a substantial part of the difference in entrepreneurship rates between the two countries.

Suggested Citation

  • Okamuro, Hiroyuki & Van Stel, André & Verheul, Ingrid, 2010. "Understanding the Drivers of an ‘Entrepreneurial’ Economy : Lessons from Japan and the Netherlands," CCES Discussion Paper Series 36, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:ccesdp:36
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    References listed on IDEAS

    as
    1. Andre van Stel, "undated". "COMPENDIA: Harmonizing business ownership data across countries and over time," Papers on Entrepreneurship, Growth and Public Policy 2005-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    2. André van Stel & Chantal Hartog & J. Cieslik Cieslik, 2010. "Measuring Business Ownership Across Countries and Over Time: Extending the COMPENDIA Data Base," Scales Research Reports H201019, EIM Business and Policy Research.
    3. Isobel van der Kuip & Ingrid Verheul, 2003. "Early Development of Entrepreneurial Qualities: the Role of Initial Education," Scales Research Reports N200311, EIM Business and Policy Research.
    4. Abe, Yukiko, 2011. "The Equal Employment Opportunity Law and labor force behavior of women in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 25(1), pages 39-55, March.
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    Cited by:

    1. Peter Zwan & Ingrid Verheul & A. Thurik, 2012. "The entrepreneurial ladder, gender, and regional development," Small Business Economics, Springer, vol. 39(3), pages 627-643, October.
    2. Paul, Justin & Shrivatava, Archana, 2016. "Do young managers in a developing country have stronger entrepreneurial intentions? Theory and debate," International Business Review, Elsevier, vol. 25(6), pages 1197-1210.

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    Keywords

    entrepreneurship; cross-country comparison; Japan; the Netherlands; United States;

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