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About this book

Using institutional economics as a theoretical framework, this book analyzes institutional environment conducive to entrepreneurial activity in order to enhance economic performance across countries. In particular, the main contributions of this book to the entrepreneurship literature are the following:

• Identify past and current research about the institutional context shaping entrepreneurial activity and its effect on economic growth

• Examine social progress orientation as those institutional factors that are shaping innovative entrepreneurial activity

• Explore the effect of different types of entrepreneurial activities on economic growth

• Examine how social progress orientation through opportunity-driven entrepreneurship affects economic development

• Analyze the interrelationships between institutions, entrepreneurial activity and economic development across countries

• Study how the country's institutional context influences the way in which entrepreneurial activity affects social progress

Two sides of the same coin might be observed when analyzing policy aspects of those institutions affecting entrepreneurial activity. On the one hand, effective public policy to promote entrepreneurship is predicated on understanding the underlying forces as well as the consequences and impacts of entrepreneurship. On the other hand, different endeavors to promote entrepreneurial activity might have deleterious economic effects since they could actually reduce employment in the long-term. Thus, it is crucial to understand the institutional environment in which entrepreneurs are interacting and making decisions. The comprehension of these phenomena serves to move forward the theoretical, practical and policy debate on entrepreneurship as a mechanism to achieve higher economic performance.

Table of Contents

Frontmatter

Chapter 1. General Introduction

Abstract
Extensive research has been conducted to understand the antecedents and consequences on entrepreneurship, in which institutions were found important factors explaining differences across countries. Similarly, a vast number of scholars have been focused on comprehending those economic consequences of entrepreneurial activity, who highlighted its importance to spur performance and development. However, scholars have identified that, despite this evidence, part of the story about the relationship between entrepreneurship and economic performance is still incomplete, since the institutional context shapes how these two variables interplay. Therefore, the main objective of this book is to explore the institutional factors that encourage entrepreneurial activity to achieve higher economic performance across developing and developed countries. In this regard, this book places particular emphasis on different types of entrepreneurship and economic performance measures, as well as on specific contexts. In this regard, this introduction offers an overview of the book, including a description and analysis about institutional economics as the theoretical lenses.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 2. Institutional Antecedents of Entrepreneurship and Its Consequences on Economic Growth: A Systematic Literature Analysis

Abstract
Through synthesizing disparate strands of literature over the period 1992–2016, this chapter identifies past and current research about the institutional context shaping entrepreneurial activity and its effect on economic growth. This conjoint analysis reveals two important research lines in entrepreneurship research, which have been devoted to explore the institutional antecedents and consequences of entrepreneurial activity. Our findings try to reveal a broader comprehension of these two separate lines, providing an analysis of the interaction between institutions, entrepreneurship and economic growth. The systematic literature review suggests that institutions could be related to economic growth through entrepreneurial activity, which would open new research questions about what institutional factors encourage entrepreneurship rates in order to achieve economic growth. Possible theoretical implications may be discussed not only in terms of the importance of entrepreneurship, such a key element in economic growth, but also in terms of economic development, such a complex process in which entrepreneurial activity, influenced by institutions, is involved.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 3. Social Progress Orientation and Entrepreneurship

Abstract
The purpose of this chapter is to examine the influence of social progress orientation on entrepreneurial activity in an international analysis. Through a cross-sectional model with information from the Global Entrepreneurial activity Monitor, the Indices of Social Development, the World Values Survey, the Hofstede Centre and the United Nations Development Programme, this chapter finds that social progress orientation approached through voluntary spirit, survival versus self-expression values, power distance, and masculinity versus femininity explain entrepreneurship. More specifically, the main findings demonstrate that high voluntary spirit influences positively total entrepreneurial activity driven by innovation, whereas high voluntary spirit and low masculinity (femininity) affect positively the prevalence of entrepreneurial activity driven by opportunity over the entrepreneurial activity driven by necessity. This chapter may serve to keep advancing on the discussion about what social progress orientation means, and comprehending those factors that influence entrepreneurial activity in the light of institutional approach. Additionally, this chapter may serve to discuss policies to promote entrepreneurship in different contexts.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 4. The Effect of Entrepreneurial Activity on Economic Growth

Abstract
Focused on those consequences of entrepreneurial activity, this chapter estimates the effect of entrepreneurship on economic growth. To this purpose, our modeling relies on a traditional Cobb–Douglas production function, which allows the examination of possible factors such as entrepreneurship that may be also important to foster economic growth. A panel data model over 43 countries in the period from 2002 to 2012 is assessed. We find that entrepreneurial activity, approached through overall TEA, opportunity and necessity TEA, effectively influences economic growth, though overall and opportunity TEA have a higher effect than necessity driven entrepreneurship. Comparisons across countries and periods of time are also conducted. These analyses show that overall TEA seems to have a higher influence on economic growth of non-OECD countries than on their OECD counterpart. We also find that overall TEA has a higher effect on growth across countries during post-crisis period than during pre-crisis period. These results could be useful for both theoretical discussion and public strategy design, in which entrepreneurship may be considered a policy mechanism.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 5. Social Progress Orientation, Entrepreneurship and Economic Development

Abstract
In this chapter, by using the institutional approach, we examine how social progress orientation through entrepreneurship driven by opportunity affects economic development. Using a pooled data of 81 observations and 56 countries and the three-stage least squares method (3SLS), we provide empirical evidence that social progress orientation measured through civic activism, voluntary spirit, and inclusion of minorities has a positive and significant influence on opportunity entrepreneurship, which in turn, affects economic development as an endogenous factor. These results could encourage new elements in both theoretical and policy discussion. For instance, this chapter advances the literature by providing new insights into the environmental factors that affect entrepreneurial activity, especially that driven by opportunity which affects positively economic development in the light of institutional economics. Also, the research could be useful for designing policies to foster economic development through entrepreneurship in different environments.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 6. Institutional Context, Entrepreneurial Activity, and Social Progress

Abstract
The main purpose of this chapter is to examine how country’s institutional context influences the way in which entrepreneurial activity affects social progress. Following the theoretical approach of institutional economics, we test our hypotheses using pooled data of 62 countries (2012 and 2014) and simultaneous equation model estimation. The findings suggest that business regulations decrease entrepreneurial activity, while established democracies provide as government context conducive to entrepreneurship. In addition, we find that the entrepreneurial activity has a positive impact on the Social Progress Index, which is an alternative measure of economic performance. Policy and theoretical implications are discussed from these findings.
David Urbano, Sebastian Aparicio, David B. Audretsch

Chapter 7. General Conclusions

Abstract
After diving into the literature on institutions, entrepreneurship and economic performance, and empirically testing the sequential connection among these factors, this chapter gathers the main findings and discusses implications for entrepreneurship and public policy. Throughout the literature analysis, we find that informal institutions have been less explored by scholars than formal institutions, despite that the former are more beneficial for entrepreneurship than the latter. The empirical chapters enable us to demonstrate the importance of informal institutions, especially observed through the social progress orientation, for entrepreneurial activity (directly) and development (indirectly). Additionally, our findings reveal that opportunity over necessity entrepreneurship increases not only economic performance, but also social progress. Based on these results, our book may serve to inspire scholars and policy makers to study and discuss strategies to achieve a higher economic performance by promoting entrepreneurial activity. Practitioners may also find useful this book as it reveals how different markets are characterized by different values that condition productive decisions such as entrepreneurship.
David Urbano, Sebastian Aparicio, David B. Audretsch

Backmatter

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