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Chapter 5 National dynamics: Effects of conditions upon entrepreneurial activity What are the national dynamics of entrepreneurship? More specifically, this chapter addresses the questions, How are the cultural conditions affecting one another? How are the institutional conditions interrelated? How are the cultural and institutional conditions affecting entrepreneurship? The cultural and institutional conditions are a framework for entrepreneurship in society. A favorable framework enhances entrepreneurship whereas an unfavorable framework hampers performance in the society. The framework is favorable in some societies and less favorable in other societies, and this shapes the level of entrepreneurial activity, so the level differs from one society to another. Is entrepreneurial activity in the various countries tightly coupled with its framework conditions? Whether entrepreneurial activity goes hand-in-hand with a framework condition, in the various countries, is ascertained by the correlation between the activity and the condition, computed across the countries. Entrepreneurial activity in a country is measured by the TEArate (Chapter 3), and each of the 14 framework conditions were measured (Chapter 4). The 14 correlations between entrepreneurship and the 14 framework-conditions are all between 0,0 and 0,5, for the developed countries (each variable is averaged across years, and then the correlation between variables is computed across the 39 developed countries). For the developing countries, however, entrepreneurship is far less coupled with its framework conditions (Schøtt and Jensen 2009). However, the framework conditions are related to each other. We shall exame how the institutional conditions are interrelated and how the cultural conditions are interrelated. Then we shall examine how the institutional conditions and the cultural conditions jointly affect entrepreneurship. Institutional conditions creating opportunities Opportunities for exploiting business ideas is a condition for entrepreneurship, but it is not a institutional condition like the eight others examined earlier - financial resources, government policies, public programs, technology transfer, commercial and legal infrastructure, internal market openness, physical infrastructure, and intellectual property rights. Opportunities should rather be considered as the condition emerging as a combination of the eight more basic institutional conditions. The institutional conditions are related in the way that opportunities can be considered a consequence emerging as a combination of the institutional conditions, not as a straightforward sum of these conditions, but in the way that each condition has a positive effect on opportunities. Indeed, opportunities is positively correlated with each of these eight basic institutional conditions, Table 5.1 (based on 39 developed countries; each correlation is statistically highly significant). A positive correlation of opportunities with an institutional condition means that, typically, a country with a favorable institutional condition Table 5.1 Correlation of opportunities with each institutional condition Developed societies Financial resources 0.6 Government policies 0.6 Public programs 0.5 Technology transfer 0.5 Commercial and legal infrastructure 0.6 Internal market openness 0.4 Physical infrastructure 0.6 Intellectual property rights 0.6 Multiple correlation with all eight 0.8 37
provides ample opportunity (and, typically, a country with an unfavorable condition offers few opportunities). Thus, specifically, a country with abundant financial resources typically provides great opportunities, (and a country with poor financial resources offers few opportunities, typically). A country with supportive policies typically has great opportunities (and a country with unsupportive policies typically offers few opportunities). The multiple correlation is the correlation of opportunities with an optimal combination of institutional conditions. Countries with a combination of several favorable institutional condition tend to have especially great opportunities, and this tendency is quite strong (and those with a combination of several unfavorable institutional conditions tend to have especially few opportunities). Opportunities, as a condition, is seen in Table 5.1 to be positively correlated with each of the eight basic institutional conditions, and is highly correlated with a combination of basic institutional conditions (the multiple correlation is much higher than any of the eight correlations). How opportunities is the consequence of a combination of the basic institutional conditions can be ascertained by a multiple regression of opportunities on the conditions. In this regression we keep only those conditions that are significant. By this modeling, five of the eight conditions seem to matter. Internal market openness matters much, a country with wide openness typically provides many opportunities. Commercial and legal infrastructure also has a large effect, a country with extensive commercial and legal infrastructure facilitates opportunities. Intellectual property rights and government policies seem to have substantial effects, and financial resources appear to have some effect. These estimated effects are shown in Figure Figure 5.1 Estimated effects upon opportunities from institutional conditions Developed societies Financial resources Government policies Commercial and legal infrastructure Opportunities Internal market openness Intellectual property rights 38
Page 1 and 2: Education, Training and Networking
Page 3 and 4: © Thomas Schøtt (and GERA for ite
Page 6: Contents Preface ..................
Page 9 and 10: skab i samfundet, både i Danmark o
Page 11 and 12: Figur B Entreprenørers ekspansivit
Page 14 and 15: Part 1 Introduction Chapter 1 Is en
Page 16 and 17: How is entrepreneurs’ innovativen
Page 18: ing years, in Denmark and in the ot
Page 21 and 22: The ex-owner-managers are those ans
Page 23 and 24: our survey counting new-business ow
Page 25 and 26: In this chapter, we shall examine e
Page 27 and 28: In short, although entrepreneurial
Page 29 and 30: - In Denmark, there is sufficient d
Page 31 and 32: Where is Denmark positioned compare
Page 33 and 34: - In Denmark, the markets for consu
Page 35 and 36: Table 4.24 Intellectual property ri
Page 37: The framework overall The framework
Page 41 and 42: an arrow represents the magnitude o
Page 43 and 44: Figure 5.4 Plot of developed societ
Page 45 and 46: provided by a college or university
Page 47 and 48: Table 6.3 Training of people, durin
Page 49 and 50: Age and training Does training diff
Page 51 and 52: Chapter 7 People’s education, tra
Page 53 and 54: Table 7.4 Networking, by education
Page 55 and 56: Chapter 8 People’s vocation shape
Page 57 and 58: Table 8.4 Vocation of adults, by th
Page 60 and 61: Part 4 entrepreneurs Chapter 9 Entr
Page 62 and 63: Table 9.1 Education, by vocation Ad
Page 64 and 65: Table 9.7 Competency of entrepreneu
Page 66 and 67: Figure 9.2 Estimated effects among
Page 68 and 69: The response to each question can b
Page 70 and 71: Figure 10.2 Estimated effects upon
Page 72 and 73: entation, Table 11.1. Entrepreneurs
Page 74 and 75: ed by regression (Table 11.6 in the
Page 76 and 77: future. To measure such expectation
Page 78 and 79: Growth-expectations and competency
Page 80 and 81: Part 5 CONCLUSIONS Chapter 13 Expan
Page 82 and 83: Figure 13.1 People’s vocation aff
Page 84: Figure 13.2 Entrepreneurs’ expans
Page 87 and 88: Table 5.4 Linear regression of nati
Page 89 and 90:
Table 7.9 Logistic regression of ad
Page 91 and 92:
Table 8.9 Logistic regression of ad
Page 93 and 94:
very small. The estimated effects a
Page 95 and 96:
Table 12.6 Linear regression of gro
Page 98 and 99:
Bibliography Ahmad, N., and A. Hoff
Page 100 and 101:
myths. Paper for the 3 rd Internati
Page 102 and 103:
sættere i netværk” In Freytag,
Page 104 and 105:
National Teams in 2008 in Global En
Page 106 and 107:
Team Institution National Team Memb
Page 108 and 109:
Page 110 and 111:
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Thomas Schøtt University of Southe
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