Entrepreneurial capital and productive efficiency: the case of the Spanish regions
Abstract
The aim of this paper is to analyse the interrelation between entrepreneurial capital and productive efficiency of the Spanish regions while verifying the importance that business dynamics and entrepreneurial activity have on regional economic growth. For this purpose, data are used from the seventeen Spanish regions during the period 2003−2016. A multi-equation model is estimated that enables the analysis, on the one hand, of the existence of a causal relationship between business dynamics and entrepreneurial activity and, on the other hand, of these variables on the total factor productivity. The results lead to the conclusion that the entrepreneurial activity and the net creation of companies have a positive effect on productive efficiency and can explain the differences in the economic growth of the regions. In addition, the stock of human capital, the promotion of innovation and the degree of technological innovation act as catalysts for the productive efficiency of the regions. Finally, the results verify the fulfilment of the Schumpeter effect by which entrepreneurial capital generates economic growth.
First published online 21 October 2019
Keyword : economic growth, entrepreneurship, new businesses, total factor productivity, productive efficiency, panel data
How to Cite
Rico, P., & Cabrer-Borrás, B. (2019). Entrepreneurial capital and productive efficiency: the case of the Spanish regions. Technological and Economic Development of Economy, 25(6), 1363-1379. https://doi.org/10.3846/tede.2019.10549
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Bjornskov, C., & Foss, N. (2013). How strategic entrepreneurship and the institutional context drive economic growth. Strategic Entrepreneurship Journal, 7(1), 50-69. https://doi.org/10.1002/sej.1148
Blanco-Mesa, F., Gil-Lafuente, A. M., & Merigó, J. M. (2018). New aggregation operators for decisionmaking under uncertainty: an applications in selection of entrepreneurial opportunities. Technological and Economic Development of Economy, 24(2), 335-357. https://doi.org/10.3846/20294913.2016.1212744
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Cobb, C., & Douglas, P. (1928). A theory production. The American Economic Review, 18(1), 139-165.
Coe, D. T., & Helpman, E. (1995). International R&D spillovers. European Economic Review, 38(5), 859-887. https://doi.org/10.1016/0014-2921(94)00100-E
Cuadrado, P., & Moral, E. (2016). El crecimiento potencial de la economía española (No. 1603). Banco de España, Documentos Ocasionales, Madrid.
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Erken, H., Donselaar, P., & Thurik, R. (2018). Total factor productivity and the role of entrepreneurhip. Journal Technology Transfer, 43(16), 1493-1521. https://doi.org/10.1007/s10961-016-9504-5
Fritsch, M. (2008). How does new business formation affect regional development? Introduction to the special issue. Small Business Economics, 30(1), 1-14. https://doi.org/10.1007/s11187-007-9057-y
Fritsch, M., & Schroeter, A. (2011). Why does the effect of new business formation differ across regions. Small Business Economics, 36(4), 383-400. https://doi.org/10.1007/s11187-009-9256-9
Griliches, Z. (1998). R&D and productivity: the econometric evidence. Chicago: University of Chicago Press. https://doi.org/10.7208/chicago/9780226308906.001.0001
Griliches, Z., & Lichtenberg, F. R. (1984). R&D and productivity growth at the industry level: is there still a relationship? In Z. Griliches (Ed.), R&D, patents, and productivity (pp. 465-496). Chicago: Chicago University Press and NBER.
González-Pernía, J. L., & Peña-Legazkue, I. (2015). Export-oriented entrepreneurship and regional economic growth. Small Business Economics, 45(3), 505-522. https://doi.org/10.1007/s11187-015-9657-x
Guellec, D., & Van Pottelsberghe de la Potterie, B. P. (2004). From R&D to productivity growth: do the institutional settings and the source of funds of R&D matter? Oxford Bulletin of Economics and Statistics, 66(3), 353-378. https://doi.org/10.1111/j.1468-0084.2004.00083.x
Hanushek, E. A. (2012). Education quality and economic growth. In B. Miniter (Ed.), The 4 percent solution: unleashing the economic growth America needs (Chapter 16, pp. 227-239). New York: Cross Business.
Holtz-Eakin, D., & Kao, C. (2003). Entrepreneurship and economic growth: the proof is in the productivity (Working paper, No. 50). Syracuse: Center for Policy Research. https://doi.org/10.2139/ssrn.1809885
Jacobs, B., Nahuis, R., & Tang, P. J. G. (2002). Sectoral productivity growth and R&D spillovers in the Netherlands. De Economist, 150(2), 181-210. https://doi.org/10.1023/A:1015696202835
Kato, M., & Honjo, Y. (2015). Entrepreneurial human capital and the survival of new firms in high- and low-tech sectors. Journal of Evolutionary Economics, 25(5), 925-957. https://doi.org/10.1007/s00191-015-0427-3
Koellinger, P. D., & Thurik, A. R. (2012). Entrepreneurship and the business cycle. Review of Economics and Statistics, 94(4), 1143-1156. https://doi.org/10.1162/REST_a_00224
Krugman, P. (1994). The age of diminished expectations. Cambridge, MA: The MIT Press.
Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
Lucas, R. (1993). Making a miracle. Econometrica, 61(2), 251-272. https://doi.org/10.2307/2951551
Mincer, J. (1984). Human capital and economic growth. Economics of Education Review, 3(3), 195-205. https://doi.org/10.1016/0272-7757(84)90032-3
OECD. (2008). A framework for addressing and measuring entrepreneurship. Paris: OECD Publishing.
Prieger, J. E., Bampoky, C., Blanco, L. R., & Liu, A. (2016). Economic growth and the optimal level of entrepreneurship. World Development, 82, 95-109. https://doi.org/10.1016/j.worlddev.2016.01.013
Rico, P., & Cabrer-Borrás, B. (2019). Entrepreneurship, firms creation and regional performance. European Journal of Management and Business Economics (in press). https://doi.org/10.1108/EJMBE-07-2018-0077
Rodriguez-Pose, A., & Comptour, F. (2012). Do clusters generate greater innovation and growth? An analysis of European regions. The Professional Geographer, 64(2), 211-231. https://doi.org/10.1080/00330124.2011.583591
Romer, P. M. (1986). Increasing returns and long-run growth. The Journal of Political Economy, 94(5), 1002-1037. https://doi.org/10.1086/261420
Sevilir, M. (2010). Human capital investment, new firm creation and venture capital. Journal of Financial Intermediation, 19(4), 483-508. https://doi.org/10.1016/j.jfi.2009.08.002
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94. https://doi.org/10.2307/1884513
Schumpeter, J. (1934). Theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle. Cambridge, MA: Harvard University Press.
Thurik, A. R., Carree, M. A., Van Stel, A., & Audretsch, D. B. (2008). Does self-employment reduce unemployment? Journal of Business Venturing, 23(6), 673-686. https://doi.org/10.1016/j.jbusvent.2008.01.007
Van Praag, C. M., & Van Stel, A. (2013). The more business owners, the merrier? The role of tertiary education. Small Business Economics, 41(2), 335-357. https://doi.org/10.1007/s11187-012-9436-x
Van Praag, C. M., & Versloot, P. H. (2007). What is the value of entrepreneurship? A review of recent research. Small Business Economics, 29(4), 351-382. https://doi.org/10.1007/s11187-007-9074-x
Van Stel, A. J., Carree, M. A., & Thurik, A. R. (2005). The effect of entrepreneurial activity on national economic growth. Small Business Economics, 24(3), 311-321. https://doi.org/10.1007/s11187-005-1996-6
Vila, L., Cabrer-Borras, B., & Pavia, J. M. (2015). On the relationship between knowledge creation and economic performance. Technological and Economic Development of Economy, 21(4), 539-556. https://doi.org/10.3846/20294913.2013.876687
Wennekers, A. R. M., & Thurik, A. R. (1999). Linking entrepreneurship and economic growth. Small Business Economics, 13(1), 25-55. https://doi.org/10.1023/A:1008063200484
Acs, Z. J., Estrin, S., Mickiewicz, T., & Szerb, L. (2018). Entrepreneurship, institutional economics, and economic growth: an ecosystem perspective. Small Business Economics, 51(2), 501-514. https://doi.org/10.1007/s11187-018-0013-9
Aghion, P. (2017). Entrepreneurship and growth: lessons from an intellectual journey. Small Business Economics, 48(1), 9-24. https://doi.org/10.1007/s11187-016-9812-z
Aubry, M., Bonnet, J., & Renou-Maissant, P. (2015). Entrepreneurship and the business cycle: the “Schumpeter” effect versus the “refugee” effect – a French appraisal based on regional data. The Annals of Regional Science, 54(1), 23-55. https://doi.org/10.1007/s00168-014-0645-x
Audretsch, D. B. (2007). Entrepreneurship capital and economic growth. Oxford Review of Economic Policy, 23(1), 63-78. https://doi.org/10.1093/oxrep/grm001
Audretsch, D. B., & Keilbach, M. (2004). Entrepreneurship capital and economic performance. Regional Studies, 38(8), 949-959. https://doi.org/10.1080/0034340042000280956
Audretsch, D. B., & Keilbach, M. (2008). Resolving the knowledge paradox: knowledge-spillover entrepreneurship and economic growth. Research Policy, 37(10), 1697-1705. https://doi.org/10.1016/j.respol.2008.08.008
Audretsch, D. B., Keilbach, M., & Lehmann, E. E. (2006). Entrepreneurship and economic growth. New York: Oxford University Press. https://doi.org/10.1093/acprof:oso/9780195183511.001.0001
Audretsch, D. B., & Peña-Legazkue, I. (2012). Entrepreneurial activity and regional competitiveness: an introduction to the special issue. Small Business Economics, 39(3), 531-537. https://doi.org/10.1007/s11187-011-9328-5
Banco de España. (2015). Business dynamics in Spain: characteristics, determinants and implications (Annual Report 2015, 93-121). Madrid.
