Abstract
Purpose The purpose of this paper is to analyse if the divergences in the economic growth of the Spanish regions are a result of sectoral differences, company size or technological level of the new firms that emerge in the market. Design/methodology/approach For this purpose, a model is specified and estimated in which the total factor productivity of Spanish regions is explained by business dynamics, innovation, human capital and the level of entrepreneurship in each region. Findings The results obtained lead the authors to conclude that entrepreneurship understood as both the creation of new firms and entrepreneurial activity, have a positive effect on productive efficiency and can explain the differences in the economic growth of the regions. In addition, the stock of human capital and the promotion of innovation act as catalysts for the productive efficiency of the regions. However, the results show that it is not enough to generate new firms to boost economic growth; these businesses must also be oriented towards sectors that promote technological innovation and with the objective to reach an adequate size. Originality/value Empirical studies use either the creation of new firms or the index of entrepreneurial activity as alternative measures of entrepreneurship. In this research, however, both variables are considered together. Specifically, the creation of new companies is used as a measure of regional business dynamics, and the entrepreneurial activity index, provided by the Global Entrepreneurship Monitor, as a measure of regional entrepreneurship. The main novelty of this paper’s approach is that it considers different types of entrepreneurial capital in considering productive sector, size and technological level of the new companies.
Highlights
It is a proven fact that there is a strong relationship between regional economic growth and the level of knowledge and innovation, demonstrated by the fact that the regions with the highest level of technological development and innovation present higher growth
These results show the fulfilment of the H1–H4 of the previous section, and they endorse the evidence of literature about that the entrepreneurial capital, R&D expenditure and human capital endowment have a positive effect on regional growth
The aim of this paper is to quantify the divergences in regional growth as a result of sectoral differences, firm size and technological level of new firms generated in the regions
Summary
It is a proven fact that there is a strong relationship between regional economic growth and the level of knowledge and innovation, demonstrated by the fact that the regions with the highest level of technological development and innovation present higher growth. Knowledge by itself does not generate economic growth; there needs to be a channel to transform this knowledge into economic growth. In this sense, Braunerhjelm et al (2010) point out that for innovations in new products or processes to generate growth they require an entrepreneur willing to assume the risk involved in launching new products or processes onto the market. Entrepreneurship is understood as the creation of new firms and the activity of introducing new products or new productive processes onto the market. It is true that the activity of entrepreneurs involves, in most cases, the creation of firms, establishing a link between entrepreneurship and firm’s creation
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
