Skip to main content
SpringerLink
Log in

Entrepreneurship, structural change, and economic growth

  • Regular Article
  • Published:
Journal of Evolutionary Economics Aims and scope Submit manuscript

Abstract

The ability to adjust to structural change is vital to economic development, and entries can be active participants in this process. While the importance of factor reallocations for growth is widely discussed, the role of entrepreneurs in managing these reallocations is currently not well understood. This paper analyzes the role of entry activity for adjustments of the sectoral structure and its relevance for regional economic development. The historical framework is the accelerated economic transformation that occurred in industrialized countries during the mid 1970s, resulting in an increasing need to adjust. Based on German data from 1975 to 2002, evidence is presented that sectoral reallocations are an important means for transforming entrepreneurial activity into growth.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3
Fig. 4
Fig. 5
Fig. 6
Fig. 7
Fig. 8
Fig. 9

Similar content being viewed by others

Notes

  1. See the overviews by Carree and Thurik (2003) and Fritsch (2008).

  2. Prior research suggests that entrepreneurial activity, measured by start-up rates, relates to growth over a relatively long period of time and thus its application in panel analysis requires inclusion of multiple time-lagged realizations of start-up activity (Fritsch 2008). Therefore, the share of small business employment is a better proxy to account for regional differences in entrepreneurial activity in this setting and exclusively used in the panel analysis (Glaeser et al. 1992, 2010).

  3. Similarity in chemicals and plastics is calculated at the level of regions using 16 industries, and similarity in textiles and leather is calculated using 30 industries. Similarity is calculated using the correlation coefficient similarity measure.

References

  • Acs ZJ, Braunerhjelm P, Audretsch DB, Carlsson B (2009) The knowledge spillover theory of entrepreneurship. Small Bus Econ 32:15–30

    Article  Google Scholar 

  • Afuah AN (2000) How much do your co-opetitors’ capabilities matter in the face of technological change? Strateg Manag J 21(3):387–404

    Article  Google Scholar 

  • Agarwal R, Gort M (1996) The evolution of markets and entry, exit and survival of firms. Rev Econ Stat 78:489–498

    Article  Google Scholar 

  • Agarwal R, Gort M (2002) Firm and product life cycles and firm survival. Am Econ Rev 92:184–190

    Article  Google Scholar 

  • Aghion P, Howitt P (1992) A model of growth through creative destruction. Econometrica 60:323–351

    Article  Google Scholar 

  • Ahlgren P, Jarneving B, Rousseau R (2003) Requirements for a cocitation similarity measure, with special reference to Pearson’s correlation coefficient. J Am Soc Inf Sci Technol 54(6):550–560

    Article  Google Scholar 

  • Audretsch DB (1995) Innovation and industry evolution. MIT Press, Cambridge/Massachusetts

    Google Scholar 

  • Balasubramanian N, Lee J (2008) Firm age and innovation. Ind Corp Change 17:1019–1047

    Article  Google Scholar 

  • Baldwin JR, Gu W (2006) Competition, firm turnover and productivity growth. Economic analysis research paper series, 42

  • Baumol WJ, Blackman SAB, Wolf EN (1989) Productivity and American leadership. MIT Press, Cambridge

    Google Scholar 

  • Beesley ME, Hamilton RT (1984) Small Firms’ seedbed role and the concept of turbulence. J Ind Econ 33:217–231

    Article  Google Scholar 

  • Bell D (1973) The coming of post-industrial society. Basic Books, New York

    Google Scholar 

  • Bensman SJ (2004) Pearson’s r and author cocitation analysis: a commentary on the controversy. J Am Soc Inf Sci Technol 55(10):935–936

    Article  Google Scholar 

  • Bernard AB, Redding SJ, Schott PK (2010) Multiple-product firms and product switching. Am Econ Rev 100:70–97

    Article  Google Scholar 

  • Bhidé AV (2000) The origin and evolution of new businesses. Oxford University Press

  • Carree MA, Thurik AR (2003) The impact of entrepreneurship on economic growth. In: Zoltan JA, Audretsch DB (eds) Handbook of entrepreneurship research. Kluwer, Boston, pp. 437–471

    Google Scholar 

  • Cassiman B, Ueda M (2006) Optimal project rejection and new firm start-ups. Manag Sci 52:262–275

