Abstract
The authors discuss how increased globalization, economic complexity and dynamism exacerbate contradictions between theoretical and empirical-driven arguments. In this discussion, the authors offer an analysis of the entrepreneurship paradox—that is, entrepreneurship is good for the economy but entrepreneurial activity is consistently higher in less developed and developing countries over time—through the lenses of two relevant tensions that underlie this paradox: the development tension (i.e., the inconsistent relationship between entrepreneurship and economic performance) and the policy tension (i.e., the unclear role of entrepreneurship policy on entrepreneurship outcomes). The authors explore the policy implications of this theoretical paradox by scrutinizing the effect of both the rate of entrepreneurial activity (quantity-based entrepreneurship) and the entrepreneurial ecosystem (quality-based entrepreneurship) on economic performance (GDP per capita). The empirical exercise, based on a sample of 81 countries from Africa, America, Asia and Europe, focuses on how the development tension and the policy tension shape the entrepreneurship paradox. In exploring these two theoretical tensions, the authors define and distinguish quantitative entrepreneurship from the systemic, quality-based entrepreneurial ecosystem and set forth alternative policies to reconcile the tensions between entrepreneurship and development. The analysis of the entrepreneurship paradox contributes to the debate on the economic role of entrepreneurship and concludes highlighting that, regardless of their development level, economies do not need more entrepreneurs but rather a healthy entrepreneurship ecosystem that supports the optimal channeling of entrepreneurship outcomes to the economy.
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Notes
- 1.
Building on the terminology used by Smith and Lewis (2011) and Putnam et al. (2016), tensions—dualities or dichotomies that are inherent to complex systems or socially constructed—are underlying elements of paradoxes that seem logical individually, but irrational and inconsistent when juxtaposed. A paradox is a set of contradictory yet interrelated elements (tensions) that coexist and persist over time (Smith & Lewis, 2011, p. 382).
- 2.
These include the Global Entrepreneurship Monitor (GEM), the World Bank Group Enterprise Survey (WBEGS), the Economic Freedom of the World Report (EFWR), Hofstede’s Indicators (HI), the Global Competitiveness Report (GCR), the Legatum Prosperity Index (LPI), the Global Entrepreneurship and Development Index (GEDI).
- 3.
We should note that the analysis by Atiase et al. (2018) probably suffers from endogeneity bias because many of the independent variables are part of the GEI components.
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Lafuente, E., Szerb, L., Ács, Z.J. (2023). The Entrepreneurship Paradox: The Role of the Entrepreneurial Ecosystem on Economic Performance in Africa. In: Acs, Z.J., Lafuente, E., Szerb, L. (eds) The Entrepreneurial Ecosystem. Palgrave Studies in Entrepreneurship and Society. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-25931-9_4
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