Barro, R. J. (1991). Economic growth in a cross section of countries. Quarterly Journal of Economics, 106(2), 155-173. https://doi.org/10.2307/2937943
Barro, R. J. (2001). Human capital and growth. American Economic Review, 91(2), 12-17. https://doi.org/10.1257/aer.91.2.12
Barro, R. J., & Lee, J. W. (1993). International comparisons of educational attainment. Journal of Monetary Economics, 32(3), 363-394. https://doi.org/10.1016/0304-3932(93)90023-9
Barro, R. J., & Sala-i-Martin, X. (2004). Economic growth (2nd ed.). Cambridge, Massachusetts, London, England: The MIT Press.
Becker, G. S. (1975). Human capital: a theoretical and empirical analysis, with special reference to education. National Bureau of Economic Research (NBER), New York.
Bjornskov, C., & Foss, N. (2013). How strategic entrepreneurship and the institutional context drive economic growth. Strategic Entrepreneurship Journal, 7(1), 50-69. https://doi.org/10.1002/sej.1148
Blanco-Mesa, F., Gil-Lafuente, A. M., & Merigó, J. M. (2018). New aggregation operators for decisionmaking under uncertainty: an applications in selection of entrepreneurial opportunities. Technological and Economic Development of Economy, 24(2), 335-357. https://doi.org/10.3846/20294913.2016.1212744
Braunerhjelm, P., Acs, Z. J., Audretsch, D. B., & Carlsson, B. (2010). The missing link: knowledge diffusion and entrepreneurship in endogenous growth. Small Business Economics, 34(2), 105-125. https://doi.org/10.1007/s11187-009-9235-1
Callejón, M., & Segarra, A. (1999). Business dynamics and efficiency in industries and regions: the case of Spain. Small Business Economics, 13(4), 253-271. https://doi.org/10.1023/A:1008015317323
Carree, M. A., & Thurik, R. (2008). The lag structure of the impact of business ownership on economic performance in OECD countries. Small Business Economics, 30(1), 101-110. https://doi.org/10.1007/s11187-006-9007-0
Carree, M. A., & Thurik, R. (2010). The impact of entrepreneurship on economic growth. In Z. J. Acs & D. B. Audretsch (Eds.), Handbook of entrepreneurship research (pp. 557-594). New York: Springer. https://doi.org/10.1007/978-1-4419-1191-9_20
Cobb, C., & Douglas, P. (1928). A theory production. The American Economic Review, 18(1), 139-165.
Coe, D. T., & Helpman, E. (1995). International R&D spillovers. European Economic Review, 38(5), 859-887. https://doi.org/10.1016/0014-2921(94)00100-E
Cuadrado, P., & Moral, E. (2016). El crecimiento potencial de la economía española (No. 1603). Banco de España, Documentos Ocasionales, Madrid.
European Commission. (2017). Country report Spain 2017 including an in-depth review on the prevention and correction of macroeconomic imbalances. (Commission Staff Working Document). Retrieved from https://ec.europa.eu/info/sites/info/files/2017-european-semester-country-report-spain-en.pdf
Erken, H., Donselaar, P., & Thurik, R. (2018). Total factor productivity and the role of entrepreneurhip. Journal Technology Transfer, 43(16), 1493-1521. https://doi.org/10.1007/s10961-016-9504-5
Fritsch, M. (2008). How does new business formation affect regional development? Introduction to the special issue. Small Business Economics, 30(1), 1-14. https://doi.org/10.1007/s11187-007-9057-y
Fritsch, M., & Schroeter, A. (2011). Why does the effect of new business formation differ across regions. Small Business Economics, 36(4), 383-400. https://doi.org/10.1007/s11187-009-9256-9
Griliches, Z. (1998). R&D and productivity: the econometric evidence. Chicago: University of Chicago Press. https://doi.org/10.7208/chicago/9780226308906.001.0001
Griliches, Z., & Lichtenberg, F. R. (1984). R&D and productivity growth at the industry level: is there still a relationship? In Z. Griliches (Ed.), R&D, patents, and productivity (pp. 465-496). Chicago: Chicago University Press and NBER.
