The Relationship between Entrepreneurship and Innovation: A Dynamic Panel Data Analysis

Abstract

Entrepreneurship and innovation are two of the most pervasive concepts of our times. Innovation and entrepreneurship have been one of the factors that provide developing countries to reach higher development stages as well as developed countries and to perform economic and social transformations and will continue. In this study, the relationship between innovation and entrepreneurship were examined for OECD countries for the period of 1990-2011 using dynamic panel data models. Results showed that the innovation and entrepreneurship have a long-term relationship, whereas in the short term there was no such indication. Accordingly, 1% increase in business ownership rate would increase the private sector R&D expenditures by 5.9%. Analysis results also showed that; the coefficients of error correction parameters of Belgium, Canada, Czech Republic, Finland, France, Germany, Ireland, Italy, South Korea, Mexico, Poland, Slovakia, the Netherlands, the United Kingdom and the United States were meaningful and revealed a long term relationship in these countries.