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Entrepreneurial attitude and economic growth; a cross-section of 54 regions

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  • Beugelsdijk, Sjoerd

    ()

  • Noorderhaven, Niels

    ()

Abstract

Over the past ten years the concept of regional clustering has gained much popularity in business, government, and the academic world. In regional economics, much attention has been devoted to explain the economic success of certain regions all around the world. Theoretical concepts like industrial districts, regional innovation systems and the learning region link the geographical concentration of firms and regional institutions to the innovativeness of these firms. Terms like 'regional innovative capacity' (Lawson and Lorenz, 1999), 'enterprise culture' (Amin and Tomaney, 1991), 'entrepreneurial ability' (Kangaharju, 2000), 'entrepreneurial human capital' (Georgellis and Wall, 2000) and 'regional cultures of innovation' (Thomas, 2000) are frequently used in the literature on regional clusters. In general, it is argued that local social conditions play an important role in the genesis and assimilation of innovation and its transformation into economic growth. More specific, entrepreneurial skills are seen as the soft factors that contribute to a regional culture that facilitates the success of regional clusters and regional economies in general.In this paper we test if certain societal characteristics are related to regional economic growth. In specific, we test if regions that can be characterised as 'entrepreneurial', experience faster economic growth than regions that score lower on entrepreneurial characteristics. Despite the growing literature in the field of economic geography and regional economics in which the role of entrepreneurial skills is stressed, to our knowledge nobody has explicated the values that make up this entrepreneurial capital. It is in most cases a black box, which is commonly referred to, but never explicated. Using a unique data-set on norms and values in 54 European regions, we distinguish values that characterise entrepreneurs, which enables us to construct a regional aggregate that reflects the average score on entrepreneurial attitude of the populations in these 54 European regions. The paper is divided in two parts. First, we study entrepreneurs and compare their personality characteristics with those of wage and salary-earners. Based on a sample of 18,418 individuals we find that entrepreneurs differ in several ways. The next step consists of aggregating these characteristics for 54 regions in Europe. By using principal components analysis, we construct a measure of entrepreneurial capital for each region. Based on standard growth theory we test if regions that have more entrepreneurial capital experience faster economic growth in the period 1950-1998. The added value of the paper is twofold. First, we show that entrepreneurs differ from the wage and salary-earners in several ways. Entrepreneurship requires aptitudes that are only present in a small portion of a population. Second, we study 54 regions in Europe and show that regions scoring higher on these entrepreneurial characteristics experience faster economic growth, conditional on factors like human capital, investment ratio and spatial auto-correlation. By unravelling the soft factors influencing economic growth we open the black box of regional culture. There are regional differences in entrepreneurial attitude, and a relatively high score on entrepreneurial characteristics is correlated with a relatively high rate of regional economic growth.

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Paper provided by European Regional Science Association in its series ERSA conference papers with number ersa02p142.

