Entrepreneurship Capital and Economic Performance

Abstract

AbstractThis chapter attempts to link entrepreneurship to economic performance. It provides empirical evidence consistent with the hypothesis that economic performance — output measured as GDP or economic growth — is positively related to the presence of a Standort's entrepreneurship capital. In particular, the empirical evidence based on German regions suggests that the neoclassical two-factor approach does not adequately explain economic performance, at least not in the case of contemporary Germany. Rather, including entrepreneurship provides a better explanation of why some regions exhibit a stronger economic performance than others. It is argued that the degree of entrepreneurial activity, which presumably reflects the underlying stock of entrepreneurship capital associated with a particular Standort, positively affects economic performance.