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Entrepreneurship and Risk PremiumAuthor(s): P. E. PetrakisSource: Small Business Economics, Vol. 23, No. 2 (Sep., 2004), pp. 85-98Published by: SpringerStable URL: http://www.jstor.org/stable/40229347.

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Entrepreneurshipnd

RiskPremium

P. E.

Petrakis

ABSTRACT. This article deals with the measurement and

determination f

entrepreneurship.

t utilises the ssue of the

absence of the

entrepreneur

rom

neoclassical

theory

nd uses

the

theory

f

portfoliomanagement

o establish a model con-

necting

risk

premium

with the

entrepreneurship remium.

t

shows that he

non-systematic

isk

may

be a

satisfactory roxy

of the level of

entrepreneurial ctivity.

The

development

of

successful

entrepreneurial ctivityproxy

contributes owards

the

development

of a theorisation f

entrepreneurship

nd an

assessment of its contribution o

growth.

1. Introduction

The renewal f interest

n

entrepreneurship

s

a

factor f

development

f the new

economy

(knowledge-based conomy,

new

technology,

smallbusinesses

tc.)

in

thedecade

1980-1990

brought

o the urface

numberf

problems

hat

surroundhe tilisationf ts

ubstance. he most

significant

f

these

oncernshe

nderstanding

f

its

mportance

n

the

growth rocess.

The distinction etween he twomeanings

(entrepreneur

s

entrepreneurship)

s

important

from

he

perspective

f a theoreticaloundation

setting

nd for he

purposes

f

empirical

tiliza-

tion. he

ntrepreneur,aving distinguished

ole

in

the

economy, equires

fitting

heoretical

foundationo be

accepted

nd it is common

knowledge

hat

n

neoclassical

heory

his

heo-

reticalfoundationf its characteristicss not

accepted. ntrepreneurship,hough,

s a situation

that escribeshe

eneral

tructural

unctioning

f

the

conomy

nd of

society,

oes not ncounter

the ame

difficultiesf

ncorporation

n

the heo-

retical ndempirical odel onstruction.

Final version

accepted

on

August

15,

2001

Department f

Economics

National and

Kapodistrian University f

Athens

Stadiou 5 10562

Athens,

Greece

E-mail:

[email protected]

The

scope

ofthe

paper

s

to

develop

theoret-

ical model f

understanding

f

entrepreneurship

insuch

way

s to be able to

ncorporate

t

n

an

operational

ormwithin

growth heory.

n

the

second and third

ection,

he relation etween

entrepreneurshipheory

nd

entrepreneurship

indicators s discussed. We proposethat the

non-systematic

isk s a

satisfactory

ndicator

f

the

entrepreneurship

evel.

However,

what s

in

question

s whethert

is verified hat

the

non-systematic

isk

NSR)

expresses

n

a satis-

factory

anner he evel of

entrepreneurship

n

an

economy.

his confirmationill be

sought

through

he uccessive

tages

f the

development

of this

paper.

To

begin

with,

discussion on-

necting

he

measure

entrepreneurship

ndicator)

and the

entrepreneurialctivity

ill

take

place.

Following

his,

n

attempt

hall

be made o

prove

that he

potentiality

f

NSR,

comparedmainly

o

the elf-employmentate ariable, illbe consid-

eredwithinhe ramework

f an

entrepreneurship

model.

inally,

n

the

next

ection,

he

proposed

measure f

ntrepreneurial

ctivity

s connected

o

the

utcome

that

s,

economic

rowth)

ithinhe

frameworkf the tandard

rowth

model.

n

the

end,

onclusions

ill

be drawn.

2.

Entrepreneurshipheory

nd

entrepreneurship

ndicators

Different

pproaches

o the

entrepreneur

nd/or

entrepreneurship

ave

lready

een

xpounded

y

other

esearchers,

uch s

HerbertndLink

1982,

1989),

Binks nd Vale

1990),

Ripsas

1998)

and

Wennekersnd Thurik

1999)

and

Venkataraman

(1997,

2000).

According

o

thatast

cholar,

ntrepreneurship

is

about he

presence

nd thevariationf

quality

of

entrepreneurial

pportunities

of

product

nd

factor

markets)

nd the

presence

f

enterprising

lj|

Small Business

Economics 23:

85-98,

2004.

"

2004 Kluwer Academic Publishers. Printed n theNetherlands.

This content downloaded from 124.207.151.25 on Sun, 8 Jun 2014 10:35:50 AMAll use subject to JSTOR Terms and Conditions
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86

P. E.

Petrakis

individuals

agents).

Measuring ntrepreneurship

could refer o the

presence

of

entrepreneurs

(agents)n neconomynd/orodeveloping ea-

surementndices f

entrepreneurship

activity).

The first

pproach

ncludes

ttempts

hat

ave

suggested

hat

he

self-employment

ate s

the

proper ntrepreneurship

ndex.

The

self-employ-

ment ate as an

entrepreneurship

ndicator

as

already

een

posited

rom

he tart f

the

1990s

(Foti

nd

Vivarelli,

994).

The ssueof the

mea-

surement

f

entrepreneurship

as dealt

with

y

Wennekersnd

Thurik

1999).

As

a

proxy

or

entrepreneurial

ctivity,

henumber

f

entrepre-

neurss

used,

with he

hope

hat he real"

number

of

entrepreneurs

ould

approach

he level

of

entrepreneurialctivity ore losely.

Whatwe

may

observe

from

he above-men-

tioned

ttempt

s

that:

a)

on numerous

ccasions

different

ypes

Schumpeterian,

ustrian

ype

tc.)

of

entrepreneur

oexistwithin

he ame

person

r

are manifested

n

a

person

who does not

xhibit

in

a

typical

manner

ny

of

the bove

characteris-

tics

n

a

way

hat an be

quantified,

nd

b)

even

if

we are ble

to

quantify

hem

with

recise

mea-

surementst s not

t all certain hat

we solve

the

theoretical

ssue f he

elationship

etween

ntre-

preneurship

nd

growth.

Along

the ines of

this

approach

ne could

enlistworks

hat

nterpretntrepreneurship

n the

assumption

hat t is

sufficientlyxpressed

y

quantifiable

ndices,

s is

the

growth

n

sales,

etc.

(Evans,

1987

and more

recently

asu and

Gorwami,

999)

or the

mployment

f the MEs

(Fitzroy,

990).

