Small Business Economics

, Volume 44, Issue 2, pp 283–298 | Cite as

Are entrepreneurship and cognitive skills related? Some international evidence

  • R. W. HaferEmail author
  • Garett Jones


Do national differences in cognitive skills (CS) predict a nation’s likelihood of generating high-quality entrepreneurs who create and expand high-value businesses? We answer this question by estimating cross-country regressions that use the Acs and Szerb Global Entrepreneurship Development Index (GEDI) and a measure of national CS. After including conventional controls we find for a sample of 60 countries that our measure of CS robustly predicts the GEDI (unconditional correlation = 0.65, standardized beta = 0.42), an index that gives weight to both entrepreneurial attitudes within a nation and the institutional and economic prerequisites for creating high-value, high-growth firms. We find that this result also holds for an alternative measure of entrepreneurship.


Entrepreneurship Cognitive skills Economic freedom 

JEL Classifications

A1 F2 K00 M2 L26 



We would like to thank Zoltan Acs, Ari Belasen, Randall Holcombe, Gerhard Meisenberg, the editor and two anonymous referees for their comments and suggestions that significantly improved an earlier version of this paper. We of course retain all responsibility for any errors.


  1. Acs, Z. J. (2006). How is entrepreneurship good for economic growth? Innovations, 1, 97–107.CrossRefGoogle Scholar
  2. Acs, Z. J., & Armington, C. (2006). Entrepreneurship, geography, and American economic growth. New York: Cambridge University Press.CrossRefGoogle Scholar
  3. Acs, Z. J., & Audretsch, D. (Eds.). (2003). International handbook of entrepreneurial research. The Netherlands: Kluwer.Google Scholar
  4. Acs, Z. J., Autio, E., & Szerb, L. (2014). National systems of entrepreneurship: Measurement issues and policy implications. Research Policy, 43, 476–494.CrossRefGoogle Scholar
  5. Acs, Z., Desai, S., & Klapper, L. (2008). What does entrepreneurship data really show? A comparison of the global entrepreneurship monitor and World Bank Group data sets. Small Business Economics, 31, 219–239.CrossRefGoogle Scholar
  6. Acs, A. J., & Szerb, L. (2010). The Global Entrepreneurship and Development Index (GEDI). In Paper presented at “Opening up Innovation: Strategy, Organization and Technology”. London: Imperial College.Google Scholar
  7. Ahmetoglu, G., Leutner, F., & Chamorro-Premuzic, T. (2011). EQ-nomics: Understanding the relationship between individual differences in trait emotional intelligence and entrepreneurship. Personality and Individual Differences, 51, 1028–1033.CrossRefGoogle Scholar
  8. Andrews, D., & Leigh, A. (2009). More inequality, less social mobility. Applied Economics Letters, 16, 1489–1492.CrossRefGoogle Scholar
  9. Audretsch, D. B., Keilbach, D. B., & Lehmann, E. E. (2006). Entrepreneurship and economic growth. Oxford: Oxford University Press.CrossRefGoogle Scholar
  10. Barro, R., & Lee, J. (2011). Barro-Lee Educational Attainment Dataset. Accessed at Scholar
  11. Belasen, A., & Hafer, R. W. (2012). Well-being and economic freedom: Evidence from the states. Intelligence, 40, 306–316.CrossRefGoogle Scholar
  12. Bjornskov, C., & Foss, N. J. (2008). Economic freedom and entrepreneurial activity: Some cross-country evidence. Public Choice, 134, 307–328.CrossRefGoogle Scholar
  13. Boettke, P., & Coyne, C. J. (2009). Context matters: Institutions and entrepreneurship. Hanover, MA: Now Publishers.Google Scholar
  14. Bowles, S., Gintis, H., & Osborne, M. (2001). The determinants of earnings: Skills, preferences, and schooling. Journal of Economic Literature, 39, 1137–1176.CrossRefGoogle Scholar
  15. Burks, S., Carpenter, J., Goette, L., & Rustichini, A. (2009). Cognitive skills affect economic preferences, strategic behavior, and job attachment. Proceedings of the National Academy of Sciences, 106, 7745–7750.CrossRefGoogle Scholar
  16. Caree, M. A., & Thurik, A. R. (2003). The impact of entrepreneurship on economic growth. In Acs, Z. J & Audretsch, D. (Eds.), International handbook of entrepreneurial research.Google Scholar
  17. Deary, I. (2001). Intelligence: A very short introduction. New York: Oxford University Press.CrossRefGoogle Scholar
  18. Gallup. (2009). Entrepreneurship in the EU and beyond. In: Flash Eurobarometer Series, European Commission, Brussels.Google Scholar
  19. Garrett, T. A., & Rhine, R. M. (2011). Economic freedom and employment growth in the U.S. states. Federal Reserve Bank of St. Louis. Review, 93, 1–18.Google Scholar
