The Economic Impact of Entrepreneurship: Comparing International Datasets:

Authors:
Douglas Cumming Professor and Ontario Research Chair York University - Schulich School of Business 4700 Keele Street Toronto, Ontario M3J 1P3 Canada Sofia Johan York University - Schulich School of Business 4700 Keele Street Toronto, Ontario M3J 1P3 Canada and University of Tilburg, Extramural Research Fellow Tilburg Law and Economics Centre (TILEC) Postbus 90153 5000 LE Tilburg The Netherlands Minjie Zhang York University - Schulich School of Business 4700 Keele Street Toronto, Ontario M3J 1P3 Canada

Year of Publication
May 4, 2013

Summary
This article empirically compares the impact of entrepreneurship on GDP / capita, unemployment, exports / GDP, and patents across countries by examining three datasets from the World Bank, the OECD, and Compendia. It also finds out if the entrepreneurship impact is mitigated by legal and cultural differences across countries. Entrepreneurship is the dependent Variable in this study while GDP/Capita, Exports/GDP, Patents and unemployment are the independent Variables. Creditor rights and Uncertainty Avoidance are the moderating variables which will moderate the positive impact of the entrepreneurship on GDP/Capita, Exports/GDP and patents and negative impact of entrepreneurship on unemployment. The explanatory variables include the new business entry rate, variables for economic conditions, as well as legal and institutional variables.

Independent Variables

Moderating variables

Dependent Variable

GDP/Capita

Creditor rights Uncertainty Avoidance

Exports/GDP Entrepreneurship Patents

Unemployment

This is quantitative study using the secondary data sources. The data include the databases from three sources, World Bank, OECD and Compendia. The World Bank sample comprises information on business starts from 2004-2011 for 125 countries. The second sample is from

the OECD, which covers 24 countries from Western and Eastern Europe as well as Brazil, Canada and the U.S. from 2004-2007.The third sample is from Compendia, which covers 11 Western European Countries and Canada and the U.S from 2004-2009.The method used in this research is Regression analysis in which further standard panel data methods are being used. The World Bank and Compendia data are highly consistent with the view that new business entry positively impact GDP/capita, exports/GDP, and patents, and negatively impacts unemployment. The OECD data do not support these propositions. World Bank data are the most reliable and largest for the purpose of assessing the impact of new business entry on economic outcomes. As additional years of data become available, further research could better assess the importance of other legal and institutional factors that impact entrepreneurial activities and the effect of such activities on economic outcomes.