The second

approach

attempts

o

develop

measurement

ndices

f

entrepreneurship

ctivity,

that

s,

entrepreneurship

ndicators.

his

pproach

could

include theoretical

eliefs

surrounding

entrepreneurship

hat

ink conomics

with ther

neighbouring

ciences such

as

sociology, sy-

chology

nd

politics.

f

one

ttempted

o

ocate he

indices hat re onnected

ith his

pproach,

ne

could iscover numberfmainlyndirectndices

that

xpress

orces

f reinforcement

r retraction

of

entrepreneurship.

hese ndices

may xpress

the social or

psychological

haracteristics

f

a

society

the

ntrepreneurial

pirit)

r

even

genetic

characteristics

creed,

origin,

amilial

radition

etc.,Petrakis,

997).

The

Neoclassical

heory,

s it

developed,

id

not nclude

role for he

ntrepreneur

Baumol,

1968,

1993;

Barreto,

989)

on

a micro

evel,

t

least s establishedn thefirmheory,n which

everyone

as

perfect

nformation

nd here

s

equi-

librium.

nly

f

one

introduces

mperfect

nfor-

mation nd

perfect

redictability,

s Leibenstein

(1968,

1979)

has done

for

dealing

withx-effi-

ciency,

ndCoase

1937)

through

nstitutionalism

doesthe

ole f he

ntrepreneur

ecome

elevant.

The revelation

f the

entrepreneur

ould

come

both rom

he

quilibrium

pproach

nd he ntre-

preneur's

ifferent

eliefs

Khilstrom

nd

Laffont,

1979).

It is

certain hat

n

agent

who

prefers

uncertainty

ould

only

ive

n an

entrepreneurial

world.

Thephenomenonfdisappearances observed

in

the

traditional

rowth

heory

Solow,

1957).

Since

there s

perfect

ompetition,

here re

no

profit pportunities

or

entrepreneurs.

n the

endogenous

rowth

heory,

s

expounded

by

Romer

1990)

and

Lucas

1988),

the

variable hat

expresses

human

apital,

which

was

imported,

sparked

discussion n

the xistence

f one

or

more actors

hat

ontribute

o the

nlargement

f

the

conomy,

hichmade

t

possible

o

nterpret

the

esidual erm

f

growth.

3.

Entrepreneurship

nd risk

The

way,

he ime nd he

attern

frevelationf

the xistence

f

entrepreneurial

pportunities

re

the

tartingoint

or

nderstanding

and

hus

mea-

suring)

ntrepreneurship.

he second

tage

fthe

understandingrocedure

s to

clarify

hy,

when

and how

entrepreneurial

gents

discover

nd

evaluate

pportunities.

hefinal

tage

s when

nd

how

different

odels

of their

xploitation

re

employed

Venkataraman,

997).

Thus

we should

develop

nstruments

or

measuring

ntrepreneur-

ship,

which

ould

xpress

he

volution

fentre-

preneurial

pportunities

rrespectively

f

they

originate

rom

market

nefficiencies,

rom

hanges

in the atentsfproductionsosts ndbenefitsr

they

onstitute

ew

nformation.

pportunities

ise

in theuncertain

nvironment.

iving

n an

uncer-

tain

nvironment

eans

aking osition

gainst

risk.

The

portfolio

heory,

s

shaped

y

Markowitz

(1952),

Tobin

1958)

and

Sharpe

1964),

recog-

nised

he

positive

elationship

etween

xpected


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Entrepreneurship

nd RiskPremium

87

returnndrisk. his

recognition

as founded n

the

hypothesis

f risk-averse ehaviour

n the

economic gent nd in thehypothesisf com-

pleteness,

ontinuity

nd

transitivityEichberger

and

Harper,

997)

of

thefunctionf its

utility.

Thus,

nce

again

here s no

place

for he ntre-

preneur

ince

n

reality veryone

xhibits

ntre-

preneurial

ehaviour.

n

essence,

he

ntrepreneur

has been

ostracised,

utnot

ntrepreneurship,

t

leastnot nits

specific

orm;

n otherwords he

situationhat inks

n

a

positive

manner

xpected

returnndrisk. o

put

t

differently,

he

ntrepre-

neur s not neededfor

he

theoretical

odelto

function.n the

ontrary,

hat s

necessary

s

an

environment

f

ntrepreneurship.

n

the

moulding

of this nvironment,iskplaysa determinative

role.

When n individual reates

portfolio,pti-

malisations based on therisk nd return

ela-

tionship:

isk

n

that he

portfolio

s

the result

of either

ystematic

isk

r,

n

the ase of

mper-

fect

unsystematic

isk,

diversification

ue to

project

ndivisibility

r

project nterrelationships

(Acemoglu

nd

Zilibotti,

997)

or a combination

of both.

Given

these

prerequisites,

he risk

premium

hat

he

economic

gent njoys

s the

entrepreneurshipremium

hatwe come cross

n

entrepreneurship

heories.

If

onecould

ccept

hat

he

ntrepreneur

n

anyofhis or her oles

Herbert

nd

Link,1989;

Dijk

and

Thurik, 995;

Wennekersnd

Thurik,

999)

is

always

risk-aversehen herisk

premium

f

Markowitz,

obin nd

Sharpe

s the ther ide of

the oin for he

ntrepreneurshipremium.

he

entrepreneurship

remium

s the

necessary

otive

for he ole f he

ntrepreneur

obe

set n

motion,

or

in

other

words,

t is the reason

why

the

economic

gent

who acts

n

the

entrepreneurial

arena ssumes isk.

An

economy

without isk s

one

without

ntrepreneurship.

herefore,

he evel

of riskthat he economic

gent

ssumesfor

given

evel s indicativef the evelof

entrepre-

neurship ithin hich e or she chooses o act.

Consequently,

f

we could measure he

pecific

levels f a kind

f

risk n the

conomy,

e

could

have a

proxy

f the evel of

entrepreneurship

n

the

conomy.

In

traditional

inancial

heory

herisk

may

be

systematic

r

non-systematic

r

it could take

another orm uch s financial

isk,

iquidity

isk

etc.

Thenon-

ystematic

s

characteristic,

or

very

investment

pportunity

nd

through

he

rganisa-

tion f the ortfolio;he isk an be reducednd,

in

some

ircumstances,

e

completely

lleviated.

Systematic

isk,

n the

other

and,

s character-

istic f the otalmarket. he well-known

ools f

financial

heory

CAPM

Coefficient

, Sharpe,

1964;

Lintner, 965; Black,

1987)

measure

ys-

tematic isk.

However,

he

ndices f

non-system-

aticriskhavebeen tudied ar ess.

We

support

he

postulate

hat

non-systematic

risk s a

satisfactory

ndicatorf

ntrepreneurship.

This

s llustrated

y

he act hatt hows

ts

mark

explicitly

n the reative

rocess

f destruction.

