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Exploring the role of FDI in enhancing the entrepreneurial activity in Europe: a panel data analysis

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Abstract

This paper explores the impact of foreign direct investment (FDI) on the entrepreneurial activity in 16 European countries. By using Global Entrepreneurship Monitor (GEM) data, which enables the distinction necessity-driven vs. opportunity-driven entrepreneurs, we assess the influence of both inward and outward FDI on the entrepreneurial activity during the time span 2005–2012. We resort to a static, as well as to a dynamic panel data analysis. Our findings highlight the fact that the FDI has no clear influence on the total entrepreneurial activity, or on the established business ownership rate. Nevertheless, our results clearly state that both inward and outward FDI positively influences the necessity-driven entrepreneurs, while having a negative impact on the opportunity-driven entrepreneurs. The results prove to be robust regarding the use of a fixed and random effects panel model, two stages least square (2SLS) model, as well as the use of a system-Generalized Method of Moments (system-GMM) approach.

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Notes

  1. Belgium (be), Croatia (cr), Denmark (dk), Finland (fi), France (fr), Germany (ge), Greece (gr), Hungary (hu), Ireland (ir), Netherlands (nl), Norway (no), Slovenia (sv), Spain (sp), Sweden (sw), Switzerland (sz) and the United Kingdom (uk).

  2. Notice that, even if the two aforementioned categories are calculated as percentage of the total entrepreneurial activity rate, their sum is not 100 % as there are questioned individuals who consider that they do not belong to one of the said categories.

  3. In order to avoid the broken panel problem, where entrepreneurship data are missing (Germany, 2007; Ireland, 2009; Sweden, 2008, 2009 and Switzerland, 2006, 2008), we use the linear interpolation to complete our panel.

  4. Appendix Table 10 presents similar results for the 2STLS model, with robust standard errors.

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Authors and Affiliations

  1. Management Department, Politehnica University of Timisoara, P-ta. Victoriei, No. 2, 300006, Timisoara, Timis, Romania

    Claudiu Tiberiu Albulescu & Matei Tămăşilă

  2. CRIEF, University of Poitiers, 2 Rue Jean Carbonnier, 86022, Poitiers, France

    Claudiu Tiberiu Albulescu

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  1. Claudiu Tiberiu Albulescu
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  2. Matei Tămăşilă
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Correspondence to Claudiu Tiberiu Albulescu.

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Claudiu Tiberiu Albulescu is Associate Professor at Politehnica University of Timisoara.

Matei Tămăşilă is Associate Professor at Politehnica University of Timisoara.

Appendix

Appendix

Table 9 Summary statistics by country (average)
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Table 10 Results of the 2STLS analysis with robust errors
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Table 11 Results of the system GMM analysis with robust errors
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Albulescu, C.T., Tămăşilă, M. Exploring the role of FDI in enhancing the entrepreneurial activity in Europe: a panel data analysis. Int Entrep Manag J 12, 629–657 (2016). https://doi.org/10.1007/s11365-015-0360-9

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