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The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review

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• Published: 04 August 2020
• Volume 71 , pages 553–584, ( 2021 )

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• Thomas Neumann   ORCID: orcid.org/0000-0002-7189-8159 1  

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This paper presents a systematic review of (a) the impact of entrepreneurship on economic, social and environmental welfare and (b) the factors determining this impact. Research over the past 25 years shows that entrepreneurship is one cause of macroeconomic development, but that the relationship between entrepreneurship and welfare is very complex. The literature emphasizes that the generally positive impact of entrepreneurship depends on a variety of associated determinants which affect the degree of this impact. This paper seeks to contribute to the literature in three ways. First, it updates and extends existing literature reviews with the recently emerged research stream on developing countries, and incorporates studies analysing not only the impact of entrepreneurship on economic growth and welfare but also on social and environmental welfare. Second, it identifies and structures the current knowledge on the determinants of this impact. And third, it provides a roadmap for future research which targets the shortcomings of the existing empirical literature on this topic. The review of 102 publications reveals that the literature generally lacks research which (a) goes beyond the common measures of economic welfare, (b) examines the long-term impact of entrepreneurship and (c) focuses on emerging and developing countries. Regarding the determinants of the impact of entrepreneurship, the results highlight the need for empirical research which addresses both already investigated determinants which require more attention (e.g. survival, internationalisation, qualifications) and those which are currently only suspected of shaping the impact of entrepreneurship (e.g. firm performance, the entrepreneur’s socio-cultural background and motivations).

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1 Introduction

Entrepreneurship and its possible impact on the economy have been studied extensively during the past two decades but the research field still continues to develop and grow. The majority of studies from a variety of scientific disciplines have found empirical evidence for a significant positive macroeconomic impact of entrepreneurship (e.g. Atems and Shand 2018 ; Audretsch and Keilbach 2004a ; Fritsch and Mueller 2004 , 2008 ). However, several empirical studies show that the macroeconomic impact of entrepreneurship can also be negative under certain conditions (e.g. Carree and Thurik 2008 ; Andersson and Noseleit 2011 ; Fritsch and Mueller 2004 , 2008 ). Potential explanations for these contradictory results are to be found in the complex relationship between entrepreneurship and economic growth. Already some of the very first empirical studies on the macroeconomic impact of entrepreneurship showed that factors such as industrial affiliation (Fritsch 1996 ), the country’s level of development and the local density of business owners (Carree et al. 2002 ) significantly determine the impact of entrepreneurship. With more entrepreneurship datasets becoming available, researchers found evidence that only a small number of new firms such as particularly innovative new firms and firms with high-growth expectations create economic value and initiate Schumpeter’s process of ‘creative destruction’ (e.g. Szerb et al. 2018 ; Valliere and Peterson 2009 ; van Oort and Bosma 2013 ; Wong et al. 2005 ). However, over the past decade, researchers have identified a multitude of other relevant determinants (e.g. survival rates of new firms, institutional and cultural settings, motivations and qualifications of the entrepreneur), thereby drawing an increasingly complex web of interrelated determinants around the macroeconomic impact of entrepreneurship. This complexity combined with the fact that the research on determinants is scattered and mostly based on separate analyses of determinants leads to a number of hitherto unidentified research opportunities. In order to detect these opportunities and to exploit them in a targeted manner, a structured overview of the current knowledge on the determinants of the macroeconomic impact of entrepreneurship is required. In this context, a structured overview is not only essential for the scientific entrepreneurship community but also for politicians all over the world who need detailed information on the impact of entrepreneurship to promote the right types of entrepreneurship in the right situations.

To ensure that this information prepared for policy makers are truly comprehensive, it is essential that state-of-the-art research considers not only economic outcomes of entrepreneurship but also its social and environmental effects. This demand for a more holistic impact analyses is based on the call of economists who have been emphasizing since the 1970’s that economic development may is a significant part of welfare, but that social and environmental dimensions need to be considered as well (Daly et al. 1994 ; Meadows et al. 1972 ; Nordhaus and Tobin 1972 ). Tietenberg and Lewis ( 2012 , p. 553) summarised the economic, social and environmental effects in a holistic welfare definition and state that a “true measure of development would increase whenever we, as a nation or as a world, were better off and decrease whenever we were worse off”. This understatement is in line with many authors who recently highlighted the importance of entrepreneurship for social and environmental welfare (e.g. Alvarez and Barney 2014 ; Dhahri and Omri 2018 ; McMullen 2011 ). Entrepreneurship research has come to see entrepreneurs as a solution for social inequality and environmental degradation rather than a possible cause of them (Gast et al. 2017 ; Munoz and Cohen 2018 ; Terán-Yépez et al. 2020 ). This scientific consent of the past 50 years clearly illustrates how important it is that econometric research on entrepreneurship incorporates research on the economic as well as on the social and environmental impact of entrepreneurship. Footnote 1