An

economy

with

high

ndicator f

non-sys-

tematicisk s one that s "full" fentrepreneurial

attempts

f the

"omega type"

Binks

and

Vale,

1990),

which

resuppose

he reuse" fresources

in

new uses.

Apparently,

owever,

similar

economy

wouldcontain

quilibriating,

reative

entrepreneurial

vents,

ince he

ontinued luc-

tuationsnreturn

or

ntrepreneurial

fforts

reates

instability

n the ide of

supply

nd

demand nd

requires

continual

ntrepreneurial

resence

hat

would over hese

aps.

4.

Non-systematic

isk,

growth

nd

entrepreneurialctivity

AfterMarkowitz

1952)

it has been

widely

accepted

hat ne measure f risk s its

standard

deviation. husone

acceptable

orm

Ramey

nd

Ramey,

995,

Acemoglu

nd

Zilibotti,

997)

of

measurementf

the totalriskthat xists n

an

economy

s the

moving

tandardeviation f

the

GDP of that

ountry.

n the other

hand,

the

standard eviation

f

thereal

returnsf invest-

ments,

ither

t

an

isolated evel or on a

market

wide

scale,

could be

an indicator f

nvestment

risk hat s the

non-systematic

isk

NSR).

To

put

it

differently,

he

non-systematic

isk

measures

investment isk

directly

nd

entrepreneurial

activityndirectlyince it reflects ll possible

changes

n

the

ntrepreneurial

nvironment.t is

true hat

mong

ther

actors,

ealrates f

returns

couldreflect

hanges

rom he

ontractual

etting

of

wages

nd someone ould

agree

hat hishas

nothing

o do with

ntrepreneurship.

ut

this s

exactly

he ase.

The

entrepreneurship

nviron-

ment

s

repressed

nd he ate freturn

eflectshe


8/10/2019 40229347

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88

P. E. Petrakis

negative ntrepreneurial

eflections

f the

wage

setting. enerallypeaking,

hose

hanges

re he

result f factors hat omprisenterpreneurship:

social

preferences,

nnovations,

onopolistrofits,

cyclical

nfluences,

ew ombinations

fresources

and reallocationf

resources,

rbitragepportu-

nities,

tc.

Therefore,

t

expresses

he

entrepre-

neurial

pportunities,

hich xist

n

an

economy.

In

OECD

(1997a)

the ates f

returnn

capital

in

thebusiness ector

re

published

or he

years

1970-1997

with

forecasts

or 1998

and

1999).

The standardeviations calculated

s a

six-year

"moving" verage

f

therate f

return,

incewe

want to lose as few

years

as

possible.

The

weighting

ooling

orrelation

etween SR

koci

GrowthRate for 10 countriesSpain, Japan,

U.S.A.,France,

Germany,

reland, weden,

taly,

Finland,

.K.,

which ccount

or 8% of

the otal

OECD

weighting)

s

0.38,

which s considered

o

be

statistically

ignificant

Koutsoyannis,

997,

p.

431).

Notethat

hedata from

he

bove

coun-

tries

will be

used

afterwards

n all the

mpirical

tasks f this rticle.

ue to the

arge

mount

f

empirical

ata hat

was

necessary

or ach

ountry,

the number

f differentountries

ad to be

reduced

lthough

hey epresent

lmost

he80%

ofthe conomic ctivities

ftheOECD

countries.

As a next

tep

o

reinforce

he

rgument

hat

thenon-systematic

isk

s a

satisfactory

easure

for

ntrepreneurship

e couldexaminetscorre-

lation withother

directmeasures

f

entrepre-

neurial

ctivity

uch

as venture

apital

ctivity,

firm ormationates

tc.Without

oubt,

n exten-

sive

discussion

concerning

he

selection

of

entrepreneurial

ariables

ould

be carried

ut.

However,

n the

cope

of

this

rticle he

riteria

for election

re related o

the

vailability

f the

empirical

ata.

We have

purposely

ollected

ata

from arious

ources

resented

n

Table

.

Examining

he relation

between

the Non-

Systematic

isk nd

he

ntrepreneurial

ariables,

through

hePool

data of

Table

,

a

high ositive

correlationesults etween henon-ystematic

risk nd the

ntrepreneurial

ariables

f Table

.

These

findings

einforce

he

view

thatwe have

already resented

y

which he

non-systematic

risk

xpresses

he

ssence

f

entrepreneurship

n

a

satisfactory

ay.

his

an be

concluded

hrough

the lmost

ositive

ingular

orrelations

thas

with

thedirect

ndices

f

entrepreneurship.

5. The

non-systematic

isk as an

endogenous

variable

n

the

entrepreneurship

odel

In this ection

f

the

paper,

he

bility

f non-

systematic

isk o

act as a

proxy

f the

ntrepre-

neurship

evel

of the

economy

within n entre-

preneurship

odel

hall be

tested.

We consider

non-systematic

isk

s an

endogenous

ariablend

we shall

xplore

o

what xtent

tsvariation

xoge-

nous

variables

etermine

ntrepreneurship.

hould

the

empirical

tudy rove

atisfactory,

e shall

not,

f

ourse,

e able

to

prove

hat

he

roxy

sed

does not

express

nything

lse

butthe

evel of

entrepreneurship.

e

shall,

however,

e able

to

demonstrate

hat

t more

han

dequately epre-

sents ntrepreneurshippportunities.

The

development

f

a

satisfactory

odelof

entrepreneurship

ust

e

supported

y

the

ntro-

duction

f those

variables,

whichdescribe

he

basic

characteristics

f

the

ntrepreneurial

nvi-

ronment.

In

general,

series

of

factors

have been

proposed

hat

hape

he

evelof

entrepreneurship

in

an

economy,

amely

he

evelof

development,

technological

hange,

hanges

n ndustrial

truc-

ture,

emographic

hanges,

nd

unemployment,

the ole

f

government,

ultural

nd

psychological

factors.

elow,

he

ominant

onceptions

re

pre-

sented

n

regard

o

the

uality

nd

direction

f

he

relationship

ftherelevantactorsndof entre-

preneurship.

t

willbe seen

that he

nalysis

lso

depends

n the

method

f

measurement

f

the

levels

f

entrepreneurship.

The

case

of

the

relationship

f

the evelof

development

prosperity)

nd he

elf-employment

rate s

characteristic.

ecause

of

the

nfluencef

prosperity

n

the

alternative

ituation

f

self-

employment

on

the evel

f

wages

nother

ords)

this

relationship

s based

on a

negative

ign.

When,

owever,

ntrepreneurship

sconsidered

s

a

fostering

actor

f

growth

hen

he

relationship

of

prosperity

nd

entrepreneurship

ust

have

a

positive ign. n realityhis s truefgrowths

the

ependent

ariable

nd

ntrepreneurship

s the

independent

ariable.

