The Economics of Entrepreneurship: What We Know and What We Don’t

Abstract

This introductory, non-technical, article offers a reflective overview of what Economics adds to our understanding of entrepreneurship. It is designed primarily to showcase to young entrepreneurship scholars several interesting research questions and a toolbox of methods to answer them. First, I will illustrate the kinds of questions that can be posed and answered using Economics. Then I will present and discuss a selective list of "canonical" theoretical and empirical models that form the intellectual bedrock of the Economics of Entrepreneurship. After that, I present and discuss some well-established theoretical contributions and empirical findings that have been generated by the approach. I conclude by discussing aspects of "What we don't know" − and should. This part of the article identifies several ideal future trends in research that build on and complement the foundations of entrepreneurship that are delineated in the main body of the article.

Knowledge spillovers and new ventures’ export orientation

“…Export activity by new ventures may provide successful role models for aspiring entrepreneurs and thus function as a catalyst for new business creation (Davidsson and Honig 2003;De Clercq and Arenius 2006). In this sense, we identify a particular type of entrepreneurship spillover that stems from export activity (Parker 2005). This finding also extends prior research that seeks to understand the determinants of a country's level of entrepreneurship (e.g., Gavron et al 1998;Noorderhaven et al 2004;Storey 1999;Thurik and Wennekers 2004;van Stel et al 2005).…”

“…To this end, we rely on knowledge spillover literature to argue that cross-country differences with respect to the proportion of export-oriented new ventures may be the result of a country's openness to cross-border activities (Grossmann and Helpman 1991), as reflected in its level of FDI (both inward and outward) and international trade (export and import). In addition, we consider a country's proportion of export-oriented new ventures to be not only a consequence of export spillovers but also a driver of entrepreneurship spillovers that contributes to the overall emergence of new businesses within a country's borders (Audretsch and Keilbach 2004;Parker 2005). Our results provide mixed support for the role of export spillover effects in shaping the proportion of export-oriented new ventures.…”

“…That is, the nature of early-stage activity itself can be an important source of spillovers (Parker 2005). In making this claim, we draw from literature that emphasizes the role of macrolevel factors to explain cross-country differences in entrepreneurship (Noorderhaven et al 2004;Verheul et al 2002).…”

“…We suspect that export-driven new ventures may be an important source of knowledge spillovers, because such ventures tend to be innovative and have high human capital levels (Bloodgood et al 1996), and thus serve as role models for aspiring entrepreneurs (Davidsson and Honig 2003). Thus, we add to literature that suggests that the nature of early-stage activity may provide an important source of spillovers (Audretsch and Keilbach 2004;Parker 2005).…”

The Protestant ethic and entrepreneurship: Evidence from religious minorities in the former Holy Roman Empire

“…The economic literature on entrepreneurship introduces a generic entrepreneurship ability and the level of risk aversion as the fundamental determinants of the individual decision to become an entrepreneur (see Parker, 2005 for a review). Both factors are likely to be influenced by traits like determination and self-esteem, and in turn by religious ethical principles.…”