  20. Gennaioli, N., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2013). Human capital and regional development. Quarterly Journal of Economics, 128, 105–164.CrossRefGoogle Scholar
  21. Gwartney, J., Lawson, R., & Hall, J. (2011). Economic freedom of the World 2011 annual report. Vancouver: The Fraser Institute.Google Scholar
  22. Hansen, K. J., Heckman, J., & Muller, K. (2004). The effect of schooling and ability on achievement test scores. Journal of Econometrics, 121, 39–49.CrossRefGoogle Scholar
  23. Hartog, J., Van Praag, M., & Van Der Sluis, J. (2010). If you are so smart, why aren’t you an entrepreneur? Returns to cognitive and social ability: Entrepreneurs versus employees. Journal of Economics & Management Strategy, 19, 947–989.Google Scholar
  24. Heckelman, J. C. (2005). Proxies for economic freedom: A critique of the Hanson critique. Southern Economic Journal, 72, 492–501.CrossRefGoogle Scholar
  25. Heckelman, J. C., & Stroup, M. D. (2000). Which economic freedoms contribute to growth? Kyklos, 53, 527–544.CrossRefGoogle Scholar
  26. Heckman, J. J. (2008). Schools, skills, and synapses. Economic Inquiry, 46, 289–324.CrossRefGoogle Scholar
  27. Henrekson, M. (2005). Entrepreneurship: a weak link in the welfare state? Industrial and Corporate Change, 14, 437–467.CrossRefGoogle Scholar
  28. Hoffman, A. (2007). A rough guide to entrepreneurship policy. In R. A. Thurik, D. B. Audretsch, & I. Grilo (Eds.), Handbook of research on entrepreneurship policy (pp. 140–161). Cheltenham: Edward Elgar.Google Scholar
  29. Holcombe, R. G. (1998). Entrepreneurship and economic growth. The Quarterly Journal of Austrian Economics, 1, 45–62.CrossRefGoogle Scholar
  30. Hunt, E., & Wittmann, W. (2008). National intelligence and national prosperity. Intelligence, 36, 1–9.Google Scholar
  31. Jones, G. (2011a). National IQ and national productivity: The hive mind across Asia. Asian Development Review, 28, 58–71.Google Scholar
  32. Jones, G. (2011b). IQ and national productivity. New Palgrave dictionary of economics. New York: Palgrave Macmillan.Google Scholar
  33. Jones, G., & Schneider, W. J. (2006). Intelligence, human capital, and economic growth: A Bayesian averaging of classical estimates (BACE) approach. Journal of Economic Growth, 11, 71–93.CrossRefGoogle Scholar
  34. Jones, G., & Schneider, W. J. (2010). IQ in the production function: Evidence from immigrant earnings. Economic Inquiry, 48, 743–755.CrossRefGoogle Scholar
  35. Kirzner, I. (1973). Competition and entrepreneurship. Chicago: University of Chicago Press.Google Scholar
  36. Kirzner, I. (1997). Entrepreneurial discovery and the competitive market process: An Austrian approach. Journal of Economic Literature, 35, 60–85.Google Scholar
  37. Knight, F. (1921). Risk, uncertainty, and profit. Boston: Hart, Schaffner & Marx; Houghton Mifflin Co.Google Scholar
  38. Lazear, E. P. (2004). Balanced skills and entrepreneurship. American Economic Review, 94, 208–211.CrossRefGoogle Scholar
  39. Lazear, E. P. (2005). Entrepreneurship. Journal of Labor Economics, 23, 649–680.CrossRefGoogle Scholar
  40. Lewis, W. W. (2004). The power of productivity. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  41. Lucas, R. E. (1978). On the size distribution of business firms. Bell Journal of Economics, 9, 508–523.CrossRefGoogle Scholar
  42. Lucas, R. E. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22, 3–42.CrossRefGoogle Scholar
  43. Lynn, R., & Meisenberg, G. (2010). National IQs calculated and validated for 108 nations. Intelligence, 38, 353–360.CrossRefGoogle Scholar
  44. Lynn, R., & Vanhanen, T. (2002). IQ and the wealth of nations. Westport: Praeger.Google Scholar
  45. Lynn, R., & Vanhanen, T. (2006). IQ and global inequality. Athens: Washington Summit.Google Scholar
  46. Lynn, R., & Vanhanen, T. (2012). Intelligence: A unifying construct for the social sciences. London: Ulster Institute for Social Sciences.Google Scholar
  47. Meisenberg, G. (2012). National IQ and economic outcomes. Personality and Individual Differences, 53, 103–107.CrossRefGoogle Scholar
  48. Miller, T., Holmes, K. R., & Feulner, E. J. (2012). 2012 Index of Economic Freedom. Washington, D.C.: The Heritage Foundation and Dow Jones & Company.Google Scholar
  49. Nystrom, K. (2008). The institutions of economic freedom and entrepreneurship: Evidence from panel data. Public Choice, 136, 262–282.CrossRefGoogle Scholar
  50. Oesterdiekoff, G. W., & Rindermann, H. (2007). The spread of AIDS in developing countries: A psycho-cultural approach. Journal of Social, Political and Economic Studies, 32, 201–222.Google Scholar
