Entrepreneurship and Growth in Local, Regional and National Economies
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Entrepreneurship and Growth in Local, Regional and National Economies

Frontiers in European Entrepreneurship Research

Edited by David Smallbone, Hans Landström and Dylan Jones-Evans

This state-of-the-art book provides a window on contemporary European entrepreneurship and small business research. The papers selected demonstrate the applied nature of entrepreneurship research as well as the various contributions that entrepreneurship can make to local, regional and national development.
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Chapter 3: Determinants of Early-Stage Entrepreneurial Activity in European Regions: Distinguishing Low and High Ambition Entrepreneurship

Niels Bosma and Veronique Schutjens

Extract

3. Determinants of early-stage entrepreneurial activity in European regions: distinguishing low and high ambition entrepreneurship Niels Bosma and Veronique Schutjens INTRODUCTION Entrepreneurship has received increasing attention in the past three decades and has been shown to be one of the engines of regional economic growth (Acs et al., 2003; Audretsch and Keilbach, 2004; Wennekers, 2006). Theoretically, entrepreneurship and new firm formation contribute to economic growth in at least three ways. First, in the Schumpeterian vocabulary, a direct economic effect is a result of the fact that entrepreneurs themselves are the people making ‘Neue Kombinationen’ of products and markets (Schumpeter, 1934). Schumpeter regarded an entrepreneur as ‘a master innovator, as a force behind economic development’ (Etzioni, 1987, p. 177). Among the many other scientists who defined entrepreneurship, ranging from Marshall’s ‘coordinator of economic resources’ in 1890 to Casson’s ‘decision maker’ (see Van Praag, 1999 for an overview), Schumpeter stood out in stressing that innovativeness is the key characteristic of an entrepreneur. This type of entrepreneur introduces new products, new processes, new market applicants and new organization structures. In the end, this innovative entrepreneurship fuels productivity growth of individual firms – and at a higher level, regional economic development. A second direct effect of entrepreneurship relates to employment creation. In particular, gazelles (rapidly growing firms, who succeed in combining resources and opportunities) fuel employment growth (Henrekson and Johansson, 2008). Many of these gazelles turn out to be young firms, who grow more organically than older gazelles (Henrekson and Johansson, 2008, p. 11). Finally,...

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