This

raises

the

question:

what s the

effect

f

the

evelof

growth

n the

entrepreneurial

rofit

ate

ersus

he

wage

rate?

f

prosperity

as

as a

result

fasterise

n

the

ntre-

preneurial

rofit

ate

n

comparison

o

the

wage

rates,

then

the

relationship

ill be

positive.


8/10/2019 40229347

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8/10/2019 40229347

7/15

90

P. E. Petrakis

Prosperity

will then have a

positive

relationship

if we

accept

that

he

positively

tructured

hanging

of theeconomy bothon theproductionnd con-

sumption

side)

because

of the

new fields and

products

new

technology)

creates

monopolistic

profit

ates

and

higher

ates of

profit.

On thebasis of the above

findings

wereach the

conclusion

thatwe

expect

that

per-capita

ncome

exert

positive

effectson the

level of

entrepre-

neurship

when the

NSR

proxy

measures this.

In

general,

t s considered hat

hanges

n

tech-

nology

can

exert

both

positive

and

negativepres-

sureson

entrepreneurship

ith

mbiguous

results.

Following

a

Schumpeterian

model

(Schumpeter,

1947),

since invention nd

technological

hange

provide heopportunitiesornew combinations f

factorsof

production,

he

rate

of

technological

change

enhances

new venture ormation

y

creat-

ing

new

opportunities

Dean

et

al.,

1993).

At

any

rate,

t seems

that there s

significant

mpirical

evidenceto

support

his

perspective

Black,

1987).

When,however,

ntrepreneurship

s measured

by

non-systematic

isk,

we must

wait a

positive

ela-

tionship

of that

variable and

the

technology

variable

because of the

uncertainty

hat

usually

accompanies

the ntroduction

f new

technology.

However,

when

t s measured

y

the

elf-employ-

ment atethen

t s notclear

whatkindof

sign

we

should

expect.

A

change

in

industrial

rganisation

chiefly

n

the

directionof

an increase

in the share

of ser-

vices)

is

expected

to

have

inflationary

ffects

n

entrepreneurship,

hether

measured

y

NSR

or

by

the

elf-employment

ate.

This occurs

because

the

transposition

f the

production

rototype

owards

new

products

and

new

technologies

has

fewer

requirements

n

capital per

final

roduct

services)

to enable the

arger

ntrance f

self-employed

nd

higher

ncertainty

due

to

new

technologies).

Five

categories

of

factors

re

usually

attached

to the

demographic

ffects

n

entrepreneurship:

the size

of

population

positive

effect),

mmigra-

tion

special

categories

f

population

with pecial

characteristics),

rbanisation

different

onditions

of

purchasing

habits

-

positive

relationship),

familial

tradition

nd

finally

he

education

evel

of the

population.

As concerns

the

last

of these

variables,

ts

effect ould

be uncertain

n direction.

If,

though,

ntrepreneurship

s

expressed

by

the

self-employment

ate,

one could

argue

that

the

educational

evel

reinforces

he sense of

indepen-

dence

and self-confidence

nd

thus s an

enabling

factor orself-employment.t the same time, t

improves

he

returns

nd

consequently

makes the

alternative

ondition

f the

wage

rate

more

xpen-

sive.

Thus,

the

final result

s

ambiguous.

If the

level

of

risk,

a

positive

relationship xpresses

entrepreneurship

ould

be

expected.

This

is due

to the

opportunity

hat

education

offers o

adopt

new

technologies,

which

consequently

eads

to a

greater

egree

of

uncertainty.

Unemployment

s a

significant

ontributing

factor

o the

evolution

of

the level

of

entrepre-

neurship.

Thus,

when it

increases,

it leads

to

upward ressures

n

entrepreneurship.

t the ame

time,theopportunityost forone to become an

entrepreneur

ecreases

(Meager,

1992

-

push

or

pull?).

Given

that

he

increase of

unemployment

is

usually

observed

during period

of

recession

and

given

that

a recession

does not

favour the

increase

n

entrepreneurship,

nemployment

ay

be correlated

negatively

with

entrepreneurship.

Generally,

when

entrepreneurship

s measured

with he

self-employment

ate,

we could

say

that

the direction

of this

relationship

s

uncertain.

When

entrepreneurship

s

measured

with

non-sys-

tematic

risk it

can be

related

to

unemployment

positively

Parker,

1997).

Greater

unemployment

means

reduced

wage

rates and

consequently

t

follows thatthereare

larger

returnsn

capital,

hence

arger

luctuations,

nd

this

mplies

risk. f

unemployment

s

the result

of

a

recession,

once

again

returns

re

expected

to

have

larger

luctua-

tions

(in

a

negative

direction).

n

both

circum-

stances,

the

level of

unemployment

eems

to be

related

positively

o

entrepreneurship.

What

we

should

pay

attention

o

s that

hanges

inthe

unemployment

ate

re

ndicative

f

periods

of

reformation

f

production

nd

consequently,

periods

of

uncertainty.

The

redistribution

f

resources

for

the

development

of new

activity

(omega

event),

ven

f

t

means

a recession

n

pro-

duction, lso means accelerating ntrepreneurial

activity.

For

this

reason

we

may

see

a

positive

correlation

f

unemployment

hange

and

entre-

preneurship

s it

is measured

by

the

NSR

indi-

cator.

At the

ame

time,

f

course,

he

cceleration

of

unemployment

an

discourage

the

expression

of

entrepreneurship

hen it

is

measured

in the

form

of

self-employment.

hus it

is not

a

rare


8/10/2019 40229347

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Entrepreneurship

nd RiskPremium

91

phenomenon

o observe

a

negativerelationship

between

he rateof

change

of

unemployment

nd

the evel of entrepreneurship,s is measuredby

the

unemployment

ate.

The role of

government olicy

is

multifaceted

as it concerns

ntrepreneurship

nd has an uncer-

tain

final direction. t has been found

Petrakis,

1997)

that ax

policies,

motivation

olicies

etc. can

have a

composite

nfluence n

the evel of entre-

preneurship.

n

interesting

nd

quantifiable

ide

of the

question

s the size of the

public

sector

n

the

economy.

A

large public

sectorhas

crowding

outeffects n the

private

ector nd

consequently

on

entrepreneurship

s

well

(OECD,

1998,

p.

20).

At the same

time,

hough,

he

public

sector ould

develop important rogrammesof public pro-

curements o as to exert

positive

effects n the

growth

f

entrepreneurship

Hartley

nd

Hutton,

1988).