González-Pernía, J. L., & Peña-Legazkue, I. (2015). Export-oriented entrepreneurship and regional economic growth. Small Business Economics, 45(3), 505-522. https://doi.org/10.1007/s11187-015-9657-x
Guellec, D., & Van Pottelsberghe de la Potterie, B. P. (2004). From R&D to productivity growth: do the institutional settings and the source of funds of R&D matter? Oxford Bulletin of Economics and Statistics, 66(3), 353-378. https://doi.org/10.1111/j.1468-0084.2004.00083.x
Hanushek, E. A. (2012). Education quality and economic growth. In B. Miniter (Ed.), The 4 percent solution: unleashing the economic growth America needs (Chapter 16, pp. 227-239). New York: Cross Business.
Holtz-Eakin, D., & Kao, C. (2003). Entrepreneurship and economic growth: the proof is in the productivity (Working paper, No. 50). Syracuse: Center for Policy Research. https://doi.org/10.2139/ssrn.1809885
Jacobs, B., Nahuis, R., & Tang, P. J. G. (2002). Sectoral productivity growth and R&D spillovers in the Netherlands. De Economist, 150(2), 181-210. https://doi.org/10.1023/A:1015696202835
Kato, M., & Honjo, Y. (2015). Entrepreneurial human capital and the survival of new firms in high- and low-tech sectors. Journal of Evolutionary Economics, 25(5), 925-957. https://doi.org/10.1007/s00191-015-0427-3
Koellinger, P. D., & Thurik, A. R. (2012). Entrepreneurship and the business cycle. Review of Economics and Statistics, 94(4), 1143-1156. https://doi.org/10.1162/REST_a_00224
Krugman, P. (1994). The age of diminished expectations. Cambridge, MA: The MIT Press.
Lucas, R. (1988). On the mechanics of economic development. Journal of Monetary Economics, 22(1), 3-42. https://doi.org/10.1016/0304-3932(88)90168-7
Lucas, R. (1993). Making a miracle. Econometrica, 61(2), 251-272. https://doi.org/10.2307/2951551
Mincer, J. (1984). Human capital and economic growth. Economics of Education Review, 3(3), 195-205. https://doi.org/10.1016/0272-7757(84)90032-3
OECD. (2008). A framework for addressing and measuring entrepreneurship. Paris: OECD Publishing.
Prieger, J. E., Bampoky, C., Blanco, L. R., & Liu, A. (2016). Economic growth and the optimal level of entrepreneurship. World Development, 82, 95-109. https://doi.org/10.1016/j.worlddev.2016.01.013
Rico, P., & Cabrer-Borrás, B. (2019). Entrepreneurship, firms creation and regional performance. European Journal of Management and Business Economics (in press). https://doi.org/10.1108/EJMBE-07-2018-0077
Rodriguez-Pose, A., & Comptour, F. (2012). Do clusters generate greater innovation and growth? An analysis of European regions. The Professional Geographer, 64(2), 211-231. https://doi.org/10.1080/00330124.2011.583591
Romer, P. M. (1986). Increasing returns and long-run growth. The Journal of Political Economy, 94(5), 1002-1037. https://doi.org/10.1086/261420
Sevilir, M. (2010). Human capital investment, new firm creation and venture capital. Journal of Financial Intermediation, 19(4), 483-508. https://doi.org/10.1016/j.jfi.2009.08.002
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65-94. https://doi.org/10.2307/1884513
Schumpeter, J. (1934). Theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle. Cambridge, MA: Harvard University Press.
Thurik, A. R., Carree, M. A., Van Stel, A., & Audretsch, D. B. (2008). Does self-employment reduce unemployment? Journal of Business Venturing, 23(6), 673-686. https://doi.org/10.1016/j.jbusvent.2008.01.007
Van Praag, C. M., & Van Stel, A. (2013). The more business owners, the merrier? The role of tertiary education. Small Business Economics, 41(2), 335-357. https://doi.org/10.1007/s11187-012-9436-x
Van Praag, C. M., & Versloot, P. H. (2007). What is the value of entrepreneurship? A review of recent research. Small Business Economics, 29(4), 351-382. https://doi.org/10.1007/s11187-007-9074-x
Van Stel, A. J., Carree, M. A., & Thurik, A. R. (2005). The effect of entrepreneurial activity on national economic growth. Small Business Economics, 24(3), 311-321. https://doi.org/10.1007/s11187-005-1996-6
Vila, L., Cabrer-Borras, B., & Pavia, J. M. (2015). On the relationship between knowledge creation and economic performance. Technological and Economic Development of Economy, 21(4), 539-556. https://doi.org/10.3846/20294913.2013.876687
Wennekers, A. R. M., & Thurik, A. R. (1999). Linking entrepreneurship and economic growth. Small Business Economics, 13(1), 25-55. https://doi.org/10.1023/A:1008063200484