Latent and Actual Entrepreneurship in Europe and the US: Some Recent Developments

  • Isabel Grilo
  • Roy ThurikEmail author


This paper uses 2004 survey data from the 15 old EU member states and the US to explain country differences in latent and actual entrepreneurship. Other than demographic variables such as gender, age and education, the set of covariates includes the perception by respondents of administrative complexities, of availability of financial support and of risk tolerance as well as country-specific effects. A comparison is made with results using a similar survey in 2000. While a majority of the surveyed population identifies lack of financial support as an obstacle to starting a new business, the role of this variable in both latent and actual entrepreneurship appears to be even more counterintuitive in 2004 than in 2000: it has no impact on actual entrepreneurship and is positively related to latent entrepreneurship. Administrative complexities, also perceived as an obstacle by a large majority of the population, have the expected negative impact both for latent and actual entrepreneurship in both years. Country-specific effects are important both for latent and actual entrepreneurship and the comparison of 2000 and 2004 results suggests that, once all other factors are controlled for, an improvement in actual entrepreneurship in the EU relative to the US has taken place in the last four years. However, in terms of unweighted averages actual entrepreneurship remained about the same. Latent entrepreneurship dropped while this drop seems to have occurred evenly in the US and the EU member states.


latent entrepreneurship determinants of entrepreneurship Europe 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acs, Z.J., Arenius, P., Hay, M. & Minniti, M. 2005. Global Entrepreneurship Monitor: 2004 executive report. Babson Park, MA: Babson College & London: London Business School.Google Scholar
  2. Audretsch, D.B., Carree, M.A., van Stel, A.J. & Thurik, A.R. 2002. Impeded industrial restructuring: The growth penalty. Kyklos, 55(1): 81–97.CrossRefGoogle Scholar
  3. Audretsch, D.B., Carree, M.A., Thurik, A.R. & van Stel, A.J. 2005. Does self-employment reduce unemployment. Discussion paper D5057. London, Centre for Economic Policy Research.Google Scholar
  4. Audretsch, D.B. & Thurik, A.R. 2001. What is new about the new economy: Sources of growth in the managed and entrepreneurial economies. Industrial and Corporate Change, 10(1): 267– 315.CrossRefGoogle Scholar
  5. Audretsch, D.B. & Thurik, A.R. 2004. A model of the entrepreneurial economy. International Journal of Entrepreneurship Education, 2: 143–166.Google Scholar
  6. Barreto, H. 1989. The entrepreneur in economic theory; Disappearance and explanation. London, Routledge.Google Scholar
  7. Bates, T. 1990. Entrepreneur human capital inputs and small business longevity. The Review of Economics and Statistics, 72: 551–559.Google Scholar
  8. Baumol, W.J. 1968. Entrepreneurship in economic theory. American Economic Review, Papers and Proceedings, 58(2): 64–71.Google Scholar
  9. Beugelsdijk, S. & Noorderhaven, N. 2005. Personality characteristics of self-employed; An empirical study. Small Business Economics, 24: 159–167.CrossRefGoogle Scholar
  10. Blanchflower, D.G. 2004. Self-employment: More may not be better. Working Paper 10286. Cambridge, MA: National Bureau of Economic Research.Google Scholar
  11. Blanchflower, D.G. & Meyer, B.D. 1994. A longitudinal analysis of the young self-employed in Australia and the United States. Small Business Economics, 6: 1–19.CrossRefGoogle Scholar
  12. Blanchflower, D.G. & Oswald, A.J. 1998. What makes an entrepreneur? Journal of Labor Economics, 16(1): 26–60.CrossRefGoogle Scholar
  13. Blanchflower, D.G., Oswald, A. & Stutzer, A. 2001. Latent entrepreneurship across nations. European Economic Review, 45: 680–691.CrossRefGoogle Scholar
  14. Blau, D. 1987. A time-series analysis of self-employment in the US. Journal of Political Economy, 95: 445– 467.Google Scholar
  15. Bull, I. & Willard, G.E. 1993. Towards a theory of entrepreneurship. Journal of Business Venturing, 8: 183–195.Google Scholar
