Showing papers by "Zoltan J. Acs published in 2006"
TL;DR: This article found that necessity entrepreneurship has no effect on economic development while opportunity entrepreneurship has a positive and significant effect, while necessity entrepreneurship is having to become an entrepreneur because you have no better option, from opportunity entrepreneurship, which is an active choice to start a new enterprise based on the perception that an unexploited or underexploited business opportunity exists.
Abstract: ple answer: Entrepreneurs create new businesses, and new businesses in turn create jobs, intensify competition, and may even increase productivity through technological change. High measured levels of entrepreneurship will thus translate directly into high levels of economic growth. However, the reality is more complicated. If, by entrepreneurship, one allows inclusion of any type of informal self-employment, then high levels of entrepreneurship may actually mean either that there are substantial bureaucratic barriers to formally creating a new business, or simply that the economy is creating too few conventional wage-earning job opportunities. Under these circumstances, we might reasonably hypothesize that high levels of entrepreneurship would correlate with slow economic growth and lagging development. For the past two years I have been the chair of the research committee of a multi-country survey effort known as the Global Entrepreneurship Monitor (GEM) project, which has begun to make headway in understanding how different types of entrepreneurship affect development. The starting point has been to distinguish “necessity entrepreneurship,” which is having to become an entrepreneur because you have no better option, from “opportunity entrepreneurship,” which is an active choice to start a new enterprise based on the perception that an unexploited or underexploited business opportunity exists. Analyzing data gathered by GEM researchers in 11 countries, Atilla Varga and I have found that effects on economic growth and development of necessity and opportunity entrepreneurship vary greatly. We found that necessity entrepreneurship has no effect on economic development while opportunity entrepreneurship has a positive and significant effect. After the fall of the Berlin Wall many uneconomical factories were closed in Central Europe as economies became integrated into the global economy. Those workers who had jobs in the plants and factories of the former socialist countries were productive members of society. However, as factories were closed one after another, many of these workers found themZoltan Acs
930 citations
Book•
19 Jun 2006TL;DR: In this article, the authors present a formulation of entrepreneurship policy for a region in the United States, based on regional variation in entrepreneurial activity and human capital and entrepreneurship, and conclude that entrepreneurship and economic growth are correlated.
Abstract: 1. Introduction 2. Entrepreneurship and economic growth 3. Regional variation in entrepreneurial activity 4. Human capital and entrepreneurship 5. Entrepreneurship and employment growth 6. Summary and conclusions 7. A formulation of entrepreneurship policy.
389 citations
Posted Content•
TL;DR: This article examined the relationship between business dynamics and employment effects in 320 U.S. metropolitan statistical areas and found that only start-ups with greater than twenty employees have persistent employment effects over time and only in large diversified metropolitan regions.
Abstract: This paper examines the relationship between business dynamics and employment effects in 320 U.S. Metropolitan Statistical Areas (MSA). Much of the theoretical work on industry dynamics focuses on the role of noisy selection and incomplete information on entry and survival. We extend this research by looking at the impact of firm heterogeneity on employment persistence. We find that only start-ups with greater than twenty employees have persistent employment effects over time and only in large diversified metropolitan regions. Therefore, both the type of entry and the characteristics of the region are important for employment growth.
381 citations
Posted Content•
TL;DR: This article found significant differences in entrepreneurial activity between Ireland and Hungary in both the type of people starting businesses and the opportunities pursued, and suggested that economic development policies for middle-income countries like Hungary should focus on increasing human capital, promoting enterprise development, and upgrading the quality of FDI.
Abstract: It is widely recognized that foreign direct investment (FDI) plays an important role in economic development. Internationalization theory is used to explore how inward FDI impacts entrepreneurial activity. Using data from the Global Entrepreneurship Monitor we find significant differences in entrepreneurial activity between Ireland and Hungary in both the type of people starting businesses and the opportunities pursued. These results suggest that economic development policies for middle-income countries, like Hungary, should focus on increasing human capital, promote enterprise development, and upgrading the quality of FDI.
105 citations
Posted Content•
TL;DR: In this article, the authors explored the impact of regional human capital on new-firm survival rates through formation rates of surviving versus closed firms in the service sector and found that the new firm survival rate is negatively related to service sector specialization and positively related to all industry intensity.
Abstract: Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods.
27 citations
Posted Content•
TL;DR: In this article, the authors identify entrepreneurship as one such mechanism facilitating the spillover of knowledge facilitating economic growth, and they find that entrepreneurial activity not only serves as a conduit for R&D and human capital, but also promotes economic growth.
