The role of innovation and institutions in entrepreneurship and economic growth in two groups of countries
International Journal of Entrepreneurial Behavior & Research
ISSN: 1355-2554
Article publication date: 11 December 2019
Issue publication date: 8 May 2020
Abstract
Purpose
Economic growth is one the most relevant economic objectives for policy makers. In order to determine the variables that enhance such an objective it is important to consider different types of entrepreneurial activity. It is also necessary to consider the level of development and growth of a country to design the proper economic policy measures, given that entrepreneurship motivations and circumstances vary from country to country. Therefore, the purpose of this paper is to analyse the relationship between entrepreneurship and economic growth, including the role played by institutions and innovation considering two types of entrepreneurship (necessity and opportunity) and countries.
Design/methodology/approach
Data analysis of 31 countries with varying levels of growth and development yielded two large groups – either innovation-driven economies or efficiency-driven economies – following GEM classification based on the phases set out by the World Economic Forum. In order to test the hypotheses, a partial least squares analysis is carried out to show the existing relationships between the different variables, specifically: innovation, institutions, entrepreneurship and economic growth.
Findings
The empirical analysis used demonstrates that innovation positively affects economic growth and entrepreneurship. In addition, adequate functioning of institutions is shown to enhance economic growth and opportunity entrepreneurship. Finally, there is a positive relationship between entrepreneurship and economic growth.
Originality/value
Unlike other studies, different types of entrepreneurship (by necessity and opportunity) are essential to this analysis of the relationship between entrepreneurship and economic growth. The country sample was divided considering some country-specific structural circumstances. Neither aspect is considered in the literature and should be considered relevant for designing measures to enhance economic activity.
Keywords
Acknowledgements
This paper forms part of a special section “Knowledge, Business, and Innovation. Economies and sustainability of future growth”.
Citation
Galindo-Martín, M.-A., Méndez-Picazo, M.-T. and Castaño-Martínez, M.-S. (2020), "The role of innovation and institutions in entrepreneurship and economic growth in two groups of countries", International Journal of Entrepreneurial Behavior & Research, Vol. 26 No. 3, pp. 485-502. https://doi.org/10.1108/IJEBR-06-2019-0336
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited