Relationship between Entrepreneurship and per Capita Output

Version	Summary	Created by	Modification	Content Size	Created at	Operation
1		Badreldin Mohamed Ahmed Abdulrahman	--	1470	2023-06-15 09:56:56	\|
2	layout & references	Sirius Huang	-3 word(s)	1467	2023-06-16 03:41:55	\|

This entry is adapted from the peer-reviewed paper 10.3390/economies11060162

The relationship between research and development expenditure (RED), per capita output, and entrepreneurship is a topic of much discussion among business leaders, policymakers, and researchers. Numerous research studies have established a connection between R&D expenditure and per capita output.

R& entrepreneurship economic per capita output

1. Overview of Entrepreneurship

Entrepreneurship is the procedure of establishing, organising, and operating a new trade to obtain profits and also taking the financial risk associated with the business (Picken 2017). Entrepreneurship is gaining traction in the GCC countries, which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates. These countries are known for their oil-based economies; however, they are now diversifying their economies, and entrepreneurship is the key driver for growth and job creation (Miniaoui and Schilirò 2016). In recent years, governments have launched initiatives and programs to support entrepreneurship. For instance, the United Arab Emirates (UAE) launched the Dubai SME 100 program, which aims to identify and promote the top 100 SMEs in the region. The UAE has also launched the Mohammed bin Rashid Establishment for SME Development, which provides various forms of support for entrepreneurs, including training, mentoring, and funding (Okasha 2020).

The Qatar Business Incubation Centre, which supports start-ups across numerous industries, was also established in Qatar. The emergence of female entrepreneurs is another important development in the GCC region. Women have historically faced difficulties starting and running businesses in the GCC nations because of cultural and legal constraints. Governments have started programmes to aid female business owners. For instance, the Women’s Business Council in Saudi Arabia seeks to advance gender equality in the workplace and raise the proportion of women in leadership roles (Alotaibi et al. 2017). The Dubai Business Women Council offers networking opportunities and support for female entrepreneurs in the UAE. The region’s emphasis on technology firms is another trend. The young, tech-savvy populations of the GCC nations offer chances for businesses to create novel solutions. Governments in the region have started programmes to help tech companies, such as the Dubai Future Accelerators programme, which links start-ups with public sector organisations to create creative solutions (Aminova et al. 2020).

2. Relationship between Entrepreneurship and per Capita Output

Entrepreneurship plays a noteworthy part in promoting economic development. New entrepreneurial businesses contribute to the expansion of the economy through producing new occupations, aggregating the production of goods and services, and generating new revenue streams (Bjørnskov and Foss 2016). Entrepreneurs create new markets and increase competition, stimulating innovation, creativity, and efficiency. They bring new notions and technologies to the market, leading to improvements in products and services. Hence, they increase consumer demand, which drives per capita output. Moreover, the study of Teixeira and Queirós (2016) elucidates that entrepreneurs also contribute to the expansion of human capital along with the creation of new jobs and generating new revenue streams. They provide opportunities for people to acquire new skills, knowledge, and experience from their businesses. These skills are transferable, which means that they can be used in other industries or businesses, further contributing to per capita output. Furthermore, the research of Mosteanu (2019) demonstrated that entrepreneurship attracts foreign investment, and GCC countries are already attractive destinations for foreign investors due to their strategic location, natural resources, and economic stability. Entrepreneurship adds to this attraction, as start-ups and small and medium-sized enterprises (SMEs) can offer new and unique investment opportunities for foreign investors. Such investments, in turn, subsidize the formation of jobs and stimulate the development of the local economy.

Bosma et al. (2018) evaluated the association between entrepreneurship, institutions, and economic development, particularly taking evidence from Europe. The researchers collected data from 25 of the present 28 European Union countries while incorporating the available annual data from 2003 to 2014. In particular, the study’s conclusions about entrepreneurship and economic development show that productive entrepreneurship supports economic progression. Furthermore, Saberi and Hamdan (2019) examined the association between entrepreneurship and economic development considering the moderating role of governmental support, particularly in the GCC countries. The researcher collected data from six GCC nations in a time series format including the 10 years from 2006 to 2015. The findings of the study stated that governmental support created a noteworthy moderating influence on the association between entrepreneurship and economic development. The study also stated that robust entrepreneurial investment indicators are found to be high-growth and -risk capital that shows rapid development in the investment of entrepreneurial activities, while the indicators that score the lowest are found to be innovation process and technology absorption.

