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“Do incentives matter to promote high technology-driven entrepreneurial activity?”

  • Ferran Vendrell-Herrero
  • José L. González-Pernía
  • Iñaki Peña-Legazkue
Article

Abstract

A productive human capital is a necessary but not sufficient condition for regional economic growth. An additional condition is the adequate allocation of talented people in innovative entrepreneurial activities, which according to previous literature have a higher social value than traditional ones. Using a large and representative sample of small and medium enterprises (SMEs) located in the Basque Autonomous Community (Spain), we empirically analyze, separately in manufacture and services, whether individual incentives and market conditions are aligned in such a way that the talent is properly allocated in innovative entrepreneurial activities. Through a novel use of existing empirical methods we find that (i) entrepreneurs operating in high-tech sectors have, on average, more entrepreneurial talent and private returns than their counterparts; and that (ii) entrepreneurial talent and private returns are positively and significantly correlated. These novel insights suggest that private and social incentives are adequately aligned.

Keywords

Entrepreneurship Allocation of talent Private incentives Productivity 

Jel code

M13 O31 D24 

Notes

Acknowledgements

The authors are grateful for commentaries received from Vincente Salas, Simon Sanchez, and Mikel Navarro. They also appreciate the support received from Asier Murciego in gathering data. Any errors are entirely the responsibility of the authors. Ferran Vendrell-Herrero acknowledges the financial support received from the Spanish Ministry of Education and Science (Project SEJ 2007-67895-C04-04). José L. González-Pernía and Iñaki Peña-Legazkue acknowledge the financial support received from the Spanish Ministry of Science and Innovation (Project ECO2009-08735).

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Copyright information

© Springer Science + Business Media, LLC 2011

Authors and Affiliations

  • Ferran Vendrell-Herrero
    • 1
  • José L. González-Pernía
    • 1
  • Iñaki Peña-Legazkue
    • 1
  1. 1.Entrepreneurship DepartmentBasque Institute of CompetitivenessSan SebastiánSpain

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