Entrepreneurship, Growth and Economic Development

Entrepreneurship, Growth and Economic Development

Frontiers in European Entrepreneurship Research

Frontiers in European Entrepreneurship series

Edited by Mário Raposo, David Smallbone, Károly Balaton and Lilla Hortoványi

This timely book presents contemporary research on the key role of entrepreneurship in firm growth and development strategies. The contributors reveal that a high level of entrepreneurial activity contributes to economic growth, innovative activities, competition, job creation and local development.

Chapter 2: Are Firm Growth and Performance the Same or Different Concepts in Empirical Entrepreneurship Studies? An Analysis of the Dependent and Independent Variables

Niklas Kiviluoto, Malin Brännback and Alan Carsrud

Subjects: business and management, entrepreneurship, economics and finance, regional economics, urban and regional studies, regional economics


Niklas Kiviluoto, Malin Brännback and Alan Carsrud INTRODUCTION Entrepreneurship is generally associated with growth and seen as the engine of economic development and private wealth creation (Schumpeter, 1934; Gartner, 1988; Low and MacMillan, 1988; Stevenson and Jarillo, 1990; Storey, 1994; Delmar, 1997; Dess et al., 1997, Shane and Venkataraman, 2000). Some researchers have even argued that entrepreneurship is growth and vice versa (Davidsson et al., 2002). Research has even shown that small start-up firms create the majority of net new jobs (Birch, 1987; Kirchhoff, 1994; Aldrich, 1999; Autio, 2005; 2007). While firm growth is generally considered good and important, it is, however, rare (Shane, 2003; Autio, 2005). Moreover, entrepreneurial growth is problematic as the phenomenon can be assessed and measured in many ways (Brush and Vanderwerf, 1992; Fischer and Reuber, 2003; Davidsson et al., 2009; Shepherd and Wiklund, 2009). When measured in terms of employment (or any other dimension), however, the phenomenon remains rare, with fewer than 10 per cent of firms growing at all during their lifetime (Reynolds and White, 1997; Aldrich, 1999; Shane, 2003). Only 6.5 per cent of start-up entrepreneurs expect to create more than 20 new jobs within five years and only 1.7 per cent expect to grow beyond 100 employees within five years (Autio, 2007). Fewer than 3 per cent expect to ever grow beyond 100 employees (Reynolds and White 1997; Aldrich, 1999; Shane, 2003). Yet, as shown by Autio (2005; 2007) new firms are expected to create nearly 50 per cent of all...

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