Sebastien Bourdin (p), Jean Bonnet, Faten Gazzah

Félix Modrego

Recently the literature has paid more attention to the entrepreneurial environment, to explain the role of entrepreneurship in the economic development. However nowadays very little empirical contributions demonstrate that the entrepreneurial environment really counts (Acs et al., 2014; Szerb et al., 2015; Acs et al., 2017) in promoting quality entrepreneurship. By using the GWR, we explored the spatial heterogeneity of the role of entrepreneurial context to explain differences in levels of regional growth. In our study, the entrepreneurial environment is measured by the Regional Entrepreneurship and Development Index (REDI) for the EU regions. The results show that the entrepreneurial environment on the level of regional growth suggests some positive or negative impact, depending on the location of the regions.

Udo Brixy (p), Stephan Brunow , Anna D‘Ambrosio

Sebastien Bourdin

See Extended Abstract

Félix Modrego (p)

Udo Brixy

During the last years, evolutionary economics approaches have placed a lot of attention to the role of entrepreneurial activity on regional growth and development outcomes. It is argued that entrepreneurs and new firms are vectors of economically-relevant knowledge, productive diversity and innovation, challenging incumbent firms and eventually driving a competition-led process of firm selection and industry evolution. Several studies in advanced economies supports this sort of creative destruction regime of regional growth. However, the relevance of these arguments is far less clear for developing economies and, particularly, for a large small firms' sector mostly characterized by imitative undertakings of dubious innovativeness and growth potential. The lack of empirical evidence from developing countries impedes shedding light on this issue. This paper uses the case of Chile to inquiry whether the evolutionary mechanisms of entrepreneurial creative destruction help explaining the growth of the Micro and Small Firms (MSF) sector at the local level, and whether entrepreneurial activity plays a role in the spatial convergence of MSF's productivity. Using data at the level of Chilean municipalities for the period 2005-2015 and dynamic panel modelling techniques, this research tests for the effects of several measures of business entry, exit and turbulence on the labor productivity growth of the MSF sector. The results portray a different picture compared to that described by studies in advanced economies. Neither entries, exits nor turbulence rates have a relationship with the growth of the MSF sector at the municipal level in Chile. On the contrary, the business cycle, the local stock of advanced human capital and productivity inertia are factors more strongly associated with observed municipal differences in the MSF's sector growth. The evidence also points at entrepreneurial activity having a mild convergence effect of the MSF sector's productivity. The results have implications for regional policies in Chile and more broadly in developing countries; in particular, they place a question mark on initiatives aimed at blindly promoting local entrepreneurship and business creation as a driver of local and regional development, and instead claim for alternative strategies emphasizing the support to local endeavors of a higher potential.