Considering that the research on the macroeconomic impacts of entrepreneurship has been gaining increasing recognition over the last two decades and across a wide range of disciplines (Urbano et al. 2019a ), literature reviews must be conducted periodically to synthesize and reflect recent progress and to stimulate future research. Several high-quality reviews have already summarized the significant amount of research on the impact of entrepreneurship on the economy. Wennekers and Thurik ( 1999 ) were the first who discussed the link between entrepreneurship and economic growth in a narrative literature analysis. With their summary of the theoretical knowledge of that time and the first framework of the entrepreneurial impact the authors laid the groundwork for the following decade of empirical research on that matter. van Praag and Versloot ( 2007 ), extended that first review by systematically reviewing and evaluating the empirical findings of 57 articles published between 1995 and 2007. More precisely, the authors evaluated the various economic contributions of entrepreneurial firms, which have been defined by the authors as either employing fewer than 100 employees, being younger than 7 years or being new entrants into the market, relative to their counterparts. van Praag and Versloot ( 2007 ) thus made the first systematic attempt to distinguish the few new firms which are of economic relevance from the majority of meaningless new firms. Fritsch ( 2013 ), in a non-systematic monograph, exhaustively surveyed and assessed the then available knowledge on how new firms particularly effect regional development over time. Within this review, the author has established the term ‘determinants’ in the field of research on the impact of entrepreneurship and developed first suggestions on which factors may determine the impact of new firms. However, the author has not provided any empirical evidence for the effect of his proposed determinants. In contrast to these three literature reviews, the three most recent reviews also incorporated the latest findings from international studies and on developing countries. However, the three latest reviews all have a narrowly defined research focus. While Block et al. ( 2017 ; systematic literature review of 102 studies published between 2000 and 2015) analysed antecedents, behaviour and consequences of innovative entrepreneurship, Bjørnskov and Foss ( 2016 ; systematic literature review of 28 studies) and Urbano et al. ( 2019a ; systematic literature review of 104 studies published between 1992 and 2016) focused on the relationship between the institutional context, entrepreneurship and economic growth. Accordingly, all the existing reviews are either (1) already outdated, (2) mostly on highly developed countries or (3) focused on specific topics. Furthermore, none of these reviews provided (4) a structured overview on the empirical knowledge on the impact of entrepreneurship on the economy or (5) included research on the social and environmental impact of entrepreneurship.

This paper addresses these five shortcomings through a comprehensive and systematic review of empirical research into the impact of entrepreneurship on economic, Footnote 2 social and environmental welfare. The methodology of the review is based on the current knowledge of systematic reviews (e.g. Fayolle and Wright 2014 ; Fisch and Block 2018 ; Jones and Gatrell 2014 ; Tranfield et al. 2003 ), on narrative synthesis (e.g. Dixon-Woods et al. 2005 ; Jones and Gatrell 2014 ; Popay et al. 2006 ) and on recent examples of best practice (e.g. Jones et al. 2011 ; Urbano et al. 2019a ; van Praag and Versloot 2007 ). Using this approach, this paper aims to contribute to the literature on the impact of entrepreneurship on welfare in three ways. First, it updates and extends the existing literature reviews. More specifically, it follows recent research recommendations (e.g. Block et al. 2017 ; Fritsch 2013 ; Urbano et al. 2019a ) by incorporating the recent empirical stream of research on the impact of entrepreneurship in developing countries and research that goes beyond measures of common economic welfare. In practical terms, this means that this review not only considers measures of economic welfare (e.g. GDP, employment rates, innovative capacity), but also for social welfare (e.g. life expectancy, literacy rates, income inequality), for environmental welfare (e.g. CO 2 emissions, water pollution, soil quality) and for indicators which incorporate all three welfare dimensions (e.g. Index of Sustainable Economic Welfare, Genuine Progress Indicator). Second, this paper, as demanded in previous reviews (Fritsch 2013 ; Urbano et al. 2019a ), aims to provide a descriptive analysis of the factors determining the entrepreneurial impact by critically assessing (a) which determinants of the entrepreneurial impact have (b) what impact on (c) which measures of economic welfare. This paper thus represents the first comprehensive attempt to summarize and structure the empirical knowledge on the determinants of the impact of entrepreneurship. Finally, to encourage future research, this paper indicates shortcomings in the empirical research not only on the impact of entrepreneurship on economic, social and environmental welfare, but also on the described and structured determinants of this impact. It concludes with suggestions for future research avenues to close these research gaps.

To achieve these objectives, this paper is structured as follows. Section  2 describes the methodological approach of the review. Sections  3.1 and 3.2 report the available empirical research into the impact of entrepreneurship on economic, social and environmental welfare. Section  3.3 summarizes the determinants of this impact and Sect.  4 presents a roadmap for future research. Section  5 discusses the limitations of this paper and provides a conclusion.