In contrast, the study of Savrul (2017) evaluates the effect of entrepreneurship on economic evolution. The research used data from 35 nations considering the time period of period 2006 to 2015. The data were gathered from the Global Entrepreneurship Research Association databases and the OCED. The findings of the study stated that modifications in the entrepreneurial variables and activities did not create an immediate influence on economic development. However, they influenced economic development in the long run. Based on the results, the study further suggested that the government is required to make policies concerning entrepreneurship on a long-term basis.

3. R&D Support for Entrepreneurial Investments and per Capita Output

R&D (Research and Development) support is crucial for entrepreneurial investment as it enables companies to develop innovative products and services, increase productivity, and gain a competitive edge. This support can take various forms, including grants, tax incentives, and access to funding. One of the most significant benefits of R&D support for entrepreneurial investment is that it allows startups and small businesses to conduct research and experiment with new ideas without having to worry about the high costs associated with these activities. In many cases, R&D is prohibitively expensive, making it difficult for smaller businesses to capitalise on it. With R&D support, entrepreneurs have access to the resources they need to develop and test new products, services, and technologies (Gimenez-Fernandez et al. 2020; Dellink et al. 2017). In addition, a study conducted by Wang (2018) posited that governments and other organizations play an essential role in providing R&D support to entrepreneurs. It will help drive innovation, boost per capita output, and create new opportunities for businesses to succeed through creating policies and programs that encourage R&D investment.

The link between entrepreneurship and per capita output is significantly influenced by support for research and development (R&D). The connection between entrepreneurship and per capita output is intricate and multifaceted, and it is impacted by several different circumstances (Bozkurt 2015). According to Castaño et al. (2016), one such element that influences the link between entrepreneurship and per capita output favourably is R&D assistance. R&D support reassures entrepreneurs to produce innovative goods and services that drive per capita output. The above-mentioned study also suggests that governments are required to raise expenditures on education and research and development. It encourages a culture of entrepreneurship, decreases complex administration, and increases the financial sustenance of SMEs, particularly for entrepreneurs, as they hold the capability to create jobs. Additionally, R&D support aids entrepreneurs in overcoming the upfront expenses and risks connected with producing new goods and services through offering financing and resources for research and development. It leads to the formation of new industries and the growth of prevailing ones, which in turn drive per capita output (Foster et al. 2020; Lindholm-Dahlstrand et al. 2019).

Furthermore, Pece et al. (2015) explained in the study that investments in technology and expenditure related to R&D and innovation are the premises for ensuring progress and competitiveness and directing them toward sustainable economic development. Economic development is endogenously defined and impacted by the decisions of agents to enhance profits and give consideration to factors linked with entrepreneurial activities, demonstrating the innovation procedure based on microeconomic information. R&D support also helps businesses and entrepreneurs to remain competitive in the global marketplace. R&D support helps companies create goods and services that are competitive and compliant with international standards through giving them access to new technology and information. This enables businesses to expand their market share and generate more revenue, which contributes to per capita output (Lüdeke-Freund 2020).

Regardless of the well-established connection between entrepreneurship, per capita output, and R&D spending, there are various problems that need to be resolved completely to evaluate the effectiveness of R&D investment in raising entrepreneurial activity and driving economic progress. Lack of financial access for SMEs and start-ups is one of the major problems. These businesses may find it difficult to capitalise on R&D, create new goods and services, and penetrate new markets if they lack access to financing. In addition, the rising cost of R&D expenditure is another important issue as for small and medium-sized businesses (SMEs) and startups, the requirement for large financial resources for R&D investment can be a major hurdle (Testa et al. 2019).

