Abstract

Research over the last decade has provided increasing insight into the determinants of entrepreneurship by explaining national and regional variations in self-employment and new firm formation. However, several empirical puzzles remain. For example, how is it possible that several countries which perform quite well with respect to innovation (Sweden, Denmark) are lagging with respect to entrepreneurial activity, while some countries that perform modestly (Australia, Ireland) or very badly (Portugal, Greece) with respect to innovation are among those with high entrepreneurial activity rates? In this paper we disentangle the role of institutions in the allocation of entrepreneurship across independent entrepreneurship and entrepreneurial employee activity. This results in a taxonomy of national systems of entrepreneurship, i.e. different sets of (combinations of) institutions providing incentives to channel entrepreneurial behavior into particular organizational contexts.

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