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Entrepreneurial Culture, Regional Innovativeness and Economic Growth

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Entrepreneurship and Culture

Abstract

In this paper, we empirically study the relationship between entrepreneurial culture and economic growth. Based on a micro based comparison of entrepreneurs and non-entrepreneurs, we develop a measure reflecting entrepreneurial attitude at the regional level. We subsequently relate this newly developed variable, ‘entrepreneurial culture,’ to innovativeness and economic growth in 54 European regions. Extensive robustness analysis suggests that differences in economic growth in Europe can be explained by differences in entrepreneurial culture, albeit mostly in an indirect way.

Entrepreneurial culture, regional innovativeness and economic growth (first published in: Journal of Evolutionary Economics, Vol. 17, No. 2, 2007)

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Notes

  1. 1.

    Acknowledging that these type of binomial regressions are normally used to predict the probability of a certain outcome (in this case someone becoming self-employed), this would require more information, such as panel data on the moment (and the period before) people decide to become an entrepreneur. Our data set does not allow us to do so, but, more importantly, this is not the goal of our analysis.

  2. 2.

    Similar to Barro and Sala-I-Martin (1995), we compute the regional growth figures by relating the regional GDP per capita information to the country mean. There are two reasons to use the country mean as a correction factor. First of all, we do not have regional price data. Second, the figures on regional GDP are provided in an index form that is not comparable across countries. Hence, we use Gross Regional Product (GRP) figures that are expressed as deviations from the means from the respective countries. An additional advantage of using relative data versus non-relative data is the direct control for national growth rates that might bias regional growth rates. The 1950 data are based on Molle et al. (1980), except for the data for Spain which refer to 1955, and are based on Barro and Sala-I-Martin’s (1995) calculations. By using the log value of this ratio, our analysis corresponds with including country averages as independent variables, also referred to as a quasi fixed effects approach (Hsiao 1986).

  3. 3.

    Eurostat and Cambridge Econometrics provide data on Gross Fixed Capital Formation. However, data are incomplete for some countries or in time.

  4. 4.

    The basic growth period we analyze is 1950–1998. The school enrolment rate in 1977 falls in between these dates and, given the fact that school enrolment rates have increased since 1950, the 1977 information may be a reasonable proxy for the average over the entire period. Data on school enrolment rates in Spanish regions refer to 1985.

  5. 5.

    Major agglomerations are the Western parts of the Netherlands, Greater Paris, Berlin, London, the Barcelona area, Brussels, and the Italian region Lazio (Rome).

  6. 6.

    There exist other ways to have a more refined control variable that can be taken into consideration, for example the physical length of abutting boundaries or the physical characteristics of the border terrain. However, these kinds of extensions go beyond the scope of the current paper.

  7. 7.

    However, if we take shorter periods of time (e.g. 1984–1998), we cannot find proof for the convergence hypothesis. This is in line with previous studies on country (Levine and Renelt 1992) and regional level (Fagerberg and Verspagen 1995). The period in the eighties can be roughly characterized by divergence instead of the observed convergence in the period before (Maurseth 2001).

  8. 8.

    In principle, the recursive method allows a graphical representation of the estimated coefficients when all 54 observations are subsequently deleted. For reasons of clarity and comprehensiveness, we have chosen to show only the results when the four highest/lowest observations are deleted.

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Acknowledgement

This paper was written while the author was visiting the European University Institute, Florence. The author is grateful to the Dutch Organisation for Scientific Research. A previous version of this paper was finalist for the Carolyn Dexter Best International Paper Award at the Academy of Management (Denver 2002) and 2nd best paper prizewinner at the European Regional Science Association Conference (Porto 2004). I thank the seminar participants at Tilburg University, Case Western Reserve University, Temple University, Copenhagen Business School, University of Girona (Spain), Nijmegen School of Management (Netherlands) and the Max Planck Institute in Jena (Germany). The author thanks the reviewers for their useful suggestions.

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  1. Nijmegen School of Management, Thomas van Aquinostraat 5.0.065, 9108, 6500, HK, Nijmegen, The Netherlands

    Sjoerd Beugelsdijk

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  1. Fak. Wirtschaftswissenschaften, Universität Jena, Carl-Zeiss-Str. 3, Jena, 07743, Germany

    Andreas Freytag

  2. Econometrisch Instituut, Erasmus Universiteit Rotterdam, Rotterdam, 3000 DR, Netherlands

    Roy Thurik

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Beugelsdijk, S. (2010). Entrepreneurial Culture, Regional Innovativeness and Economic Growth. In: Freytag, A., Thurik, R. (eds) Entrepreneurship and Culture. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-87910-7_7

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