References

Picken, Joseph. C. 2017. From startup to scalable enterprise: Laying the foundation. Business Horizons 60: 587–95.
Miniaoui, Hela, and Daniele Schilirò. 2016. Innovation and Entrepreneurship for the Growth and Diversification of the GCC Economies. Richmond Hill: Redfame Publishing Inc.
Okasha, A Ahmad. 2020. Entrepreneurship in the United Arab Emirates. In Entrepreneurial Innovation and Economic Development in Dubai and Comparisons to Its Sister Cities. Hershey: IGI Global, pp. 158–82.
Alotaibi, Fatmah, Roger Cutting, and Julia Morgan. 2017. A critical analysis of the literature on women’s leadership in Saudi Arabia. International Journal of Business Administration and Management Research 3.
Aminova, Munira, Slaheddine Mareef, and Carlos Machado. 2020. Entrepreneurship Ecosystem in Arab World: The status quo, impediments and the ways forward. International Journal of Business Ethics and Governance 3: 1–13.
Bjørnskov, Christian, and Nicolai Foss. 2016. Institutions, entrepreneurship, and economic growth: What do we know and what do we still need to know? Academy of Management Perspectives 30: 292–315.
Teixeira, Aurora A., and Anabela S. Queirós. 2016. Economic growth, human capital and structural change: A dynamic panel data analysis. Research Policy 45: 1636–48.
Mosteanu, Narcisa Roxana. 2019. Intelligent Foreign Direct Investments to boost economic development–UAE case study. The Business & Management Review 10: 1–9.
Bosma, Niels, Jeroen Content, Mark Sanders, and Erik Stam. 2018. Institutions, entrepreneurship, and economic growth in Europe. Small Business Economics 51: 483–99.
Saberi, Maria, and Allam Hamdan. 2019. The moderating role of governmental support in the relationship between entrepreneurship and economic growth: A study on the GCC countries. Journal of Entrepreneurship in Emerging Economies 11: 200–16.
Savrul, Mesul. 2017. The impact of entrepreneurship on economic growth: GEM data analysis. Journal of Management Marketing and Logistics 4: 320–6.
Gimenez-Fernandez, Elena M., Francesco D. Sandulli, and Marcel Bogers. 2020. Unpacking liabilities of newness and smallness in innovative start-ups: Investigating the differences in innovation performance between new and older small firms. Research Policy 49: 104049.
Dellink, Rob, Jean Chateau, Elisa Lanzi, and Bertrand Magné. 2017. Long-term economic growth projections in the Shared Socioeconomic Pathways. Global Environmental Change 42: 200–14.
Wang, Jue. 2018. Innovation and government intervention: A comparison of Singapore and Hong Kong. Research Policy 47: 399–412.
Bozkurt, Cuma. 2015. R&D expenditures and economic growth relationship in Turkey. International Journal of Economics and Financial Issues 5: 188–98.
Castaño, María Soledad, María Teresa Méndez, and Miguel Ángel Galindo. 2016. The effect of public policies on entrepreneurial activity and economic growth. Journal of Business Research 69: 5280–5.
Foster, Lucia, Cheryl Grim, and Nikolas Zolas. 2020. A portrait of US firms that invest in R&D. Economics of Innovation and New Technology 29: 89–111.
Lindholm-Dahlstrand, Åsa, Martin Andersson, and Bo Carlsson. 2019. Entrepreneurial experimentation: A key function in systems of innovation. Small Business Economics 53: 591–610.
Pece, Andreea Maria, Olivera Ecaterina O. Simona, and Florina Salisteanu. 2015. Innovation and economic growth: An empirical analysis for CEE countries. Procedia Economics and Finance 26: 461–7.
Lüdeke-Freund, Florian. 2020. Sustainable entrepreneurship, innovation, and business models: Integrative framework and propositions for future research. Business Strategy and the Environment 29: 665–81.
Testa, Giuseppina, Katarzyna Szkuta, and Paul N. Cunningham. 2019. Improving access to finance for young innovative enterprises with growth potential: Evidence of the impact of R&D grant schemes on firms’ outputs. Research Evaluation 28: 355–69.

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Subjects: Economics

Contributors MDPI registered users' name will be linked to their SciProfiles pages. To register with us, please refer to https://encyclopedia.pub/register :

Houcine Benlaria

Naeimah Fahad S. Almawishir

Sawssan Saadaoui

Sanaa Mostafa Mohammed Mohammed

Badreldin Mohamed Ahmed Abdulrahman

Ibrahhim Ahmed ELamin Eltahir

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Update Date: 16 Jun 2023

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1. Overview of Entrepreneurship

2. Relationship between Entrepreneurship and per Capita Output

3. R&D Support for Entrepreneurial Investments and per Capita Output

References