2 Methodology

In order to clarify not only the macroeconomic impact of entrepreneurship on economic welfare but also the determinants of this impact, this paper provides a broad-ranging systematic, evidence-based literature review including a narrative synthesis. According to Mulrow ( 1994 ), systematic reviews are particularly useful in identifying and evaluating a large volume of evidence published over a long period of time and have been frequently applied in recent state-of-the-art literature reviews (e.g. Li et al. 2020 ; Mochkabadi and Volkmann 2020 ; Urbano et al. 2019a ). The systematic literature review conducted in this paper employs a rather broad empirical definition of entrepreneurship which covers both the entrepreneur, who creates or discovers new businesses (Kirzner 1973 ; Schumpeter 1942 ) and the entrepreneurial firm itself. Entrepreneurship is understood here as new business activity, which includes entrepreneurs in the process of new firm creation as well as recently founded firms. Furthermore, although not necessarily associated with the formation of new firms, self-employed individuals and owner-managers are defined here as entrepreneurs as well. This general definition is consistent with the majority of empirical studies (e.g. Bosma et al. 2011 ; Fritsch and Schindele 2011 ; Mueller et al. 2008 ). The review process comprises three major steps, namely (1) data collection, (2) the selection of relevant studies and (3) data synthesis.

2.1 Data collection

As a first step, to reduce bias and maintain objectivity in all stages of the review, a review panel was set up. The panel consists of the author, a professor and two doctoral students knowledgeable in this field of research. In order to obtain the most relevant terms for the systematic search, the suggestions of Tranfield et al. ( 2003 ) were followed and a number of scoping studies based on combinations of keywords related to the topic were performed. The insights from this initial search phase were used to further develop relevant search terms resulting in the Boolean search string presented in the online appendix. The number of selected search terms was intentionally rather broad to avoid overlooking potentially valuable studies. It included the most common terms and measures of entrepreneurship and of economic, social and environmental welfare. This search string was subsequently used to scan titles, abstracts, and enclosed keywords of studies in the electronic databases EBSCO Business Source Complete, ProQuest ABI/INFORM Global and Web of Science. These databases were selected, because they allow the application of complex search strings and cover an extensive range of scientific journals from a variety of different disciplines. In order to provide a quality threshold, only peer-reviewed journal articles were scanned, since they are considered as validated knowledge (Podsakoff et al. 2005 ; Ordanini et al. 2008 ). Unpublished papers, books, book chapters, conference papers and dissertations were omitted in the initial search. Furthermore, the search was restricted to studies written in English. The main search was conducted in May 2019 and updated once in December 2019. It yielded, after the removal of duplicates, an initial data set of n = 7533 studies.

In addition to the main search, three more steps were conducted to create an exhaustive sample. First, five journals of particular relevance for the discussion were manually searched. Footnote 3 Second, meta-studies and literature reviews on related topics were screened for additional studies. Footnote 4 And finally, based on the guidelines of Wohlin ( 2014 ), an iterative back- and forward snowballing approach was conducted. The whole process of data collection and selection and its results are summarized in Fig.  1 .

Systematic process of data collection and selection

2.2 Data selection and quality assessment

The studies collected during the main search were carefully reviewed to determine whether they were suitable for the objective of this paper. Titles, abstracts and, in doubtful cases, whole studies were checked against the following set of selection criteria.

Studies must analyse the macroeconomic impact of entrepreneurship by applying at least one economic, social or environmental welfare measure on an aggregated regional, national or global level.

Studies must employ definitions of entrepreneurship as discussed in the introduction of Sect.  2 . Studies that solely analysed the impact of small firms, intrapreneurship, corporate-entrepreneurship, institutional entrepreneurship, or entrepreneurial capital were excluded.

Studies must apply adequate quantitative methods to measure the impact of entrepreneurship. Studies that only discuss this matter theoretically, that follow a qualitative approach or that do not go beyond simple correlation techniques were excluded.

Studies must analyse spatial units, as they seem to be considerably better suited to analysing the impact of entrepreneurship (Fritsch 2013 ). Studies that are based on the analysis of industry units were excluded.

Studies must analyse long-term panel data or data on an adequately aggregated level to account for demographic, political and economic events. Studies that analysed single spatial units over a short period of time were excluded.

Due to the broadness of the search string, the main search yielded many studies which solely dealt with the microeconomic performance of new firms or which analyse how the local level of development determines the number of new firms. Studies which were not related to the research questions or did not meet all five selection criteria, were manually removed. This process of selection in the main search led to a total of n = 92 studies. The three additional search steps increased this number by n = 10, resulting in a final data set of n = 102 studies, including two high-quality book chapters which present empirical results of particular relevance to the paper’s objective (namely Stam et al. 2011 ; Verheul and van Stel 2010 ). When comparing the sample size with that of related literature reviews, it appears to be appropriate. Hence, even if the selected sample is not exhaustive, it is very likely to be representative of the relevant literature.