    Article  Google Scholar 

  • Cooper AC, Dunkelberg WC (1987) Entrepreneurial research: old questions, new answers and methodological issues. Am J Small Bus 11:11–23

    Google Scholar 

  • David PA (1994) Why are institutions the Carriers of history?: path dependence and the evolution of conventions, organizations and institutions. Struct Change Econ Dyn 5(2):205–220

    Article  Google Scholar 

  • David PA (2007) Path dependence, its critics and the quest for “historical economics.” In: Hodgson GM (ed) The evolution of economic institutions: a critical reader. Edward Elgar Publishing

  • Disney R, Hasekl J, Helden Y (2003) Restructuring and productivity growth in UK manufacturing. Econ J 113:666–694

    Article  Google Scholar 

  • Echevarria EC (1997) Changes in sectoral composition associated with economic growth. Int Econ Rev 38(2):431–452

    Article  Google Scholar 

  • Fagerberg JE (2003) Schumpeter and the revival of evolutionary economics: an appraisal of the literature. J Evol Econ 13(2):125–159

    Article  Google Scholar 

  • Faulstich W (2004) Gesellschaft und Kultur der siebziger Jahre: Einführung und Überblick. In: Faulstich W (ed) Die Kultur der 70er Jahre. W. Fink Verlag, Munich

  • Foster L, Haltiwanger JC, Krizian CJ (2006) Market selection, reallocation, and restructuring in the US Retail Trade Sector in the 1990s. Rev Econ Stat 88:748–758

    Article  Google Scholar 

  • Fritsch M (2008) How does new business formation affect regional development? Introduction to the special issue. Small Bus Econ 30:1–14

    Article  Google Scholar 

  • Fritsch M, Falck O (2007) New business formation by industry over space and time: a multidimenstional analysis. Reg Stud 41(2):157–172

    Article  Google Scholar 

  • Fritsch M, Schröter A (2009) Are more start-ups really better? Quantity and quality of new businesses and their effect on regional development. Jena Economic Research Papers, 2009-070

  • Gartner WB (1989) Some suggestions for research on entrepreneurial traits and characteristics. Entrep Theory Pract 14(1):27–37

    Google Scholar 

  • Glaeser EL, Kallal HD, Scheinkman JA, Shleifer A (1992) Growth in cities. J Polit Econ 100:1126–1152

    Article  Google Scholar 

  • Glaeser EL, Rosenthal SS, Strange WC (2010) Urban economics and entrepreneurship. J Urban Econ 67:1–14

    Article  Google Scholar 

  • Grabher G (1993) The weakness of strong ties. In: Grabher G (ed) The embedded firm. Routledge

  • Inglehart R (1977) The silent revolution: changing values and political styles among western publics. Princeton

  • Inglehart R (1990) Culture shift in advanced industrial society. Princeton University Press, Princeton

    Google Scholar 

  • Jarausch KH (2006) Krise oder Aufbruch? Historische Annäherungen an die 1970er-Jahre. Zeithist Forsch [Studies in Contemporary History] 3:334–341

    Google Scholar 

  • Klepper SJ (1996) Entry, exit, growth, and innovation over the product life cycle. Am Econ Rev 86:532–583

    Google Scholar 

  • Klepper SJ (2002) The capabilities of new firms and the evolution of US automobile industry. Ind Corp Change 11:645–666

    Article  Google Scholar 

  • Klepper SJ (2007) Disagreements, spinoffs, and the evolution of Detroit as the capital of the US automobile industry. Manag Sci 53:616–631

    Article  Google Scholar 

  • Koster S (2007) The entrepreneurial and replication function of new firm formation. Tijdschr Econ Soc Geogr 98(5):667–674

    Article  Google Scholar 

  • Kuznets SS (1971) Economic growth of nations, total output and productivity structure. Harvard University Press, Cambridge

    Google Scholar 

  • LaFountain C (2005) Where do firms locate? Testing competing models of agglomeration. J Urban Econ 58:338–366

    Article  Google Scholar 

  • Lyotard J-F (1993) The postmodern condition: a report on knowledge, 9th printing (first pub 1984). University of Minnesota Press, Minneapolis

    Google Scholar 

  • Malerba F, Orsenigo L (1993) Technological regimes and firm behaviour. Ind Corp Change 2:45–71

