Abstract
The literature has traditionally focused on the relationship between innovation and entrepreneurial activity, adopting mainly two perspectives when addressing entrepreneurship: empirical studies focusing on the behaviour of companies, and studies that consider entrepreneurship as a factor promoting the achievement of economic policy objectives. Following Schumpeter, innovation is a key source of value creation, generating growth in companies and the economy as a whole. But it is also important to remember the feedback effects generated in this process. This chapter analyses the relationship among three variables: entrepreneurship, innovation, and value creation, as well as the subsequent feedback effects. The theoretical aspects are considered and an empirical analysis is developed for the case of some European countries.
TopIntroduction
The last crisis suffered by the economies has meant that, among other issues, the analysis and determination of those factors and variables that exert a positive effect on economic growth and that stimulate business activity would be prioritized. In this sense, policies makers could design measures to enhance such factors and variables having also positive effects on other economic policy objectives, such as the creation of higher employment, and finally greater social welfare. Entrepreneurship has been highlighted as a factor that would have a positive effect in both areas.
For this reason, economic literature has focused on the role of entrepreneurs in the economy, considering entrepreneurs as generators of a country's economic growth and, therefore, social welfare. The main reason is that entrepreneurs show an adequate capacity to generate products, and more specifically, to use productive resources in order to introduce innovations. Therefore, there are many empirical and theoretical analysis that views entrepreneurs also as generators of wealth and employment (Alpkan, Bulut, Gundy, Ulusoy, & Kilic, 2010; Andersen, 2011; Chilton & Bloodgood, 2010). Consequently, countries in which the effects of the recession are more severe, and show relevant unemployment rates introduce measures to boost entrepreneurial activity in their economic policies (Acs, Audretsch, Braunerhjelm, & Carlsson, 2004; Acs, Audretsch, Braunerhjelm, & Carlson, 2005; Acs, Audretsch, Braunerhjelm, & Carlsson, 2012; Acs & Szerb, 2007; Audretsch, Bonte, & Keilbach, 2008; Audretsch & Keilbach, 2004a, 2004b; Hamilton, 2007; Noseleit, 2013).
With regard to specialized literature, the role of Entrepreneurship has been analyzed from two points, mainly in view of the empirical works focused on company behavior (Audretsch & Keilbach, 2004, Bierwerth, Schwens, Isidor, & Kabst, 2015; Ndubisi & Iftikhar, 2012 and Zahra, Jennings & Kuratko, 1999). Secondly, those who consider Entrepreneurship as one of the factors that inactively economic policy objectives, mainly economic growth in a direct way, and employment and social welfare indirectly (for example, Holcombe, 1998, Audretsch, 2005, Audretsch, Grilo, & Thurik, 2007, Alpkan, Bulut, Gundy, Ulusoy & Kilic, Acs, Audretsch, Braunerhjelm, & Carlsson, 2011, Braunerhjelm & Henrekson, 2013, Galindo & Méndez, 2014, Holcombe, 2007, Thornton, Ribeiro-Soriano, & Urbano, 2011, Castaño, Méndez & Galindo, 2015, 2016).
Key Terms in this Chapter
Distribution of Income: The way in which income is divided among the population of a country.
Entrepreneurial Employee Activity (EEA): indicator is calculated by the Global Entrepreneurship Monitor (GEM) and it is the rate of involvement of employees in entrepreneurial activities, such as developing or launching new goods or services, or setting up a new business unit, a new establishment or subsidiary. GEM (2017) defines EEA as employees developing new activities for their main employer, such as developing or launching new goods or services, or setting up a new business unit, a new establishment or subsidiary.
Human Capital: A productive resource which brings together the training, abilities and skills of individuals who take part in production processes and which are related to work productivity. It depends on factors such as education and experience.
Social Entrepreneurship: A business venture which aims to provide goods or services which meet social needs using business tools to make the enterprise sustainable.
Economic Growth: The increase in the production of goods and services in a country during a period of time.
Rule of Law: Principle by which the citizens of a country are subject to the law, in such a way that the law has authority and influence in society.
Institutions: The structures and mechanisms present in a society which regulate the conduct of individuals, promoting or discouraging certain behaviours. They may be formal (usually written, such as laws, norms, contracts) or informal (unwritten, such as customs, taboos, traditions).
Value Creation: That value is understood as actions dedicated to increasing the value of goods and services.
Entrepreneurial Activity: The life cycle of entrepreneurial ventures (nascent, new business, established business, discontinuation) and their impact (high growth, innovation, internationalization) ( GEM, 2017 ).
Entrepreneurship: A business venture launched by one or various individuals who identify market opportunities and are willing to assume economic risks so as to achieve profitability and consolidation over time.