Does Entrepreneurship Capital Matter?
Posted: 11 Nov 2009
Date Written: 2004
Economics traditionally identifies three types of capital as engines of economic growth: physical capital, knowledge capital, and social capital. The concept of entrepreneurship capital is introduced and suggests it also is an important factor shaping economic performance. Entrepreneurship capital is defined as "those factors influencing and shaping an economy's milieu of agents in such a way as to be conducive to the creation of new firms." Entrepreneurship capital is a subcomponent, or specific aspect, of social capital and focuses solely on those aspects of social capital that promote entrepreneurial activity. Entrepreneurship capital reflects a number of legal, institutional, and social factors and forces that create a capacity for entrepreneurial activity. Entrepreneurship capital is measured indirectly as being reflected by the amount of business startup in an economy relative to the respective population. The hypothesis that entrepreneurship capital is positively linked to economic growth is tested by examining the relationship between several different measures of entrepreneurship capital and regional economic performance, as measured by per capita income for Germany.The empirical evidence suggests a strong link between the two. The results suggest that a new direction for public policy should focus on instruments to enhance entrepreneurship capital. (TNM)
Keywords: Entrepreneurship capital, Market resources, Startups, Nascent entrepreneurs, Regional development, Social capital, Economic development, Human capital, Intellectual capital
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