2.3 Data analysis

Given that research in this area employs a variety of measures of entrepreneurship and of economic welfare and is methodologically diverse, it was unfeasible to perform a meta-analysis. Instead, an integrative and evidence-driven narrative synthesis based on the guidelines established by Popay et al. ( 2006 ) was chosen to aggregate, combine and summarise the diverse set of studies. Narrative synthesis is considered particularly useful when, as in this case, research area is characterised by heterogeneous methods, samples, theories, etc. (Fayolle and Wright 2014 ).

Once the final set of studies had been identified, the characteristics and study findings were extracted by carefully reading the methods and results sections. To reduce research bias, a review-specific data-extraction form was employed. The extraction-form is based on the suggestions of Tranfield et al. ( 2003 ) and Higgins and Green ( 2008 ) and contains general information, details about the analysed samples, the applied measures of entrepreneurship and economic welfare, the applied econometric techniques as well as short summaries of the relevant findings and the identified microeconomic impact factors.

3 Results of the literature review

The main results of the literature review regarding the impact of entrepreneurship on economic, social and environmental welfare and the determinants of this impact are presented in Table 5 (see online appendix). The large number of gathered studies on impact of entrepreneurship (n = 102) as well as on its determinants (n = 51) attest to the fact that this field of research has already been studied in great detail. Most of the identified studies were published in high-quality management, economics, social science and environmental science journals. Table  1 illustrates that the main part of the cross-disciplinary scientific discussion, however, took place in the Journals Small Business Economics (24%) and Regional Studies (7%). The number of empirical studies published per year has increased over the last decade, indicating the topicality of the research field and the need for an updated review of the new knowledge.

Figure  2 summarizes the statistics of the large amount of data gathered in Table 5 (see appendix) and illustrates the complexity of the research field. The left-hand-side lists the measures of entrepreneurship used in the analysed studies and shows how often they were applied. The most frequently applied measure of entrepreneurship is new firm formations either (a) per work force (labour market approach), (b) per number of existing firms (ecological approach) or (c) per capita. Another frequently applied measure of entrepreneurship is total early-stage entrepreneurial activity (TEA) based on data from the Global Entrepreneurship Monitor (Reynolds et al. 2003 ) or its subgroups: necessity-driven entrepreneurial activity (NEA), opportunity-driven entrepreneurial activity (OEA), innovative entrepreneurial activity (IEA) and high-growth expectation entrepreneurial activity (HEA). Other authors estimated regional entrepreneurship using self-employment or business ownership rates. The Kauffman Foundation Index for entrepreneurial activity is used less frequently, as it is a specific measure of entrepreneurship for US regions.

Overview of applied measures of entrepreneurship and welfare, and analysed determinants. Note : the numbers in brackets represent the numbers of associated empirical studies

Regarding the right-hand-side of Fig.  2 , it is noticeable that the majority of authors analysed the impact of entrepreneurship on economic welfare, primarily on GDP, growth and employment-related measures. Far fewer studies analysed the impact on the economic measures of national competitiveness or innovativeness, e.g. the number of patent applications. In contrast to the clear research focus on economic welfare, only five studies were found which analysed the impact of entrepreneurship on environmental or social welfare. Although many common measures of social and environmental welfare (e.g. crime rates or ecological footprint) were explicitly included in the search string (see online Appendix), no studies could be found that analyse the impact of entrepreneurship on them.

Independent of the measures of entrepreneurship and welfare used, the reviewed studies test their relationship by applying a very heterogenous set of methods. With the availability of more and more cross-sectional data covering longer and high-frequency time-series, authors started to apply new econometric approaches such as pooled and panel data regressions, fixed effect models, and subsequently, dynamic panel data models. Most authors based their analyses on rather straightforward regression techniques.

Sections  3.1 and 3.2 discuss empirical knowledge relating to the impact of entrepreneurship on economic welfare as well as on social and environmental welfare. Section  3.3 deals with the empirical evidence on the factors which determine this impact of entrepreneurship (see the lower part of Fig.  2 ).

3.1 Impact of entrepreneurship on economic welfare

The analysed literature predominantly confirms the results of previous literature reviews and gives empirical evidence that new firm formations have a generally positive effect on regional development and economic performance. The relationship holds for all tested measures of entrepreneurship and is robust across a broad range of spatial and cultural contexts.

The impact does, however, differ over time. Fritsch and Mueller ( 2004 ) studied the time-lag structure of the impact of entrepreneurship by applying an Almon lag model of different polynomial orders in their study of 326 West German regions. Their results revealed that the impact of entrepreneurship follows a typical time-sequence: an S- or wave-shaped pattern which can be structured into three phases. Phase I is defined by a positive immediate increase of employment (direct effects of new capacities). After approximately 1 year, in phase II, this positive short-term impact becomes smaller, insignificant or even negative (displacement effects and market selection). Around year five, this medium-term impact becomes positive again and reaches a peak in year eight (supply-side and spill-over effects). This positive long-term effect of entrepreneurship on employment, which defines phase III, diminishes after a period of 10 years.

