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Supplementary: Economics of Entrepreneurship UU summary
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Missing articles of other summary are summarized here including: Gans, J., Scott, E. L., & Stern, S. (2018). Strategy for Start-ups
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Entrepreneurship additional summaryWennekers & Thurik : linking entrepreneurship and economic growth
What this article is about:
This article combines different literature about supply side economics, history etc to study the
relationship between entrepreneurship and economic growth. This is an article from 1999 so keep in
mind that this was written more than 20 years ago. They state that up until then there was not much
research into the entrepreneurs.
Short take aways/ conclusions: In modern open economies entrepreneurship is more important for
economic growth than it has ever been. The reason is that globalization and the ICT-revolution imply
a need for structural change, requiring a substantial reallocation of resources. This induces an
intense demand for entrepreneurship. How entrepreneurship can best be promoted or on how
entrepreneurship influences economic performance are underdeveloped. The article looks at
different literature. It attempts to be a starting point for an agenda of research into the field of
entrepreneurship and economic development. They propose 3 fields of research: measurement
(now we have GEM for example and many articles who try to tackle this issue) determinants of
entrepreneurship ( web series erik stam) and lastly the impact of entrepreneurship on economic
development.
Newness through start-ups and innovations as well as competition are the most relevant factors
linking entrepreneurship to economic growth.
Summary
Researchers in Europe are especially interested in economic growth as the unemployment rates
were high after world war II.
In the 1980’s and 1990’s there is a noticeable increase in small firms (Europe and America). The
authors look at why this happened and what the consequences are.
Why this happened:
intensification of global competition
the instability of markets in the 1970s resulted in the
demise of mass production and promoted flexible
specialization.
the increase of labor supply leading to lower real
wages and coinciding with an increasing level of
education
relaxation of (entry) regulations
the fact that we are in a period of creative
destruction
shift towards the knowledge based economy
( they name a lot so I assume that we do not have to
know all of them, they are countless reasons working together)
What are the consequences:
, entrepreneurship
routes of innovation
job generation
“ small firms play an important role in the economy serving as agents of change by their
entrepreneurial activity, being the source of considerable innovative activity, stimulating
industry evolution and creating an important share of the newly generated jobs.”
a lower orientation towards exports, a lower propensity to export employment
additional output in the entire economy
lower levels of unemployment
etc
Many economists and politicians now have an intuition that there is a positive impact of
entrepreneurship on the growth of GDP and employment. Furthermore, many stress the role of the
entrepreneur in implementing innovations. This renewed interest of politicians and professional
economists coincides with a revival of entrepreneurship rates in most, though not in all, Western
economies.
Entrepreneurship is not only small firms but also business units of bigger firms etc. this causes
measurement issues.
Defining entrepreneurship
Entrepreneurship has been defined in many different ways. The authors distinguish three main
‘traditions’:
The (neo-)classicals stress the role of the entrepreneur in leading markets to equilibrium
through their entrepreneurial activities.
The Austrians concentrate on the abilities of the entrepreneur to perceive profit
opportunities, usually after some exogenous shock. The “Austrian” entrepreneur combines
resources to fulfill currently unsatisfied needs or to improve market inefficiencies or
deficiencies.
In the German or Schumpeterian tradition economists concentrate on the entrepreneur as
a creator of instability and creative destruction. The difference between the German
(Schumpeterian) and Austrian tradition can be summarized as follows: “The creation of
potential may be seen as Schumpeterian and its realization (to see opportunities) as
Austrian.”
Definition of other authors ; “the entrepreneur is someone who specializes in taking responsibility
for and making judgmental decisions that affect the location, form, and the use of goods, resources,
or institutions”
Author’s definition of entrepreneurship
Entrepreneurship is the manifest ability and willingness of individuals, on their own, in teams, within
and outside existing organizations, to:
– perceive and create new economic opportunities (new products, new production methods, new
organizational schemes and new product market combinations) and to
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