  16. Carree, M., Stel, A., van, Thurik, A.R. & Wennekers, S. 2002. Economic development and business ownership: An analysis using data of 23 OECD countries in the period 1976–1996. Small Business Economics, 19(3): 271–290.CrossRefGoogle Scholar
  17. Carree, M.A. & Thurik, A.R. 2003. The impact of entrepreneurship on economic growth. In D.B. Audretsch & Z.J. Acs (Eds.), Handbook of entrepreneurship research: 437–471. Boston/Dordrecht: Kluwer Academic Publishers.Google Scholar
  18. Carree, M.A. & Thurik, A.R. 2006. The handbook of entrepreneurship and economic growth (international library of entrepreneurship). Cheltenham, UK and Brookfield, US: Edward Elgar Publishing Limited, forthcoming.Google Scholar
  19. Casson, M.C. 1982. The entrepreneur: An economic theory. Oxford: Martin Robertson.Google Scholar
  20. Cooper, A.C. & Dunkelberg, W.C. 1987. Entrepreneurial research: Old questions, new answers and methodological issues. American Journal of Small Business, 1: 11–23.Google Scholar
  21. Cressy, R. 1999. The Evans and Jovanovic equivalence theorem and credit rationing: Another look. Small Business Economics, 12: 295–297.CrossRefGoogle Scholar
  22. Davidsson, P. 2004. Researching entrepreneurship. International Studies in Entrepreneurship, Boston etc: Springer Science Inc.Google Scholar
  23. Davidsson, P. & Honig, B. 2003. The role of social and human capital among nascent entrepreneurs. Journal of Business Venturing, 18: 301–331.CrossRefGoogle Scholar
  24. Delmar, F. & Davidsson, P. 2000. Where do they come from? Prevalence and characteristics of nascent entrepreneurs. Entrepreneurship and Regional Development, 12: 1–23.Google Scholar
  25. Douglas, E.J. & Shepherd, D.A. 2002. Self-employment as a career choice: Attitudes, entrepreneurial intentions, and utility maximization. Entrepreneurship Theory and Practice, 26(3): 81–90.Google Scholar
  26. Evans, D.S. & Jovanovic, B. 1989. An estimated model of entrepreneurial choice under liquidity constraints. Journal of Political Economy, 97: 808–827.Google Scholar
  27. Evans, D.S. & Leighton, L.S. 1989. Some empirical aspects of entrepreneurship. American Economic Review, 79: 519–535.Google Scholar
  28. Evans, D.S. & Leighton, L.S. 1990. Small business formation by unemployed and employed workers. Small Business Economics, 2: 319–330.Google Scholar
  29. Grilo, I. & Irigoyen, J.M. 2005. Entrepreneurship in the EU: To wish and not to be. Small Business Economics, forthcoming.Google Scholar
  30. Grilo, I. & Thurik, A.R. 2004. Entrepreneurship in Europe. Papers on Entrepreneurship, Growth and Public Policy no 30–2004. Max Planck Institute of Economics, Jena, Germany.Google Scholar
  31. Grilo, I. & Thurik, A.R. 2005. Entrepreneurship in the old and the new Europe. Papers on Entrepreneurship, Growth and Public Policy. Max Planck Institute of Economics, Jena, Germany.Google Scholar
  32. Hébert, R.F. & Link, A.N. 1989. In search of the meaning of entrepreneurship. Small Business Economics, 1: 39–49.Google Scholar
  33. Kirchhoff, B.A. 1994. Entrepreneurship and dynamic capitalism. Westport, CT: Praeger.Google Scholar
  34. Kirzner, I.M. 1999. Creativity and/or alertness: A reconsideration of the Schumpeterian entrepreneur. Review of Austrian Economics, 11: 5–17.CrossRefGoogle Scholar
  35. Kouriloff, M. 2000. Exploring perceptions of a priori barriers to entrepreneurship: A multidisciplinary approach. Entrepreneurship Theory and Practice, 25(2): 59–79.Google Scholar
  36. Lin, Z., Picot, G. & Compton, J. 2000. The entry and exit dynamics of self-employment in Canada. Small Business Economics, 15: 105–125.CrossRefGoogle Scholar
  37. Lumpkin, G.T. & Dess, G.G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21: 135–172.Google Scholar
  38. Minniti, M., Arenius, P. & Langowitz, N. 2005. Global Entrepreneurship Monitor: 2004 report on women and entrepreneurship. Centre for Women's Leadership at Babson College/London Business School.Google Scholar
  39. OECD. 1998. Fostering entrepreneurship, the OECD jobs strategy. Paris: OECD.Google Scholar
  40. OECD. 2000. OECD Employment outlook. Paris: OECD.Google Scholar
  41. Praag, M.C. van. 1999. Some classic views on entrepreneurship. De Economist, 147: 311–335.Google Scholar
