Does all entrepreneurship matter? The contribution of entrepreneurial activity to economic growth

Abstract

Purpose The purpose of this paper revisits the effect of entrepreneurship on economic growth. Design/methodology/approach Using a cross-country panel data set of 61 countries in the period 2002–2014, this paper empirically analyzes the differences in contribution to economic growth. Particularly, using an extension of the Cobb–Douglas production function, the authors show the role of entrepreneurship in developed and developing economies. Global entrepreneurship monitor data were used to estimate the proposed types of entrepreneurship. Findings Results indicate that economic growth can be explained by growth-oriented entrepreneurship, including developing economies. These results remain robust to a variety of specifications that include economic, social and cultural controls, and two ways of sorting countries by stage of development. Originality/value The authors split the total entrepreneurial activity (TEA) according to job expectations, in order to isolate the effect of entrepreneurial activity that is growth oriented (dynamic) and not (regular). Lastly, the empirical application presented comprises a more adequate timeframe to analyze the proposed relationship, determining possible differences for developed and developing economies.