Table  2 presents the findings of all reviewed studies which analysed the impact of new firm formations on employment and GDP in one, two or all three phases. It shows that the findings regarding the impact of entrepreneurship on employment are largely consistent with the wave-pattern theory. The existence of the wave-pattern could be confirmed on different regional levels for Great Britain (Mueller et al. 2008 ), for the United States (Acs and Mueller 2008 ; Henderson and Weiler 2009 ), for Portugal (Baptista et al. 2008 ; Baptista and Preto 2010 , 2011 ), for West Germany (Fritsch and Mueller 2008 ; Fritsch and Noseleit 2013a ), for the Netherlands (van Stel and Suddle 2008 ; Koster 2011 ; Delfmann and Koster 2016 ), for Sweden (Andersson and Noseleit 2011 ), for China (Rho and Gao 2012 ) for Canada (Matejovsky et al. 2014 ) as well as in several cross-country studies on OECD countries (Audretsch et al. 2015 ; Carree and Thurik 2008 ; Koellinger and Thurik 2012 ; Thurik et al. 2008 ). Furthermore, the reviewed studies reveal that this relationship not only holds for new firm formations as a measure of entrepreneurship but also for self-employment (e.g. Matejovsky et al. 2014 ; Rho and Gao 2012 ; Thurik et al. 2008 ) and business ownership (e.g. Carree and Thurik 2008 ; Henderson and Weiler 2009 ; Koellinger and Thurik 2012 ). The latter two measures of entrepreneurship, however, seem to have a less pronounced impact (Acs and Armington 2004 ; Rho and Gao 2012 ; Dvouletý 2017 ). Empirical evidence suggests a similar wave-pattern for the impact of entrepreneurship on GDP. Studies on GDP analysing all three phases confirm the positive short- and long-term peaks. However, in contrast to the results on employment, they find the medium-term impact to be less pronounced and positive (Audretsch et al. 2015 ; Carree and Thurik 2008 ; Koellinger and Thurik 2012 ; Matejovsky et al. 2014 ). The few empirical results displayed in Table  2 , which contradict the wave-pattern theory (e.g. findings of a negative short-term impact of entrepreneurship on GDP), can largely be explained by certain determining factors such as a differing impact in developing countries (see Sect.  3.3.4 ) or of necessity-driven entrepreneurship (see Sect.  3.3.9 ).

The results for other measures of economic welfare are scarce and contradictory. Ferreira et al. ( 2017 ) analysed the short-term impact of entrepreneurship on different measures of competitiveness and found that TEA and IEA positively related to competitiveness. However, they found no significant relationship between OEA and competitiveness. On the contrary, a study by Mrozewski and Kratzer ( 2017 ) found a positive relationship between OEA and competitiveness, but not between TEA and competitiveness.

The empirical results regarding the impact of entrepreneurship on innovativeness are also inconclusive. Acs and Varga ( 2005 ) and Draghici and Albulescu ( 2014 ) found that OEA has a positive impact on patent applications and innovation indices, but that TEA and NEA do not have any significant impact on them. Anokhin and Wincent ( 2012 ) found a positive impact of TEA on innovativeness but a more recent study from Albulescu and Draghici ( 2016 ) found that neither TEA nor OEA have a significant relationship to innovativeness. Similarly, Cumming et al. ( 2014 ) found new firm formations based on the labour market approach have a positive short-term impact on patent applications, but new firm formations based on the ecological approach and business ownership rates do not.

3.2 The impact of entrepreneurship on social and environmental welfare

Contrary to the well-researched impact of entrepreneurship on employment and GDP, little is known about the impact on social and environmental welfare. Three independent studies recently found empirical evidence that entrepreneurship positively affects measures of social welfare. Rupasingha and Goetz ( 2013 ) found that in the short-term self-employment reduces poverty in rural and urban U.S. counties, Atems and Shand ( 2018 ) found that in the medium-term self-employment decreases income inequality in U.S. states and, finally, Dhahri and Omri ( 2018 ) found new firm formations to increase the national modified Human Development Index (MHDI) in developing countries.

The empirical research on the impact of new firm formations on environmental welfare, however, illustrates that entrepreneurship may also come with major drawbacks. Omri ( 2017 ) as well as Dhahri and Omri ( 2018 ) and Ben Youssef et al. ( 2018 ) found that new firms significantly increase the amount of national CO 2 -emissions. According to Ben Youssef et al. ( 2018 ), this unfortunate impact on CO 2 -emissions is in fact so great that, despite the positive impact on GDP, new firms decrease Genuine Savings (also known as adjusted net saving) in African countries. They also found that the impact is more pronounced for informal new firm formations. This finding matches the results of Omri ( 2017 ), who detected the impact on CO 2 -emissions to be lower in developed countries which generally have lower rates of informal entrepreneurship (Williams and Lansky 2013 ). Furthermore, Omri ( 2017 ) discovered that the relationship between new firm formations and CO 2 -emissions is not linear but can be described as exhibiting an inverted U-shape. Thus, at an already high level of entrepreneurship, new firm formations may result in a decrease in CO 2 -emissions.