  42. Rees, H. & Shah, A. 1986. An empirical analysis of self-employment in the UK. Journal of Applied Econometrics, 1: 95–108.Google Scholar
  43. Reynolds, P.D. 1997. Who starts new firms?—Preliminary explorations of firms-in-gestation. Small Business Economics, 9: 449–462.Google Scholar
  44. Reynolds, P.D., Hay, M. & Camp, S.M. 1999. Global Entrepreneurship Monitor: 1999 executive report. Babson College, London Business School and the Kauffman Center for Entrepreneurial Leadership.Google Scholar
  45. Reynolds, P.D., Bygrave, W.D., Autio, E., Cox, L.W. & Hay, M. 2002. Global Entrepreneurship Monitor, 2002 executive report, Babson College, London Business School and Kauffman Foundation.Google Scholar
  46. Robinson, P.B. & Sexton, E.A. 1994. The effect of education and experience on self-employment success. Journal of Business Venturing, 9: 141–156.CrossRefGoogle Scholar
  47. Stel, A.J. van & Stunnenberg, V. 2004. Linking business ownership and perceived administrative complexity: An empirical analysis of 18 OECD countries. Papers on Entrepreneurship, Growth and Public Policy no 35–2004. Max Planck Institute of Economics, Jena, Germany.Google Scholar
  48. Stel, A. van. 2005. COMPENDIA: Harmonizing business ownership data across countries and over time. International Entrepreneurship and Management Journal, 1: 105–123.CrossRefGoogle Scholar
  49. Stel, A. van, Storey, D., Thurik, A.R. & Wennekers, S. 2005. From nascent to actual entrepreneurship: The effect of entry barriers. Papers on Entrepreneurship, Growth and Public Policy. Max Planck Institute of Economics, Jena, Germany, forthcoming.Google Scholar
  50. Storey, D.J. 1994. Understanding the small business sector. London/New York: Routledge.Google Scholar
  51. Storey, D.J. 2003. Entrepreneurship, small and medium sized enterprises and public policies. In D.B. Audretsch and Z.J. Acs (Eds.), Handbook of entrepreneurship research: 476–511. Boston/Dordrecht: Kluwer Academic Publishers.Google Scholar
  52. Uhlaner, L. & Thurik, A.R. 2004. Post-materialism: A cultural factor influencing total entrepreneurial activity across nations. Papers on Entrepreneurship, Growth and Public Policy no 07–2004. Max Planck Institute of Economics, Jena, Germany.Google Scholar
  53. Verheul, I., Wennekers, S., Audretsch, D. & Thurik, A.R. 2002. An eclectic theory of entrepreneurship: Policies, institutions and culture. In D.B. Audretsch, A.R. Thurik, I. Verheul, and A.R.M. Wennekers (Eds.), Entrepreneurship: Determinants and policy in a european-US comparison: 11–81. Boston/Dordrecht: Kluwer Academic Publishers.Google Scholar
  54. Verheul, I., Uhlaner, L. & Thurik, A.R. 2005. Business accomplishments, gender and entrepreneurial self-image. Journal of Business Venturing, 20: 483–518.CrossRefGoogle Scholar
  55. Verheul, I., Stel, A. van. & Thurik, A.R. 2006. Explaining female and male entrepreneurship across 29 countries. Entrepreneurship and Regional Development, forthcoming.Google Scholar
  56. Wagner, J. 2003. Testing lazear's jack-of-all-trades view of entrepreneurship with German micro data. Applied Economics Letters, 10: 687–689.CrossRefGoogle Scholar
  57. Wennekers, A.R.M. & Thurik, A.R. 1999. Linking entrepreneurship and economic growth. Small Business Economics, 13: 27–55.CrossRefGoogle Scholar
  58. Wennekers, A.R.M., Uhlaner, L. & Thurik, A.R. 2002. Entrepreneurship and its conditions: A macro perspective. International Journal of Entrepreneurship Education, 1(1): 25–64.Google Scholar
  59. Wit, G. de & Winden, F.A.A.M. van. 1989. An empirical analysis of self-employment in the Netherlands. Small Business Economics, 1: 263–272.CrossRefGoogle Scholar

Copyright information

© Springer Science + Business Media, Inc. 2005

Authors and Affiliations

  1. 1.DG EnterpriseEuropean CommissionBrusselsBelgium
  2. 2.Gremars, Université de Lille 3 and COREUniversité Catholique de LouvainFrance
  3. 3.Centre for Advanced Small Business Economics, Rotterdam School of EconomicsErasmus University RotterdamRotterdamThe Netherlands
  4. 4.EIM Business and Policy ResearchZoetermeerThe Netherlands
  5. 5.Max Planck Institute of EconomicsJenaGermany

Personalised recommendations