Financial and Institutional Reforms for an Entrepreneurial Society
Financial and Institutional Reforms for an Entrepreneurial Society
Claire Economidou 0 1 2 4
Luca Grilli 0 1 2 4
Magnus Henrekson 0 1 2 4
Mark Sanders 0 1 2 4
0 M. Henrekson Research Institute of Industrial Economics (IFN) , Stockholm , Sweden
1 L. Grilli Department of Management, Economics and Industrial Engineering, Politecnico di Milano , Milan , Italy
2 C. Economidou Department of Economics, University of Piraeus , Piraeus , Greece
3 Utrecht University School of Economics (USE) , Utrecht , Netherlands
4 M. Sanders (
In this paper, we introduce the special issue on Financial and Institutional Reforms for an Entrepreneurial Society in Europe. There are many reasons for Europe to want to make the transition to a more Entrepreneurial Society. And for decades now, policy makers are trying to bring that transition about with variations on the Beducate, deregulate and finance^ approach to entrepreneurship. We argue that more fundamental reforms are required to improve the entrepreneurial ecosystem and bring about this transition. We then discuss the 12 contributions that pertain to five different facets of the entrepreneurial ecosystem. The first two papers address the most fundamental institutional foundations of the ecosystem. The next three papers discuss the (lack of) access to knowledge and incentives to start innovative entrepreneurial ventures. That is followed by three papers that focus on the institutions that (fail to) channel financial resources to such ventures and two papers that analyze the relevance of labor market institutions. The special issue concludes with two papers investigating how the interplay of institutions and productive entrepreneurship results in economic growth.
Entrepreneurship; Institutions; Reform; European Union; Innovation
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The European Union, in its Horizon 2020 program in 2015,
invited researchers to develop evidence-based strategies to
put Europe back on track to a situation of sustainable,
inclusive, and innovative growth. In their call, however,
the word Bentrepreneurship^ was entirely absent. We
believe entrepreneurship is at the heart of this challenge. And
indeed, the European Commission itself intuitively
recognizes the importance of entrepreneurship. At the launch of
the Innovation Union, they state: BWe need to do much
better at turning our research into new and better services
and products if we are to remain competitive in the global
marketplace and improve the quality of life in Europe.^ And
to emphasize the urgency of this challenge, the Commission
continues: BWe are facing a situation of ‘innovation
emergency’.^1
1 Cited from http://ec.europa.eu/research/innovation-union/index_en.
cfm?pg=why (accessed November 17, 2017); bold in the original.
This rather stark conclusion followed from the
observation that European member states are gradually
slipping out of the top positions in global rankings on
innovation. The most recent rankings of the top 20
countries, according to the most commonly used
measures for innovativeness, are presented in Table 1. One
can tell two stories with this table. On the one hand, the
USA consistently ranks higher than most European
countries, many Asian countries are rising fast, and
Singapore and Hong Kong already outperform most
EU member states on all rankings. On the other hand,
half the top 20 countries in all these rankings are still
European, and particularly, the Nordic and Western
European countries continue to do well. The table
furthermore reveals the well-known core-periphery pattern
in Europe.2
The emphasis on such rankings is without doubt
important, but competitiveness, patents, and innovation
per se will not automatically result in growth and
increased prosperity
(Acs et al. 2009; Acs and Sanders
2013)
. They are necessary but by no means sufficient
ingredients in the growth process. To transform these
ingredients into inclusive and sustainable growth,
entrepreneurs must exploit the new knowledge and diffuse
the innovations into the marketplace. If good ideas do
not make it to global markets fast enough, knowledge
creation alone will not fuel inclusive and sustainable
growth.
Entrepreneurship, broadly defined as the act of
challenging the status quo by introducing novelty into the
economic realm, must then be a central theme.3
Schumpeterian entrepreneurs introduce new products
and technologies and act as conduits of knowledge to
generate innovation and growth
(Schumpeter 1934)
.
Kirznerian entrepreneurs ensure that these new
technologies, opportunities, and products diffuse, and
thereby, the benefits of innovation trickle down and out
2 The southern and eastern EU member states are absent in most
rankings. Such patterns arguably also exist in the USA and China,
but there, they are obscured by the focus on national averages.
3 We do not want to get bogged down here in a discussion on what
exactly defines and delimits entrepreneurship. As Acs et al. (2014, p.
476) state: BIn spite of years of research, (...truncated)