3.3 Determinants of the impact of entrepreneurship

So far, the empirical results suggest, in many cases, a clear causal macroeconomic impact of new firm formations on economic measures of welfare. However, this topic is reasonably complex, and the complexity increases further when determining factors of this impact are considered. The lower part of Fig.  2 presents an overview of the empirical knowledge on these determinants. A key finding of this review, namely that all of the found analyses of determinants focus exclusively on the economic effects of entrepreneurship, is, however, not illustrated in Fig.  2 . The review revealed that, although they are strongly interdependent, the determinants of the impact of entrepreneurship can generally be categorized into external environmental conditions, firm level characteristics and individual characteristics of the entrepreneurs themselves. Figure  2 illustrates that most empirical research has been conducted on the determining environmental conditions and on the firm level characteristic innovativeness and on the individual level characteristic motivations . In fact, some of the determinants presented have already been thoroughly investigated in highly recommendable earlier literature reviews, namely: industry affiliation (Fritsch 2013 ), regional population - and entrepreneurship density (Fritsch 2013 ), institutions and culture (Bjørnskov and Foss 2016 ; Urbano et al. 2019a ), innovativeness (Block et al. 2017 ). The review for this paper confirms these findings and briefly summarizes the key learnings in the Sects. 3.3.1 to 3.3.3 and 3.3.5 . However, except for a recently emerged empirical research stream on innovativeness , no new insights could be gained on the already reviewed determinants. Therefore, the focus of this section is primarily on the empirical evidence which has not yet been systematically investigated.

3.3.1 Industry affiliation

Fritsch ( 1996 ) was one of the first to analyse how entrepreneurial impact differs between industries. He focused on the impact of new firm formations on employment in West Germany and found it to be significantly higher in the manufacturing sector than in the service sector. Several authors confirmed this finding for the Netherlands (van Stel and Suddle 2008 ), for West-Germany (Fritsch and Mueller 2004 ) and for Sweden (Andersson and Noseleit 2011 ). Other studies, however, found the impact of new firms on economic welfare measures to be higher in the service sector (Bosma et al. 2011 ; Koster and van Stel 2014 ). Fritsch ( 2013 ) reasoned that these contradicting results may be due to considerable differences between the industries in different regions or countries and thus an analysis at the industry level might be not appropriate at all. For more information on the industrial perspective of the entrepreneurial impact on the economy, Fritsch ( 2013 ) provides a comprehensive overview including policy implications and avenues for further research.

3.3.2 Regional population- and entrepreneurship density

In a second wave of literature, researchers analysed how the impact of entrepreneurship differs between regions. They found clear evidence that the magnitude of the entrepreneurial impact is positively related to the population density (Baptista and Preto 2011 ; Fritsch and Mueller 2004 , 2008 ; Fritsch and Schroeter 2011 ; Henderson and Weiler 2009 ; Lee 2017 ; Li et al. 2011 ; van Stel and Suddle 2008 ). In urban regions and agglomerations, new firms have a more pronounced and more positive impact on employment (Baptista and Preto 2011 ; Henderson and Weiler 2009 ; van Stel and Suddle 2008 ) and GDP (Audretsch et al. 2015 ; Belitski and Desai 2016 ) throughout all three previously described phases (see Sect.  3.1 ). On the contrary, in rural and less agglomerated regions, the entrepreneurial impact is weak and often negative (Fritsch and Mueller 2004 , 2008 ).

While the economic relevance of new firm formations seems to increase with the population density, empirical evidence suggests that this is not the case for the relation between firm formations and regional entrepreneurship density. On the contrary, several authors found that the economic effect of another new firm becomes lower the more entrepreneurs are already on the market and even zero for regions with high entrepreneurship rates close to equilibrium rate (e.g. Carree et al. 2002 , 2007 ; Mueller et al. 2008 ). These empirical insights identify entrepreneurship as a regional phenomenon and illustrate that macroeconomic effects of new firms are shaped by local conditions. An in-depth discussion of regional differences in the macroeconomic impact of new firms can be found in the monograph by Fritsch ( 2013 ).

3.3.3 Institutions and culture

To shed light on the complex interactions between institutions, entrepreneurship and economic growth, Urbano et al. ( 2019a ) and Bjørnskov and Foss ( 2016 ) recently conducted thorough literature reviews. The empirical evidence identified in the present paper (Aparicio et al. 2016 ; Audretsch and Keilbach 2004a , b , c ; Bjørnskov and Foss 2016 ) is in line with the findings of these two reviews which suggest that institutions affect the economy indirectly through endogenous factors like entrepreneurship. This holds true for formal institutions like (academic) support systems for new firms, procedures and costs to create a business, property rights or political structures as well as for informal institutions like social norms, cultures or belief systems (Urbano et al. 2019a ). However, in contrast to Bjørnskov and Foss ( 2016 ), Urbano et al. ( 2019a ) suggest that formal and informal institutions are not of equal importance, but that social norms and cultures have higher and more positive effects on the relation between entrepreneurship and economic growth.