What we

may

obtain from he

relationship

f

the

public

sector and

entrepreneurship,

owever,

is the

negative

relationship

etween the

change

of the hareof the

public

sector nd that f entre-

preneurship, egardless

of how it

is measured

(self-employment

r

non-systematic

isk).

The model s estimated ased on the

hypothesis

that he

exogenous

variables are not

interdepen-

dent.However

a

potential

ndogeneitymay

exist.

The model of determination

f

entrepreneurship

takes the

following

orm:

EN

=

EN

(I,

IS, L, E, U, UC, T,

G,

GD) (1)

Where

EN standsfor

ntrepreneurship

(For

the restof the

symbols

ee Table

lib).

The model

s

presented

n

Tables Ha and lib.

It

is

true hat

we

would be

more

convincing

f

we

used fixed ffects

n

one

regression

ince there

is a lot of unobserved

heterogeneity

n the coun-

tries.

n

this

way

the

heterogeneity

ould be

par-

tially

ut.

However,

hiswould ntroduce nit oot

problems.

As a

way

to

partially

ake out

some

of

the

heterogeneity

f the countrieswe choose to

weight

the

country

variables with the OECD

weights

sed

for

onstructingggregate

variables

from ndividual

ountry

ariables.Note that

n

this

case

the

mpirical ounding

since

we

run

he sti-

mationswith nd without

weighting)

was

signifi-

cantly mproved.

On the basis of the

above econometric

onclu-

sions we discover that the model of

assessment

of

entrepreneurship,

hen t s

expressed

by

non-

systematicrisk and the self-employmentate,

displays

the

following

haracteristics:

1

The estimated

ign

of the

variables

n

relation

to those

theoretically xpected.

t is

observed

that the NSR

displays greater

concision in

regard

o

what s

expected

n

comparison

with

the

estimated

igns.

2.

The statistical

ignificance

f the

coefficients

of the variables. t was

observedthat he

first

regression

ontains six

non-significant

ari-

ables

(95%

significance

evel)

and the second

only

two.

3.

The

degree

of

interpretation

f the

dependent

variable (R2). It is observed that the SE

variable s

interpreted

o

99%,

while the NSR

is

interpreted

o 89%.

4. The F-statistic

f

the

entire

regression.

t

is

observed hat he two

samples

display high

F-

statistic alues and

nil

probability,

romwhich

it follows that

the common behaviour of

the

variables

significantly

ffects he

dependent

variable

tatistically.

n

general,

heresults re

satisfactory.

Despite

the

good performance

f

the determi-

native

models of

the

evel of

entrepreneurship,

he

issue of

the

elf-employment

ate nd

that f entre-

preneurship

emain

pen.

n

other

words,

f

theSE

(self-employment

ate)

s not

considered o be an

independent

ariable,

hen t

s

veryprobable

that

it has to be

considered one of the

determinative

factors f

entrepreneurship.

ndeed,

it should be

one of the

important ositive

factors f

determi-

nation

of the level of

entrepreneurship

f an

economy

that

atisfactorily

escribes the

supply

side

conditions of

entrepreneurship.

ecause it

seems to be an

important

actor

n

shaping

the

level of

entrepreneurship, large

number

of

studiesconsider t to be an

indicator f

entrepre-

neurship.

Put

differently,

n

order to

accept

that

the

elf-employment

ate s one of the

ndependent

variables we must

ccept

that wo

conditions re

presupposed:

irst,

he

elf-employment

ttitude f

economic

agents

s determined

y

factors hat re

not

expressed

hrough

ther eterminative

actors

of

entrepreneurship,

nd

second,

there re indica-

tions of

causality

n

the direction f the

relation-

ships

that arise from

self-employment

nd are


8/10/2019 40229347

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92

P. E.

Petrakis

TABLE Ha

Factors

ffectingntrepreneurship:

wo alternativesE

vs. NSR

Indicants f Self-employmentate Non-systematicisk

entrepreneurship

Independent

Theoretical Estimated Coefficient -Statistic

Theoretical EstimatedCoefficient

-Statistic

variable

expected sign expected

sign

sign sign

1

Constant

C)

-

0.010073

-0.022276

-

0.005401 -8.456124*

2

Per

capita

income

I)

- -

0.007978

-0.370965

+

+

0.164886 3.910266*

3 Industrial

structure

change

IS)

+

+

0.006354 1.703603

+

+

0.019518 5.659987*

4a Labour orce

rate

hange

L)

+

-

0.093285 -2.863737*

+

-

0.172988 -1.496162

4p

Educationevel

of

working

population

E)

?

-

0.107929 -5.240005*

+ +

0.026177

2.958173**

5

Unemployment

rate

U)

? +

0.036197

2.233222*

+

+

0.082696 4.965647**

6

Unemployment

rate

hange

UC)

+

-

0.063640 -0.433531

+

+

0.550237

1.119380

7

Technological

level

T)

+ +

0.006294

1.635879

+

+

0.052983

5.710784*

8 Government'

share

G)

-

0.020868 -2.127481*

-

0.046206

-7.013503*

9 Government'

share ate

f

change

DG)

-

1.740613 -1.372498

+

3.186241

2.400134*

10

SE,_2

+

1.000793 498.6391*

Adjusted

2

0.998985 Prob

F-stat):

0.892034 Prob

F-stat):

Notes:

1. The first

egression

as

been orrectedorAutocorrelation

nd

degree.

t has also used

White's

Heteroskedasticity-Consistent

covariancemethod f correction.

2.

*

F-test esults t a 95%

significance

evel.

3.

E-

Views,

Econometric

iews,

Micro

TSP,

1994

have beenused.

receptors

f the

ntrepreneurship

ndicator,

nd not

the

opposite.

The entrenchmentf

the first ondition

has a

theoretical nd

empirical

character.

The theoret-

ical character

originates

from he fact

that self-

employment

s

determined

y

a series

of factors

such as thosedescribed arlier

ut t the

ame time

is theresult fa seriesof characteristicsfsociety

and of the ndividual hat

have not beendescribed

until now.

At the individual

level,

the sense of

independence

nd the self-motivationalorces

of

the ndividual re theresult

f cultural nd

historic

conditions and form

part

of a basic

factorin

shaping

ttitudes owards

elf-employment.

On

an

economy-

ide

level,

perhaps,

he most

important

f

the

significant

actors

haping

the

self-employment

ate

are

consequences

of the

development

of

entrepreneurship.

o

put

it

in

another

way,

the

development

f

new

initiatives

within

existing production

methods

creates

the

preconditions

for

the

exiting

of

the

creative

individuals

from

he

swelling

of the

self-employ-

ment rate. In essence, the factors described

above

shape

the content

of

the residual

of

the

regression

hat

makes

self-employment

depen-

dent

variable.

