The Entrepreneurial Society

The Entrepreneurial Society

How to Fill the Gap Between Knowledge and Innovation

Edited by Jean Bonnet, Domingo García Pérez De Lima and Howard Van Auken

This timely book analyzes the emergence of new firms in a broad context where economics, management and sociological approaches are joined. The market benefits of an entrepreneurial economy are evident in the new technology that has been made available to consumers over the past ten to twenty years. Entrepreneurial firms provide the market with innovations that create new products and, in turn, generate new employment and tax revenue, thus playing a critical role in surviving the economic crisis. The book explores diverse conditions that explain, permit and support entrepreneurship, allowing thinking outside the box and enhancing breakthrough innovations. At a time when new challenges are appearing regarding the ecological footprint, this is crucial.

Chapter 1: Entrepreneurial Diversity and Economic Growth

Ingrid Verheul and André van Stel

Subjects: business and management, entrepreneurship

Extract

Ingrid Verheul and André van Stel INTRODUCTION 1.1 Several studies have discussed and empirically investigated the link between entrepreneurial activity and economic performance at the level of cities, regions and nations (Audretsch and Keilbach, 2004; Carree et al., 2002; Iyigun and Owen, 1999). In these studies entrepreneurs are often treated as a homogeneous group. However, in the 1980s Gartner (1985, p. 696) argued that: ‘The diversity among entrepreneurs and their ventures may be larger than the differences between entrepreneurs and nonentrepreneurs and between entrepreneurial firms and non-entrepreneurial firms’. In practice we see extensive variation between entrepreneurs, for example, in terms of motivations, human capital, goals and so on. Notwithstanding the importance of the number of small firms for economic performance, this (pure) diversity within the small business population may also play a role over and above the sheer quantity effect. It should be noted, however, that a higher number of enterprises ‘an sich’ also implies higher diversity.1 The importance of diversity in entrepreneurship can be better understood in the context of an increasing diversity in demand. Indeed, market demand has become more diverse, induced by an increase in prosperity (Jackson, 1984) and reinforced by the processes of individualization and globalization. Hence, for achieving high rates of economic growth it is important that there is a diverse supply of goods and services to match this demand for variety. A greater diversity of the entrepreneurial population – in terms of characteristics of entrepreneurs and their firms – will contribute to this supply variation. Cohen...

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