The relationship between economic development and business ownership revisited

Authors: Carree, Martin¹; Van Stel, André²; Thurik, Roy³; Wennekers, Sander⁴

Source: Entrepreneurship and Regional Development, Volume 19, Number 3, May 2007 , pp. 281-291(11)

Publisher: Routledge, part of the Taylor & Francis Group

Abstract:

This paper revisits the two-equation model of Carree, van Stel, Thurik and Wennekers (2002) where deviations from the 'equilibrium' rate of business ownership play a central role in determining both the growth of business ownership and that of economic development. Two extensions of the original set-up are addressed: using longer time series of averaged data of 23 OECD countries (up to 2004) we can discriminate between different functional forms of the 'equilibrium' rate and we allow for different penalties for being above or under the 'equilibrium' rate. The additional data do not provide evidence of a superior statistical fit of a U-shaped 'equilibrium' relationship when compared to an L-shaped one. There appears to be a growth penalty for having too few business owners but not for having too many.

Keywords: entrepreneurship; economic development; economic growth; business ownership

Document Type: Research article

DOI: http://dx.doi.org/10.1080/08985620701296318

Affiliations: 1: Faculty of Economics and Business Administration, University of Maastricht, MD Maastricht, the Netherlands 2: EIM Business and Policy Research, AA Zoetermeer, the Netherlands,Cranfield University School of Management, Cranfield, UK,Centre for Advanced Small Business Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, the Neth 3: EIM Business and Policy Research, AA Zoetermeer, the Netherlands,Centre for Advanced Small Business Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, the Netherlands,Max Planck Institute of Economics, Jena, Germany 4: EIM Business and Policy Research, AA Zoetermeer, the Netherlands,Centre for Advanced Small Business Economics, Erasmus School of Economics, Erasmus University Rotterdam, Rotterdam, the Netherlands

Publication date: 2007-05-01

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