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Date of creation: Aug 2002
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Handle: RePEc:wiw:wiwrsa:ersa02p142
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  1. Anisya S Thomas & Stephen L Mueller, 2000. "A Case for Comparative Entrepreneurship: Assessing the Relevance of Culture," Journal of International Business Studies, Palgrave Macmillan, vol. 31(2), pages 287-301, June.
  2. Xavier X. Sala-i-Martin, 1997. "I Just Ran Four Million Regressions," NBER Working Papers 6252, National Bureau of Economic Research, Inc.
  3. Costas Megir & Danny Quah, 1996. "Regional Convergence Clusters Across Europe," CEP Discussion Papers dp0274, Centre for Economic Performance, LSE.
  4. Fagenson, Ellen A., 1993. "Personal value systems of men and women entrepreneurs versus managers," Journal of Business Venturing, Elsevier, vol. 8(5), pages 409-430, September.
  5. repec:dgr:uvatin:20010030 is not listed on IDEAS
  6. Brandstatter, Hermann, 1997. "Becoming an entrepreneur -- A question of personality structure?," Journal of Economic Psychology, Elsevier, vol. 18(2-3), pages 157-177, April.
  7. Aki Kangasharju, 2000. "Regional variations in firm formation: Panel and cross-section data evidence from Finland," Papers in Regional Science, Springer, vol. 79(4), pages 355-373.
  8. Quah, Danny T., 1996. "Regional convergence clusters across Europe," European Economic Review, Elsevier, vol. 40(3-5), pages 951-958, April.
  9. Wennekers, Sander & Thurik, Roy, 1999. " Linking Entrepreneurship and Economic Growth," Small Business Economics, Springer, vol. 13(1), pages 27-55, August.
  10. Begg, Iain, 1995. "Factor Mobility and Regional Disparities in the European Union," Oxford Review of Economic Policy, Oxford University Press, vol. 11(2), pages 96-112, Summer.
  11. Howard J. Wall & Yannis Georgellis, 2000. "What makes a region entrepreneurial? Evidence from Britain," The Annals of Regional Science, Springer, vol. 34(3), pages 385-403.
  12. Cooke, Philip & Gomez Uranga, Mikel & Etxebarria, Goio, 1997. "Regional innovation systems: Institutional and organisational dimensions," Research Policy, Elsevier, vol. 26(4-5), pages 475-491, December.
  13. R. Paci & S. Usai, 1997. "Technological enclaves and industrial districts. An analysis of the regional distributions of innovative activity in Europe," Working Paper CRENoS 199708, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  14. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
  15. Peter Nijkamp & Jacques Poot, 1998. "original: Spatial perspectives on new theories of economic growth," The Annals of Regional Science, Springer, vol. 32(1), pages 7-37.
  16. Hospers, Gert-Jan & Beugelsdijk, Sjoerd, 2002. "Regional Cluster Policies: Learning by Comparing?," Kyklos, Wiley Blackwell, vol. 55(3), pages 381-402.
  17. Roy Thurik & Sander Wennekers & Ingrid Verheul & David Audretsch, 2001. "An eclectic theory of entrepreneurship: policies, institutions and culture," Scales Research Reports H200012, EIM Business and Policy Research.
  18. Quah, Danny, 1996. "Regional Convergence Clusters Across Europe," CEPR Discussion Papers 1286, C.E.P.R. Discussion Papers.
  19. Leamer, Edward E, 1985. "Sensitivity Analyses Would Help," American Economic Review, American Economic Association, vol. 75(3), pages 308-13, June.
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Cited by:

  1. 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).
  2. Kristina Nyström, 2013. "Entrepreneurial politicians," Small Business Economics, Springer, vol. 41(1), pages 41-54, June.
  3. Michael Fritsch & Michael Wyrwich, 2014. "The Effect of Regional Entrepreneurship Culture on Economic Development - Evidence for Germany," Jena Economic Research Papers 2014-014, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  4. Michael Fritsch & Michael Wyrwich, 2012. "The Long Persistence of Regional Entrepreneurship Culture: Germany 1925 - 2005," Discussion Papers of DIW Berlin 1224, DIW Berlin, German Institute for Economic Research.
  5. Li, Hongbin & Yang, Zheyu & Yao, Xianguo & Zhang, Haifeng & Zhang, Junsen, 2012. "Entrepreneurship, private economy and growth: Evidence from China," China Economic Review, Elsevier, vol. 23(4), pages 948-961.
  6. Thomas A. Garrett & Howard J. Wall, 2006. "Creating a policy environment for entrepreneurs," Working Papers 2005-064, Federal Reserve Bank of St. Louis.
  7. Hongbin Li & Zheyu Yang & Xianguo Yao & Junsen Zhang, 2009. "Entrepreneurship and Growth: Evidence from China," Discussion Papers 00022, Chinese University of Hong Kong, Department of Economics.
  8. Niels Bosma & Kashifa Suddle & Veronique Schutjens, 2008. "Whither a flat ladscape? Regional differences in Entrepreneurship in the Netherlands," Scales Research Reports H200805, EIM Business and Policy Research.
  9. 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).
  10. Balázs Páger, 2014. "The entrepreneurial performance of the Central and Eastern European regions," ERSA conference papers ersa14p1631, European Regional Science Association.
  11. repec:enr:rpaper:0016 is not listed on IDEAS
  12. Nyström, Kristina, 2008. "Regional Institutional Environment and Swedish Regional New Firm Formation," Working Paper Series in Economics and Institutions of Innovation 142, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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