    Article  Google Scholar 

  • Malerba F, Orsenigo L (1997) Technological regimes and sectoral patterns of innovative activities. Ind Corp Change 6:83–117

    Article  Google Scholar 

  • Metcalfe JS (2005) Evolutionary concepts in relation to evolutionary economics. In: Dopfer K (ed) The evolutionary foundations of economics. Cambridge University Press

  • Neffke F, Henning M, Boschma R (2011) How do regions diversify over time? Industry relatedness and the development of new growth paths in regions. Econ Geogr 87(3):237–265

    Article  Google Scholar 

  • Nelson RR, Winter SG (1982) An evolutionary theory of economic change. Harvard University Press

  • Pavitt K (1984) Sectoral patterns of technical change: towards a taxonomy and a theory. Res Policy 13:343–373

    Article  Google Scholar 

  • Redding SJ, Sturm DM (2008) The costs of remoteness: evidence from German division and reunification. Am Econ Rev 95:1766–1797

    Article  Google Scholar 

  • Romer PM (1990) Endogenous technological change. J Polit Econ 98:71–102

    Article  Google Scholar 

  • Scarpetta SP, Hemmings P, Tressel T, Woo J (2002) The role of policy and institutions for productivity and firm dynamics: evidence from micro and industry data. OECD Economics Department Working Papers, 329

  • Sorenson O, Auida PG (2000) The social structure of entrepreneurial activity: geographic concentration of footwear production in the United States 1940–1989. Am J Sociol 106:224–262

    Article  Google Scholar 

  • Südekum J (2008) Convergence of skill composition across German regions. Reg Sci Urban Econ 38:148–159

    Article  Google Scholar 

  • Teece D, Pisano G (1994) The dynamic capabilities of firms: an introduction. Ind Corp Change 3:537–556

    Article  Google Scholar 

  • Teece DJ, Rumelt R, Dosi G, Winter SG (1994) Understanding corporate coherence: theory and evidence. J Econ Behav Org 23:1–30

    Article  Google Scholar 

  • Temple J, Wößmann L (2006) Dualism and cross-country growth regressions. J Econ Growth 11:187–228

    Article  Google Scholar 

  • Van Eck N, Waltman L (2008) Appropriate similarity measures for author cocitation analysis. J Am Soc Inf Sci Technol 59:1653–1661

    Article  Google Scholar 

  • Van Praag M, van Stel A (2011) The more business owners the merrier? Scales Research Reports, H201010

  • White HD (2003) Author cocitation analysis and Pearson’s r. J Am Soc Inf Sci Technol 54(13):1250–1259

    Article  Google Scholar 

  • Zagler M (2009) Economic growth, structural change, and search unemployment. J Econ 96:63–78

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Faculty of Economics and Business, University of Groningen, Nettelbosje 2, 9747AE, Groningen, Netherlands

    Florian Noseleit

Authors
  1. Florian Noseleit
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Florian Noseleit.

Appendix

Appendix

Fig. 10
figure 10

Employment development of businesses founded prior to 1976 (Q1: regions with 25 % lowest similarity; Q4: regions with 25 % highest similarity)

Full size image
Fig. 11
figure 11

Employment development of businesses founded after 1975 relative to total employment in 1975 (Q1: regions with 25 % lowest similarity; Q4: regions with 25 % highest similarity)

Full size image
Fig. 12
figure 12

Employment development in the textiles and leather industry in incumbent businesses (founded prior to 1976) and entry cohorts 1976, 1986, and 1996

Full size image
Fig. 13
figure 13

Employment development in the chemicals and plastics industry in incumbent businesses (founded prior to 1976) and entry cohorts 1976, 1986, and 1996

Full size image
Table 5 Regression results for similarity measures based on all three-digit industries
Full size table
Table 6 Usage of different similarity measures similarity between entries and incumbents
Full size table
Table 7 Cross-section regression results for agglomerations only
Full size table
Table 8 Panel regression results for sectoral similarity between entries that survived at least 5 years and exits
Full size table

Rights and permissions

Reprints and permissions

About this article

Cite this article

Noseleit, F. Entrepreneurship, structural change, and economic growth. J Evol Econ 23, 735–766 (2013). https://doi.org/10.1007/s00191-012-0291-3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s00191-012-0291-3

Keywords

JEL Classification

Search

Navigation