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Linking academic training with experience in the market can boost entrepreneurship

Mircea Epure, Universitat Pompeu Fabra, BSE and UPF-BSM
Project selected in the Social Research Call, 2021

Both academics and policymakers have highlighted the positive impact of human capital on entrepreneurial activity. Much attention has also been directed to the beneficial role of economically liberalised markets for entrepreneurship, but few have linked the different types of human capital to institutional characteristics. This article analyses the joint effects of the institutional context and different types of human capital on entrepreneurial growth aspirations in terms of employment growth. The study uses representative individual data from the Global Entrepreneurship Monitor and institutional data from the Heritage Foundation, comprising 141,003 entrepreneurs from 93 countries between 2005 and 2020.
Key points
  • 1
       Both general human capital (higher education) and specific human capital (start-up or business angel experience) are positively related to higher entrepreneurial growth aspirations.
  • 2
       Liberalised markets have an especially strong relationship with ambitious entrepreneurship due to reducing transaction costs and ensuring an adaptive business environment.
  • 3
       The positive relationship between economic liberalisation and entrepreneurial growth aspirations is weaker for individuals with general human capital, but stronger for those with specific human capital (market experience).
  • 4
       During the global financial crisis and the covid-19 pandemic, the differential effect of economic liberalisation on entrepreneurial growth aspirations existed only for entrepreneurs with market-based human capital.
  • 5
       All results are confirmed by controlling for entrepreneur demographics (age, gender and income) and network (knowing other entrepreneurs), macroeconomic conditions (gross domestic product per capita, gross domestic product growth and unemployment), and industry and country characteristics.
242020

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