3.3.4 Local level of development

While Sect.  3.1 illustrates that the impact of entrepreneurship in developed countries follows a typical wave-pattern, until now, no studies have analysed this time-pattern in developing countries. In general, the empirical evidence on the impact in developing countries is contradictory: some studies found a positive impact of entrepreneurship (Ben Youssef et al. 2018 ; Dhahri and Omri 2018 ; Feki and Mnif 2016 ; Stam et al. 2011 ), others found no or even a negative impact (Anokhin and Wincent, 2012 ; Ferreira et al. 2017 ; Verheul and van Stel 2010 ). However, studies which compared countries in different development stages found that the magnitude of the impact of entrepreneurship depends on the national welfare level and is generally higher in more developed countries (Anokhin and Wincent 2012 ; Carree et al. 2002 , 2007 ; Crnogaj et al. 2015 ; Hessels and van Stel 2011 ; Urbano and Aparicio 2016 ; Valliere and Peterson 2009 ; van Stel et al. 2005 ; Verheul and van Stel 2010 ). Furthermore, little is known on the mechanisms behind the impact of entrepreneurship in developing countries. Most of the few studies which specifically deal with developing countries (n = 19) analysed the impact on a national level (n = 16) based on GEM data (n = 12), focused on the impact on GDP related measures (n = 17), or solely analysed the short- or medium-term impact (n = 16).

3.3.5 Innovativeness

According to the knowledge spillover theory of entrepreneurship, new knowledge results in business opportunities and entrepreneurs exploit these opportunities by turning the new knowledge into innovative products (Acs et al. 2009 , 2013 ; Audretsch and Keilbach 2005 ). Recent studies confirm this theory and provide empirical evidence that entrepreneurship moderates the transformation of new knowledge into innovations (Block et al. 2013 ) and that innovative regions with higher levels of entrepreneurship perform economically better (González-Pernía et al. 2012 ). Accordingly, it is reasonable to assume that particularly innovative new firms are more important to economic welfare than their non-innovative counterparts. These considerations coincide with those presented in the literature review on innovative entrepreneurship by Block et al. ( 2017 ). However, the present systematic literature review extends the review of Block et al. ( 2017 ) by including previously unconsidered as well as recently emerged empirical evidence on the macroeconomic impact of innovative entrepreneurship. The identified empirical studies do indeed confirm the presumed positive impact of innovativeness. Crnogaj et al. ( 2015 ) as well as Du and O’Connor ( 2017 ) and Szerb et al. ( 2018 ) used GEM data to compare the impact of founders who stated their products or services to be new or at least unfamiliar to their customers. All of the previously mentioned authors found that innovative founders have a higher impact on GDP, economic efficiency, gross value added (GVA) and employment than less innovative founders. Furthermore, earlier studies attest to new firms which are in innovative, knowledge- or technology-intensive industries a higher than average impact on both GDP (Audretsch and Keilbach 2004a , b , 2005 , Mueller 2007 ) and employment (Baptista and Preto 2010 , 2011 ).

3.3.6 Firm survival

Empirical evidence suggests that a particularly important determinant of the impact of entrepreneurship is whether new firms are able to survive the first years. Falck ( 2007 ) was the first to find empirical evidence of a positive relationship between new firms which survive for at least 5 years and efficiency of the industry in which they are in. On the contrary, he could not find any significant relationship to industry level efficiency growth for firms which did not survive the first 5 years. Brixy ( 2014 ), Fritsch and Noseleit ( 2013b ) and Fritsch and Schindele ( 2011 ) have confirmed that Falck’s ( 2007 ) findings not only hold for the relationship between entrepreneurship and GDP but also for the relationship between entrepreneurship and employment.

3.3.7 Firm size

Baptista and Preto ( 2010 ) found that new firms of a larger than average initial size have a strong impact on employment and that this impact follows a pronounced wave-shaped time-lag structure (see Sect.  3.1 ). New firm formations which are smaller than average, on the other hand, only have a small impact. Acs and Mueller ( 2008 ) confirmed this finding and show that small new firms have a positive but declining direct impact on employment. The impact of medium and large new firms, however, is much higher and increases till it peaks in year five. Very large new firms (> 499 employees), however, decrease employment in the short- and medium-term, probably due to restructuring processes of incumbents. This empirical evidence suggests that up to a threshold, large new firms have a larger impact on employment.

