Entrepreneurial Growth Aspirations and Familiarity with Economic Development Organizations: Evidence from Canadian Firms

Angelo Dossou-Yovo

doi:10.7341/20151147

Abstract

The purpose of this paper is to investigate the relationship between the entrepreneurship ecosystem and the entrepreneur’s willingness to grow. This study is particularly interested in exploring the relationship between entrepreneur’s familiarity with the key economic development organizations in the entrepreneurship ecosystem and the willingness to grow. Several studies have investigated the growth process in small and medium sized enterprises (SMEs) since the case has been made that high growth SMEs contribute to economic growth through job creation. To date, these studies have identified multiple internal and external determinants including their effects on small business growth. There is evidence in the literature that characteristics of the entrepreneurs such as the willingness to grow and the entrepreneur’s network are important factors in growth process. However, the relationship between growth process and the entrepreneur’s networking behavior is yet to be fully understood. Drawing from the entrepreneurship ecosystem literature, the growth process literature and the resource dependence theory, this study uses the business confidence survey from 2011 to 2013, which targeted all businesses across all of Halifax Regional Municipality (HRM) in Nova Scotia, Canada, to explore the relationship between the entrepreneur willingness to grow and the propensity to network with key economic development organizations of the entrepreneurial ecosystem. The findings support the assumption that the proportion of businesses that are willing to grow (i.e. hire additional staff and enter new markets within the next twelve months) is higher for the group of businesses that are familiar with the key economic development organizations than for the group of businesses that are not familiar with them. However, the results are not homogeneous across all populations. Our findings also indicate that the higher the expectation to enter new markets over the next twelve months, the higher the odds to be familiar with the key economic development organizations. Our findings contribute to the literature around the association between networking and small business growth.

Highlights

For many decades, policy makers have been looking for effective economic policies to boost economic growth
Since it has been demonstrated that the entrepreneurial system is a key driver of economic growth (Spilling, 1996), policies have shifted to focus on entrepreneurs and small and medium-sized enterprises (SMEs), especially high growth SMEs which are known for their high share of job creation (Storey and al., 1988)
The findings from the first series of contingency table analyses indicate that there is no association between familiarity with all key economic development organizations (GHP, Nova Scotia Business Incorporated (NSBI), Atlantic Canada Opportunities Agency (ACOA), Economic and Rural Development and Tourism (ERDT)) and the expectation to introduce a new product or service, to increase sales and to make a major investment in facilities or equipment

Summary

Introduction

Policy makers have been looking for effective economic policies to boost economic growth. Since it has been demonstrated that the entrepreneurial system is a key driver of economic growth (Spilling, 1996), policies have shifted to focus on entrepreneurs and small and medium-sized enterprises (SMEs), especially high growth SMEs which are known for their high share of job creation (Storey and al., 1988). Mason and Brown argue that public policies that use a holistic approach (Isenberg, 2010) and which focus on the environment, represented as the entrepreneurship ecosystem, are more effective than transactional forms of support such as financial assistance External factors, such as the entrepreneurship ecosystem, influence small business growth, there is evidence in the literature that characteristic of the entrepreneur such as his/her willingness to grow (Davidsson 1989, Kolvereid, 1990, Gundry & Welsch, 1997; Cooper et al, 1994) is an important factor in growth process. One of the important factors for a thriving entrepreneurship ecosystem is the presence of entrepreneurs, but those that can identify and exploit unique and scalable opportunities which translate into high value creation such as wealth for the business and jobs

Objectives

Methods

Results

Conclusion