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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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2/15
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:
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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3/15
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
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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.
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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
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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
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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-
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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
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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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Entrepreneurship
nd RiskPremium
95
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.
*
F-test esults t a 95%
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
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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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14/15
Entrepreneurship
nd
Risk remium
97
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.
*
F-test esults t a 95%
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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D. and F.
Zilibotti,
997,
'Was
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conomy
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ondon:
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