On

thebasis

of the

bove

techniques

we

moved

on to

the econometric

erification

f the

hypoth-

esis

that is

advanced

here,

so as

to discover

whether or

not

we should

consider

the self-


8/10/2019 40229347

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Entrepreneurship

nd RiskPremium

93

TABLE lib

The definitionsnd the ources f

thevariables

Self-employment

ate SE) Definition:elf-employments percentagef total mployment.

Source:

European

ommission,

mployment

n

Europe,

997,

pp.

119-135.

Per

apita

ncome

I)

Definition:

eal GDP

per apita.

Source:

OECD, 1997c,

Table 3.2.

Technological

evel

T)

Definition:

NBERT,

TotalBusiness

nterprise,

illions f PPP dollars.

Source:

OECD,

1997d.

Industrial

tructure

hange

IS)

Definition:

alue added

n

services s a

percentage

f GDP.

Source:

OECD, 1997c,

Table 5.4.

Labour orce ate

hange

L)

Definition:

abour

orce

percentagehange

rom

revious eriod).

Source:

OECD, 1999,

Table 18.

Educationevelof

working Definition:

s an

approach

o the

ariable,

thasbeenused

s

the

articipationercentage

population

E)

of the work

forceof

people

who are still

n,

or

have

graduated

rom,

econdary

educationalevel.

Source:

The data

originated

rom he

ollowing

ources:

ECD, 1997b;

Psacharopoulos

and

Arriagada,

986; 1992;

and Barro nd

Lee,

1993.

Unemployment

U)

Definition:

nemployment

s a

percentage

f the otal abour orce.

Source:

OECD,

1997c,

Table

2.15.

Unemployment

ate

hange

UC)

Definition:

he

change

n

unemployment

s a

percentage

f the otal abour orce.

Source:Calculated

rom he bovevariable.

Governments'

hare

G)

Definition:

otal

outlays

f

government

s a

percentage

f GDP.

Source:

OECD, 1997c,

Table 6.5.

Governments'

hare

GD)

Definition:

he

change

n

the otal

utlays

f

government

s a

percentage

f GDP.

Source:Calculated

rom he bove variable.

employment

ate s one

of the

nterpretative

ari-

ables of

the

development

f

entrepreneurship.

For this eason

we used a test f

causality

irec-

tion,

he

Granger

ausality

Test

Granger,

969).

For the

Granger

Causality

Test to function

t

all,

it mustfirst e determined

hether he two series

of data are

stationarylthough

o

integrated.

f the

series are

non-stationary,

n

the first evels

they

are converted

o

stationary

nes with

the forma-

tion of theirfirst

ifferentiationsnd co

integra-

tion of the

Augmented

ickey

Fuller

ADF)

and

the

Phillips-Peron

ests.

f the first wo series of

data are co

integrated,

xamining

he function

f

integration

ccording

o

Johansen,

hen

hey

must

constitute

relationship

f causal connection t

least

in one direction

unidirectional

ausality)

and

possibly

in two directions

(bi-directional

causality).

The

application

of

the above methods nsures

thatwe

gain

an exact

image

for he relative rust-

worthiness f

the

used

examples.

The relevant

results re

presented

n Tables

Ilia, b,

and c.

The

ADF

and

PP

test tatistics re

higher

han

their riticalvalues

(1%

s.

1.),

so the series

(SE)

and

(NSR)

are

stationary

t their irst

ifferences.

D.F tests have showed thatthere

s

no

deter-

ministic

rend,

fact that s

strengthened

y

the

nature f the

variables

since we have

no theoret-

ical

option

reasons to believe that

here

s

a deter-

ministic

rend.

LR

test

ndicates 2

cointegrating

equation(s)

at 5%

significance

evel. The LR

test

rejects

the

hypothesis

f no

cointegration

ut not

the

hypothesis

of,

at

most,

one co

integration

relation. Therefore

he

test shows that the two

variables

may

co

integrate.

We can

marginally eject

he

hypothesis

hat

E

does not

Granger

ause NSR but we do not

reject

the

hypothesis

hatNSR does not

Granger

ause

SE.

Therefore,

t

appears

that

GrangerCausality

runs one

way

from

E

to NSR and

not the other

way.

Given that here re

strong

ndications

hat

elf-

employment

hould be considered s an

explana-

tory

factor of the level of

entrepreneurship,

t


8/10/2019 40229347

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94

P. E. Petrakis

TABLE Ilia

Verificationf stationariness

f

SE)

series

nd

NSR) (in

first

ifferences)

ADF

Test Statistic

4.724980

1% Critical alue*

3.4885

On

D

(SE)

Phillips-Perron

est Statistic

1% Critical

alue* 3.4885

On

D(SE)

-11.05614

ADF

Test Statistic

6.199091

1% Critical alue*

3.4885

On

D

(NSR)

Phillips-Perron

est Statistic

1%

Critical

alue* 3.4885

On

D

(NSR)

-9.151271

*

MacKinnon ritical

aluesfor

ejection

f

hypothesis

f

a

unit oot.

TABLE Illb

Johansenointegrationest

Test

ssumption:

o

deterministicrend

n thedataV

Series:NSR SE

Lags

interval: to

4

Eigenvalue

Likelihood 5%

1%

Hypothesised

ratio

Critical Critical

no. Of

CE(s)

value

value

0.199966

38.30135

12.53 16.31 None**

0.104125

12.64471 3.84

6.51

At most

*

**

Denotes

rejection

f

the

hypothesis

t 5%

(1%)

signifi-

cance evel.

TABLE IIIc

Pairwise

Granger

ausality

ests

Lags:

2

Null

hypothesis

F-statistic

Probability

SE does not

Granger

ause NSR

196700

4.7E-0.8

NSR does not

Granger

ause

SE

1.74102

0.18001

should

e

introduceds

an

independent

ariable

on the

determination

f

entrepreneurship.

ote

that t

the ametime

he

ame

variable

s influ-

enced

y

he

tandard

ndependent

ariables

f he

model f

entrepreneurship.

A rather impleway of solvingthe above

problem

s

to ntroduce

s

an

ndependent

ariable

of the model

of

forming

ntrepreneurship

he

residual f

the

regression

hatwould

have as

a

dependent

ariable

he

elf-employment

ate. hus

a model

f the

determination

f

entrepreneurship

could be

realised

with

non-systematic

isk

s a

dependent

ariable.

Themodel

s estimated

ased n the

hypothesis

that he

xogenous

ariables re

not

nterdepen-

dent. owever,potentialndogeneityay xist.