  51. Parker, S. C., & van Praag, C. M. (2006). Schooling, capital constraints, and entrepreneurial performance: The endogenous triangle. Journal of Business & Economic Statistics, 24, 416–431.CrossRefGoogle Scholar
  52. Potrafke, N. (2012). Intelligence and corruption. Economics Letters, 114, 109–112.CrossRefGoogle Scholar
  53. Powell, B., & Rodet, C. (2012). Praises and profits: Cultural and institutional determinants of entrepreneurship. Journal of Private Enterprise, 27, 19–42.Google Scholar
  54. Ram, R. (2007). IQ and economic growth: Further augmentation of the Mankiw-Romer-Weil model. Economics Letters, 94, 7–11.CrossRefGoogle Scholar
  55. Reynolds, P. D., Bosma, N., & Autio, E. (2005). Global entrepreneurship monitor: data, collection design and implementation 1998–2003. Small Business Economics, 24, 205–231.CrossRefGoogle Scholar
  56. Rindermann, H. (2007). The g-factor of international cognitive ability comparisons: The homogeneity of results with PISA, TIMSS, PIRLS and IQ-tests across nations. European Journal of Personality, 21, 667–706.CrossRefGoogle Scholar
  57. Rindermann, H. (2008a). Relevance of education and intelligence at the national level for the economic welfare of people. Intelligence, 36, 127–142.CrossRefGoogle Scholar
  58. Rindermann, H. (2008b). Relevance of education and intelligence for the political development of nations: Democracy, rule of law and political liberty. Intelligence, 36, 306–322.CrossRefGoogle Scholar
  59. Rindermann, H. (2012). Intellectual classes, technological progress and economic development: The rise of cognitive capitalism. Personality and Individual Differences, 53, 108–113.CrossRefGoogle Scholar
  60. Rindermann, H., & Meisenberg, G. (2009). Relevance of education and intelligence at the national level for health: The case of HIV and AIDS. Intelligence, 37, 383–395.CrossRefGoogle Scholar
  61. Rindermann, H., Sailer, M., & Thompson, J. (2009). The impact of smart fractions, cognitive ability of politicians and average competence of peoples on social development. Talent Development & Excellence, 1, 3–25.Google Scholar
  62. Rindermann, H., & Thompson, J. (2011). Cognitive capitalism: The effect of cognitive ability on wealth, as mediated through scientific achievement and economic freedom. Psychological Science, 22, 754–763.CrossRefGoogle Scholar
  63. Sala-i-Martin, X. (1997). I just ran two million regressions. American Economic Review, 87, 178–183.Google Scholar
  64. Smith, A. (1776)[1937] An inquiry into the nature and causes of the wealth of nations. New York: The Modern Library.Google Scholar
  65. Strenze, T. (2007). Intelligence and socioeconomic success: A meta-analytic review of longitudinal research. Intelligence, 35, 401–426.CrossRefGoogle Scholar
  66. van Praag, C. M., & Cramer, J. S. (2011). The roots of entrepreneurship and labour demand: Individual ability and low risk aversion. Economica, 68, 45–62.CrossRefGoogle Scholar
  67. Van Praag, M., van Witteloostuijn, A., & van der Sluis, J. (2013). The higher returns to formal education for entrepreneurs versus employees. Small Business Economics, 40, 375–396.Google Scholar
  68. van Stel, A., Caree, A. M., & Thurik, A. R. (2005). The effect of entrepreneurial activity on national economic growth. Working Paper, Max Planck Institute of Economics.Google Scholar
  69. Vinogradov, E., & Kolvereid, L. (2010). Home country national intelligence and self-employment rates among immigrants in Norway. Intelligence, 38, 151–159.CrossRefGoogle Scholar
  70. Weede, E., & Kämpf, S. (2002). The impact of intelligence and institutional improvements on economic growth. Kyklos, 55, 361–380.CrossRefGoogle Scholar
  71. Wicherts, J. M., Dolan, C. V., Carlson, J. S., & van der Maas, H. L. J. (2009). Raven’s test performance of sub-Saharan Africans: Average performance, psychometric properties, and the Flynn effect. Learning and Individual Differences, 20, 135–151.CrossRefGoogle Scholar
  72. Wicherts, J. M., Dolan, C. V., Carlson, J. S., & van der Maas, H. L. J. (2010). A systematic literature review of the average IQ of sub-Saharan Africans. Intelligence, 38, 1–20.CrossRefGoogle Scholar
  73. World Bank. (2014). New business registration database. Washington, D.C.: World Bank.Google Scholar

Copyright information

© Springer Science+Business Media New York 2014

Authors and Affiliations

  1. 1.Southern Illinois University EdwardsvilleEdwardsvilleUSA
  2. 2.Mercatus CenterGeorge Mason UniversityFairfaxUSA

Personalised recommendations