Abstract: This paper suggests that the spillover of knowledge may not occur automatically as has typically been assumed in models of endogenous growth. Rather, a mechanism is required that serves as a conduit for the spillover and commercialization of knowledge from the source creating it to the firm actually commercializing the new ideas. In this paper, entrepreneurship is identified as one such mechanism facilitating the spillover of knowledge. Using a panel of entrepreneurship data for 18 countries, empirical evidence is found that in addition to measures of R&D and human capital, entrepreneurial activity also serves to promote economic growth.
23 citations
01 Jan 2006
TL;DR: The BITS database is uniquely suitable for testing new approaches to explain regional differences in economic growth rates as mentioned in this paper. But it is not suitable for the analysis of economic growth in cities with their closely integrated surrounding counties.
Abstract: The BITS database constructed for the Office of Advocacy of the U.S. Small Business Administration is uniquely suitable for testing new approaches to explaining regional differences in economic growth rates. Recent theories of economic growth view local externalities, as opposed to scale economies, as the primary engine in generating growth in cities with their closely integrated surrounding counties (Labor Market Areas). While scale economies operate at the plant level, externalities operate at the level of the firm, primarily through entrepreneurial activity.
20 citations
Journal Article•
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TL;DR: This volume explains the interactions between economic growth, economic geography and the economics of innovation, and develops an appropriate model of technology-led regional economic development.
Abstract: To understand why some regions grow and others stagnate, we need to understand the interactions between economic growth, economic geography and the economics of innovation. Each of these individual approaches has strengths and weaknesses, but when integrated it is possible, as evidenced by this volume, to develop an appropriate model of technology-led regional economic development.
9 citations
TL;DR: In this paper, the authors propose an American solution to the social feedback mechanism, one that is consistent with the work of the early Schumpeter, and suggest that American philanthropists, especially those who have made their own fortunes, created foundations that, in turn, contributed to greater and more widespread economic prosperity through knowledge creation.
Abstract: Introduction As we saw in Chapter One, the latter Schumpeter (1942) had pessimistic prognoses about the future of capitalism, while the early Schumpeter (1911) did not articulate any social feedback problems. In this volume, we propose an American solution to the social feedback mechanism, one that is consistent with the work of the early Schumpeter. American capitalism differs from all other forms of industrial capitalism in its historical focus on both the creation of wealth (entrepreneurship) and the reconstitution of wealth (philanthropy). Philanthropy is part of the implicit social contract that continually nurtures and revitalizes economic prosperity (Schramm, 2005). Much of the new wealth created historically has been given back to the community to build up the great social institutions that have a positive feedback on future economic growth. This entrepreneurship-philanthropy nexus has not been fully explored by either economists or sociologists. We suggest that American philanthropists – especially those who have made their own fortunes – created foundations that, in turn, contributed to greater and more widespread economic prosperity through knowledge creation (Acs and Phillips, 2002). In traditional industrial societies, wealth creation, wealth ownership, and wealth distribution were, in great part, left up to the state or to organized religion. However, in an entrepreneurial society, individual initiative plays a vital role in propelling the economy and the society forward.
6 citations
Posted Content•
TL;DR: A framework for organizing the literature on the role of entrepreneurship in low-income communities is developed in this paper, where a two-by-two matrix is introduced in order to clarify the roles played by supply of inputs and demand for products in both poor and affluent communities.
Abstract: A framework for organizing the literature on the roleof entrepreneurship in low-income communities is developed. A two-by-two matrixis introduced in order to clarify the roles played by supply of inputs anddemand for products in both poor and affluent communities. According to themodel, poor communities do not possess the same functioning markets that richcommunities do. The following section considers what is needed to createfunctioning markets where none exist. Current research suggests that institutional infrastructure, need-basedgovernment support, and a positive business environment are integral to thecreation of new markets. At this point, a discussion of the factors thatmotivate individuals to become entrepreneurs is presented, followed by evidencefrom a series of studies that have examined self-employment in both rich andpoor communities. Studies of the Appalachian Region, for example, reveal thatbusiness retention does not necessarily translate into robust growth andvitality.It is then argued that social entrepreneurship, with itsemphasis on utility maximizing as opposed to profit maximizing, might play animportant role in community building, where government has failed. The studyconcludes with an examination of entrepreneurship policy as a tool forimpacting poor communities. (SAA)
3 citations
01 Jan 2006
Posted Content•
01 Jan 2006
TL;DR: In this paper, the authors explored the impact of regional human capital on new-firm survival rates through formation rates of surviving versus closed firms in the service sector and found that the new firm survival rate is negatively related to service sector specialization and positively related to all industry intensity.
Abstract: Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods.
01 Jan 2006
01 Jan 2006