This

point

will

give

room

o one of

themost

if-

ficult

roblems

o be

handled

withinhe stima-

tion

procedures.

or

this

easonwe

estimate

he

Correlation

atrix o

identify ossible

nterde-

pendency

n

the

variables.

The

high

correlation

etween

ome of the

independent

ariables

reates

certain

kepti-

cism

concerning

he

reliability

f the

tatistical

findings

ue to

multicolinearity.

hus the

high

correlation

etween

hevariables

UC

T

G

DG

leadsus to

exclude

hem

n

the

inal ersion

f

he

model.

Thefinalmodel s presentednTableV.The

final

implified

odel,

which

s estimated

n fact

in

two

tages,

ontains

ssentiallygiven

hat

wo

variables

,

and U

are

proved

o be

non-statisti-

cally significant)

hree

ariables.

he

per

capita

income

I),

the ndustrial

tructure

IS)

and the

residual

f SE

estimation

RESAR).

Its

nterpre-

tative

bility

s

particularly

atisfactory.

6.

The

entrepreneurship

non

ystematic

isk)

as

an

explanatory

ariable

n the tandard

growth

model

In this

ection

we

willexamine

he

predictabilityof

entrepreneurship

roxy

within he standard

growth

odels

s

far s the

rowth

rocess

s con-

cerned.

f this

ttempt

s

successful

e

willhave

strong

vidence

hat

he

elation

f

ntrepreneurial

activity

nd

measures

of

outcome,

conomic

growth,

s

well

founded.

To

establish

his

equires

concise

heoretical

background,

amely

hat

f

growth

ccounting

it-

erature

Solow,

1957;

Jorgensen

nd

Grilisches,

1967;

Young,

994)

which

ivides

utput rowth

among

hanges

n measurable

nput

uantities;

physical

nd

human

apital

and

the

well-known

"Solow

residual"

r

he

total

roductivity"

TFP)

effect.hequestionweposeis whetherisk s a

part

f

the

Solow

residual".

n other

words,

he

matter

ere

s

whether

iskhas

an

interpretative

ability

s concerns

he

growth

ate.

However,

s

we

discovered

efore,

concise

heoretical

ack-

ground

or

he

ntroduction

f

risk

n the

ines

f

the

neoclassical

xample

xists

nly

or

non-sys-

tematic

isk

s a

proxy

f

entrepreneurship.


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TABLE

IV

Correlation atrix

I IS L E U UC T G DG RESAR

I 1.000000 -0.137384 0.513440

-0.027709 0.146069 -0.710781 -0.109283 -0.253960 -0.626491

0.011870

IS

1.000000

-0.048857 -0.018728 -0.015516 -0.001165 0.406257 0.163645 0.017910

0.210992

L 1.000000 0.273338

-0.017840 -0.525527

0.325673

-0.552281

-0.270637 -0.100097

E

1.000000 -0.310854 -0.117652 0.547730 -0.660661 0.088643

-0.000181

U

1.000000 0.036722 -0.394977 0.174878

-0.091530 0.071595

UC

1.000000 -0.107808 0.272697 0.598763

0.057087

T 1.000000 -0.521211 -0.028772 0.037888

G

1.000000 0.135792

0.099525

DG

1.000000 -0.008663

RESAR 1.000000

TABLE

V

Theentrepreneurshipodel:non-systematicisk s dependentariable

Variable

Theoretical

xpected ign

Estimated

ign

Coefficient /-Statisti

1 Per

capita

ncome

I)

+

0.017450 4.707708*

2 Industrialtructure

hange

IS)

+ +

0.07642 4.047304*

3b Educationevel

of

working opulation

E)

+ +

0.003946 1.305926

4

Unemployment

ate

U)

+ +

0.010506 0.865765

9 Residual f SE

(RESAR)

+ +

0.080809 4.435177*

10

NSRM

0.841343 5.170695*

Adjusted

2

0.746952

F-statistic

53.54229 Prob

F-stat):

Notes:

1. The

regressions

avebeen

correctedorAutocorrelationst

degree.

t

has also been used White's

Heteroskedasticity

con-

sistentovariancemethod f correction.

2.

*


significance

evel.

3. Source:

he

-Views,

conometric

iews,

Micro

TSP,

1994 havebeenused.

Following

Solow and the otherswe

may

pos-

tulate:

Yit aitKit

+

(\-ait)Lit

+

Sit

(2)

where

Yit

efers o the

proportional

ates f

change

of

output,

Kit

refers o the

proportional

ates of

physical

capital,

Lit

refers

o the

proportional

f

human

apital,

S it refers o

the

proportional

ates

of

TFP

(Solow residual)

and

a,,

is

capital's

share

of

national

ncome.

To the

degree

thatthe "Solow residual" is an

endogenous

ariable

dependent

n thevariables f

capital

nd

abor,

hen ormula

2)

is an

accounting

expression

with n

unexplained

esidual. As

long

as

the work of the researchers

Solow, 1957)

ignored

he

uality

n

nputs, largepart

f

growth

was attributedo

TFP.

Endogenous growth

theory

(Romer,

1990;

Lucas,

1988),

with he

variable thatwas

imported

and

expresses

human

apital,

opened

the

dialogue

for he existenceof one or more factors

hat on-

tribute o the

enlargement

f the

economy,

that

are

capable

of

interpreting

he residual

termof

growth.

Thus,

because the theoretical ontent of

the

basic

inputs mproved

with the addition

of their

qualitative

imensions

Jorgensen

nd

Grilisches,

1967;

Jorgensen

t al.

1987)

it was illustrated hat

a substantial ortion f the Solow residual" ould

represent

he

changes

n

input uality.

For

the

consequences

of our

analysis,

we

shall

accept

that:

Sit

=

Tit

HCQ

+

NSit

(3)

where

Tit

tands

or he

echnological

evel

quality

of

capital),

HCQ

refers to the

changes

in the


8/10/2019 40229347

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96

P. E.

Petrakis

human

apital quality,

nd

NSit

tandsfor heNew

Solow Residual.

In contrast o capital, abor and human apital

quality

variable,

which are

endogenous

variables,

referring

o the Lucas

-

Romer

approach,

the

effect f

technology

s

exogenous

and therefore

t

appears

in "level" form.Before

proceeding

with

the

mpirical

ssessment

f the bove

proposition,

the

endogenous

variables were tested

for multi-

colinearityby constructing

correlation

matrix

(Table VI).

The correlation oefficient

o not reveal

any

significant

ssociation

K, L,

T,

HCQ.

We now

could

estimate he standard

rowth

model as it

is

presented

nTable VII.

