Conditions Supporting Entrepreneurship and Sustainable Growth

Conditions Supporting Entrepreneurship and Sustainable Growth

Luís Farinha (Instituto Politécnico de Castelo Branco, Castelo Branco, Portugal & NECE-Research Unit, Covilhã, Portugal), Joao J. Ferreira (NECE-Research Unit, University of Beira Interior, Covilhã, Portugal), Sara Nunes (Instituto Politécnico de Castelo Branco, Castelo Branco, Portugal) and Vanessa Ratten (School of Management, La Trobe Business School, La Trobe University, Melbourne, Australia)
DOI: 10.4018/IJSESD.2017070105

Abstract

There are a variety of different conditions that support entrepreneurship and affect sustainable development. The aim of this paper is to focus on the issue of territorial advantage, based on the dimensions analysed by the World Economic Forum (WEF). This helps to assess the sustainable competitiveness of different geographic regions in the world based on the variables of the Global Entrepreneurship Monitor (GEM). The geographic regions the authors focus on in the analysis are 1) Asia and Oceania, 2) Europe and 3) Latin America and the Caribbean. From the analysis they analyse which variables best explain the socio-economic development of these geographic regions and whether there are any major differences. The results based on partial least squares structural equation modelling (PLS-SEM) show the variables within each group of countries, which best explain the regional development. This helps to understand the association between competitiveness and entrepreneurship variables with sustainable growth in order to help explain best interventionist priorities to use in order to foster entrepreneurship.
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1. Introduction

Entrepreneurial initiatives and exports have a positive impact on national competitiveness and regional development, increasing both productivity, wealth, and jobs creation (Dana et al. 2014; Farinha et al., 2014; Huggins and Williams 2011; Ratten, 2014; Smith and Bagchi-Sen 2012; Valliere and Peterson 2009). The increased regional competitiveness based on country regions has meant that it is also urgent to evaluate the behavior of countries in the field of entrepreneurial culture and entrepreneurship rate. This is due to the globalization of markets and the resulting mass of competition associated with greater technological complexity, making innovation a key aspect for enterprises and their countries (Farinha et al. 2014; Ocampo & Clark, 2017). This is seen in the productivity of a country determining its ability to sustain its level of income and is one of the central determinants affecting return on investment, which is one of the key factors explaining an economy’s growth potential (Balkyte and Tvaronavičiene 2010; Farinha et al. 2015). This has lead to the economic role of territorial capital being to enhance the efficiency and productivity of local activities (Camagni, 2008). Due to the increased emphasis on regional competitiveness it is important to understand the conditions supporting entrepreneurship.

Despite the several studies published in the last decades on the determinants of the economies competitiveness (Bergsteiner & Avery, 2012; Lall, 2001; Porter et al., 2000; Klaus Schwab, 2015; Squalli et al., 2008); and on the attitude and entrepreneurial activity (Bosma & Schutjens, 2011; García-Tabuenca et al., 2010; Hayton & Cacciotti, 2013; Huggins & Williams, 2011; Valliere & Peterson, 2009), a gap is identified in the literature about studies that combine both these perspectives, and that focus their impact on the nation’s sustainable growth.

This study focuses on the national framework conditions and entrepreneurial culture, which are important factors in providing territorial competitive advantage, resulting in higher innovativeness and entrepreneurship levels. According to Hayton & Cacciotti (2013) entrepreneurial culture is that distinguishes entrepreneurs from non-entrepreneurs. These are cultural values and beliefs, motivations, attitudes and entrepreneurial behaviours.

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