Entrepreneurship, innovation and regional performance: application for the Spanish regions

Abstract

The aim of this study is to test the importance of entrepreneurship or new business formation for explaining differences in economic performance in the Spanish regions, together with the role played by the endowments of innovation capital and the socio-economic capabilities of every region. The results show that the effect of new business formation on economic performance varies considerably between regions, and the type of start-up is highly important for the results obtained: entrepreneur endowments of high technology intensive sectors and medium technology intensive sectors, but not those of low technology intensive sectors, have a positive effect on regional performance. Also, the size of the start-ups is important for explaining regional development.

Keywords:

• Entrepreneurial capital
• regional economic performance

Acknowledgement

The author acknowledges the National Institute of Statistics for the information provided for the research.

Notes

1. According to OECD (2006, 3) ‘researchers argue about the link between entrepreneurship and growth, but everybody wants entrepreneurship, even if the link to growth is not clear’.

2. Period for which it has been possible to have regionalized information of new start-ups by sector and size as it will be explained in Section 4.-Data and variables used.

3. In particular, studies (see Goerlich, Mas, and Perez (2002) or Papeles de Economía España, 138 (2013)) have shown that economic imbalances of the Spanish regions are related to the concentration in regions such as Madrid, Catalonia, Basque Country, Navarra, Balearic Islands or Valencia region of tourism, specialized services or industrial activities -highly productive- with endowments of business and technology parks. These studies also point out that the economies of the other regions carry a lower rate of adaptation to recent global changes. So that, Spanish regions have significant inequalities depending on their economic activities as well as differences in taxation.

4. See Capello and Nijkamp (2009), Cooke et al. (2011), Harris (2011) or Huggins and Thompson (2015).

5. A precise description of these composite indexes is displayed in the next section.

6. Recently, the database ‘Enterprise demography harmonized’ reporting information of births of companies has been created but only for 2012.

7. The stock of capital estimated by IVIE follows the OECD guidelines and has been incorporated into OECD databases for the Spanish case.

8. Figure 1 illustrates the differences in the rate of entrepreneurship throughout the period 1995–2010.

9. See Sargan (1958).

10. See Arellano and Bond (1991).