Abstract
There is important literature that analyzes the relationship between entrepreneurship and economic growth. But it is also essential to consider the variables that influence entrepreneurship. In this sense, innovations, institutions, and human capital would be the main variables to consider, as they allow the entrepreneur to create new products, make them more competitive, or access new markets. At the same time, entrepreneurs establish the legal framework and the social climate to develop its activity, so innovations are generated and assimilated. But it is also essential to consider the degree of development and economic growth that countries present.
TopIntroduction
In recent decades, economic growth has been considered as one of the essential objectives of the economic policy due to its beneficial effects on employment and social welfare. Consequently, there is an extensive literature dedicated to determining the variables that favor its increase, fiscal variables, technology, institutions, etc., that could be included in the economic policy measures designed to achieve this objective.
One of the variables that have been given significant attention in recent years is entrepreneurship. According to Schumpeter (1911, 1950), entrepreneurs create new industries and introduce substantial structural changes in the economy, stimulating economic activity, favoring economic growth, job creation, and, ultimately, more generous social welfare. Due to this circumstance, an extensive literature has emerged in which the relationship between entrepreneurship and economic growth is analyzed (for example, Acs et al., 2012, 2018; Alpkan et al., 2010; Audretsch, 2005; Audretsch and Keilbach, 2004a,b; Audretsch and Fritsch, 2003; Galindo and Méndez, 2014; Méndez-Picazo et al., 2012; Castaño, Méndez, & Galindo, 2016).
However, it is also necessary to take into account other factors that could influence entrepreneurial activity. Two can be mainly considered. First, innovations must be considered. Thanks to innovations, entrepreneurs can enter new markets and make their products more competitive. And second, there must be adequate institutions that defend property rights and generate an appropriate social and legal framework for entrepreneurs to develop their activity. Without that proper legal framework, they will be reluctant to allocate their resources towards new investments and may seek other locations that they consider more appropriate in this regard. Related to all this, it is also necessary for an adequate social climate that favors business activity and enhances new technologies and their acceptance and assimilation. In the latter area, human capital would be a factor to consider.
Therefore, it is convenient to analyze the relationship between all these variables when designing appropriate measures to promote economic growth. Focusing attention, for example, on the role of innovations without taking into account the behavior of institutions, especially if these are not adequate, would mean that the measures would not have the desired effect or would have a lesser influence than expected on economic growth.
But, on the other hand, it must be taken into account that the structural situation of the countries would also be a condition to be considered because the structural circumstances of the economies could affect the results obtained. For this reason, the degree of development and growth of the countries play an essential role in the analysis because they will influence the motivations of the entrepreneurs when developing their activity. Depending on the existing economic situation, especially when there are high levels of unemployment or a particular economic stagnation, entrepreneurship by necessity is higher, considering that it is usually reduced when these adverse situations are mitigated or disappear. Therefore, it is crucial to carry out the study taking into account the position of the countries. For these reasons, the countries sample will be divided into two groups: the nations of group A includes innovation-driven economies characterized by presenting high values of the motivational index, and the countries of the Group B that are described, on the contrary, by efficiency-driven economies that show low values of the motivational index.
The main objective of this paper is to analyze the relationship between innovation, institutions, human capital, entrepreneurship on economic growth, considering different types of entrepreneurship and countries. In this sense, two kinds of entrepreneurship motivation have been considered: by necessity and opportunity, and two groups of countries will be created, a group of countries where entrepreneurship predominates opportunity motivations, and another group which predominates the necessity motivations. To classify the countries, the ratio (opportunity motivations/necessity motivations) will be used.
Key Terms in this Chapter
Opportunity Entrepreneurship: Entrepreneur that start-up to net exploitation of a business opportunity.
Efficiency-Driven Economies: Countries are increasingly competitive, with more-efficient production processes and increased product quality. At this level of development, economies are characterized by higher education and training, goods market efficiency, labor market efficiency, financial market sophistication, technological readiness, and higher market size.
Innovation-Driven Economies: Countries are the most developed. In this phase, businesses are more knowledge-intensive, and the service sector expands. The main difference is that these economies are based on knowledge and innovations activities.
Motivational Index: This index measures the relationship between opportunity entrepreneurship and necessity entrepreneurship, where the higher the score on the index, the greater the opportunity motivation.
Institutions: Are formed by the set of norms and agreements given to actors, organizations, and people to regulate their economic, social, and political relations. Institutions can be formal and informal.
Necessity Entrepreneurship: Entrepreneurs that start-up the need to create one’s own employment in response to the lack of other job alternatives.
FsQCA: The qualitative comparative analysis of fuzzy sets (fsQCA) is a methodology to obtain causal configurations from data from specific cases. This method attempts to search for logical connections between combinations of causal conditions and a result, the result being paths that describe how combinations of causal conditions would cause the expected result.