In the lightof the analysis in the previous

sections the variable NS could be

analysed

as

follows:

NS

=

NSR

+

e

whereNSR stands for the non-

ystematic

isk as

an indicator f

entrepreneurship;

stands

for an

errorwhich is

independently

isturbed and

is

unique

for ach

country

ncluded

n

the

sample.

The new variable we

introduce ould

take the

place

of the

dummy

variable,

which

captures

he

effects f

entrepreneurship

s concerns the

clas-

sical

interpretative

ariables

of the neoclassical

model.

That,

at

anyrate,

s

the

deepermeaning

f

the

level of

entrepreneurship

hat exists

in

an

economy.

The results re

presented

n Table

IX.

The results f the econometric

stimations

re

satisfactory

s

far as the

interpretative

bility

of

the model

being

used is

concerned.

The

signs

of

TABLE

VI

Correlation

atrix

T K L HCQ

T 1.000000

0.172947

0.296738

-0.106189

K

1.000000

0.287929

0.220561

L

1.000000

0.206804

HCQ

1.000000

TABLE VII

The

standard

rowth

odel

Variable

Coefficient

Std.

rror r-Statistic

C

0.00504

0.000518

9.731674*

K

0.227782

0.014017

16.25021*

L

0.164723

0.067255

2.449242*

T 0.037757 0.00515 7.331285*

HCQ

0.053811

0.002735

19.67841*

G(f-l)

0.409856

0.101489

4.038428*

Adj

R2 0.856728

Prob

F-stat.)

0

Source:

1. The

results

ave been corrected

orAutocorrelation

st

degree.

2.

*

F-test esultst a 95%

significance

evel.

3.

E-

Views,

conometric

iews,

Micro

TSP,

1994

havebeen

used.

the models

were as

expected

and the

R2 is at

a

satisfactory

evel.

We can make

a comment on-

cerning

he

partialregressions

oefficients.

ince

theyrepresent

he

partial

nfluence f each inde-

pendent,

when

it

changes

for

one

unit,

to

the

average

value

of

dependent

ariable

growth

ate),

the rest

of

the

independent

variables

remain

constant,

he evels

ofthe

partial

egressions

oef-

ficients

an

be used

to

evaluate

the

influence

f

TABLE

VIII

Definitions

nd sources

f

variables

Capital

K)

Definition:

eal total

ross

ixed

apital

ormation

Percentage

hange

rom

revious

eriod).

Source:

OECD, 1999,

Table

5.

LaborForce

L)

Definition:

mployment

Percentage

hange

rom

revious

eriod).

Source:OECD, 1999,Table 20.

Technological

evel

T)

Definition:

NBERD,

Total

Business

nterprise,

illions

f

PPP dollars

urrent

rices.

evels.

Source:

OECD,

1974-1995.

Human

apital

HCQ)

Definition:

s an

approach

o

the

variable,

t

has been

used

as the

participationercentage

f

thework orce

f

people

who

re till

n,

orhave

graduated

rom,

econdary

ducational

evel.

(Percentage

hange

rom

revious

eriod)

Source:

The data

originated

rom

he

following

ources:

OECD,

1997b;

Psacharopoulos

nd

Arriagada,

986;

1992;

and Barro

nd

Lee,

1993.


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TABLE IX

The

standard

rowth

odel nd theNSR

Variable Coefficient Std. rror /-Statistic

C

0.004709

0.000544

8.656043*

K

0.222467

0.013663

16.28297*

L

0.177355

0.066889 2.651468*

T

0.032725

0.005934

5.514373*

HCQ

0.046367

0.002916

15.8998*

NSR

0.252387 0.038787

6.507014*

G

(r

1)

0.457508

0.038787

6.507014*

Adj/?2

0.855868

Prob

F-stat.)

0

Source:

1. The results ave

been corrected or

Autocorrelationst

degree.

2.

*


significance

evel.

3. TheE-Views, conometriciews,MicroTSP, 1994have

beenused.

the

ndependentrowth

actors

nd the

nterpre-

neurshiproxy

o the

eterminationfthe

epen-

dent ariable.

herefore,

e can

conclude hat he

enterpreneurship

nfluenceccounts or

5% of

the nfluencef the

basic

growth

actors f the

growth

ate.

7.

Conclusions

In

this article t has been

suggested

hat we

consider isk as the

missing

ink

between he

entrepreneurshipheory

nd the neoclassical

theory.

he

initial dea is old

enough

nd

in

essence

has,

for hefirst

ime,

een

uggested y

the

upporters

f

the

ntrepreneur

s an

agent

f

uncertainty.

e

support

he

elf-evidentdea that

the

environmentf the

neoclassical

heory

as

been tructured

n

such

way

s to allow he

xis-

tence of

entrepreneurial

ehaviour,

while not

allowing

or

significant

ole or he

ntrepreneur.

As

such,

he isk

remium

f the

conomic

gent

of

neoclassical

heory

s

nothing

more han

he

entrepreneurshipremium

f

entrepreneurship

theories.

f,

hough,

his s

absolutely

nd

readily

acceptable,hen hemeasurementf the evel of

(non-systematic)

isk

an allow for

satisfactory

"revelation"

f the evel of

entrepreneurship

n

economic

ctivity.

The

validity

f the

roposed

measuref entre-

preneurial

ctivities

as testedn

three

tages.

n

the

first,

we examine he

correlation

etween

entrepreneurship

ariables

i.e.

venture

apital

start-ups

tc)

with he

proposed

ariable.

n

the

second,

we

examine he

superiority

f

thenew

measure ersus traditionalne like theself-

employment

ate as

endogenous

ariables. n

repeated

conometric

nalyses

we built

up

an

acceptable

model f

entrepreneurship

etermina-

tion.

ased

upon

he vailable

ndicators,

he

new

measure

emonstratedmuch

etter

ehaviours

an

entrepreneurship

roxy

han

he

elf-employ-

ment ate.

In

the

hird

evel,

the

ntrepreneurship

roxy

was connectedo the

utcome f the

growth

ate.

We enlisted

hemore

rganized

orum

fthe

neo-

classical

rowthheory

nto ur

nalysis

nd

broke

new

ground

n

the

rowth

ccounting odeling

y

recreatingheexplanatoryactors hat nclude

capital,

abor,

echnology

nd

human

apital.

he

contributionf

non-systematic

isk

entrepreneur-

ship)

s realized

s

statistically

ignificant,

fact

that ontributeso an

increase f the

nterpreted

residual

f the

growth

ate.

Having

used all the

empirical

ndications

e

came o

the onclusion

hatwe

have

n

our

hands

a

good

entrepreneurshiproxy,

hich ould

lso

allow

us to reconsider

he

relation f

entrepre-

neurship

nd theneoclassical

onstructions.

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