3.3.8 Degree of internationalization

A less studied but yet empirically significant determinant is a firm’s degree of internationalization. Baptista and Preto ( 2010 ) analyzed 30 Portuguese regions and found that new firms which were, at least, partially owned by foreign investors had a much higher and more pronounced medium- and long-term impact on employment. A second measure of the positive impact of internationally active new firms is the export-orientation of new firms. Hessels and van Stel ( 2011 ) compared the impact of total-entrepreneurial activity and export-driven entrepreneurial activity on GDP per capita in 34 developed and developing countries. They found evidence that new firms for which the share of customers living abroad is above 26% have a more positive impact on GDP—but only in developed countries. González-Pernía and Peña-Legazkue ( 2015 ) confirmed their finding on a regional level by comparing OEA and export-oriented OEA in 17 Spanish regions. Besides a generally higher impact of export-oriented new firms, González-Pernía and Peña-Legazkue ( 2015 ) found that the impact increases with higher shares of foreign customers up to a threshold level. An earlier study by Fryges and Wagner ( 2008 ), who found a positive relationship between firm-level productivity and export-sales ratio, supports the evidence for a more positive impact of internationally active new firms.

3.3.9 Motivation

The literature review conducted for this paper provided eleven studies which empirically tested the macroeconomic importance of the entrepreneur’s motivations. All of these studies applied GEM-based data and definitions for opportunity-driven entrepreneurial activity (OEA) and necessity-driven entrepreneurial activity (NEA). Although four of these studies could not find a significant economic impact of OEA or NEA (Albulescu and Draghici 2016 ; Ferreira et al. 2017 ; Valliere and Peterson 2009 ; Wong et al. 2005 ), the other seven studies found evidence that OEA significantly increases national innovativeness (Acs and Varga 2005 ; Draghici and Albulescu 2014 ), competitiveness (Mrozewski and Kratzer 2017 ) and productivity (Du and O’Connor 2017 ; González-Pernía and Peña-Legazkue 2015 ; Ivanovic-Ðukic et al. 2018 ; Urbano and Aparicio 2016 ). Moreover, six of these seven studies confirmed that the impact of OEA is higher compared to NEA and TEA. Mrozewski and Kratzer ( 2017 ) even found NEA to decrease the national competitiveness.

3.3.10 Growth-ambitions

There are some entrepreneurs who not only seek to exploit a business-opportunity but also have high growth - ambitions for their new firms. All five empirical studies selected for this paper take GEM data on high-growth expectation entrepreneurship (HEA) as a measure of the entrepreneur’s growth - ambitions and found that it has a significantly positive impact on GDP-related measures of welfare. Furthermore, the impact of HEA seems to be more positive compared to TEA, to NEA and even to OEA (Ivanović-Đukić et al. 2018 ; Stam et al. 2011 ; Valliere and Peterson 2009 ; Wong et al. 2005 ). Generally, this macroeconomic impact of HEA seems to increase with the level of growth-aspiration (van Oort and Bosma 2013 ). The positive impact of HEA on economic welfare could be confirmed on the regional- and national-level as well as for developed countries. For less-developed countries, however, the empirical evidence is contradicting. On the one hand, Valliere and Peterson ( 2009 ) only found a significant impact of HEA on GDP for 25 developed countries, but not for the 18 emerging countries. On the other hand, Stam et al. ( 2011 ) found the impact of HEA on GDP in eight analysed lower-income to upper-middle-income economies (World Bank 2002 classification) even higher compared to the impact in the 22 analysed high-income economies.

3.3.11 Qualification

While many microeconomic studies have highlighted that an entrepreneur’s qualifications in terms of education (e.g. Kangasharju and Pekkala 2002 ), skills and experience (e.g. Brüderl et al. 1992 ; Baum et al. 2001 ; Unger et al. 2011 ) play a significant part in the success of new firms, only one of the studies empirically investigated the macroeconomic impact of education. This is an analysis of 3702 German firms conducted by Engel and Metzger ( 2006 ). It suggests that new firms founded by people with an academic degree may have a more positive direct employment effect, than firms founded by people without an academic degree. This finding is, however, based on an old dataset (1990–1993) and a simple descriptive comparison and the authors did not apply control variables such as the regional density of more educated people.

3.3.12 Gender and age

Only one study could be found which empirically analysed the economic impact of the entrepreneur’s gender and age . This study was conducted by Verheul and van Stel ( 2010 ) and was based on a dataset of 36 developed and developing countries. Their results show that there is a positive relationship between young opportunity-driven entrepreneurs between the ages of 18 and 24 and national GDP growth in developed countries, while in developing countries there is only a significant positive relationship between entrepreneurs aged between 45 and 64 and GDP growth (Verheul and van Stel 2010 ). Contrary to the microeconomic literature (e.g. Cliff 1998 ; Kalleberg and Leicht 1991 ; Rosa et al. 1996 ), Verheul and van Stel ( 2010 ) could not find any significant gender differences on the macroscale.

4 Roadmap for further research

The major scientific value and contribution of this paper lies in the groundwork for future research. Despite the extant of the reviewed existing research, many questions still remain unanswered. The following two sections therefore highlight the shortcomings of current research and make suggestions on how to address them. Section  4.1 discusses how remaining gaps in empirical research into the impact of entrepreneurship can be addressed and Sect.  4.2 presents fruitful research avenues on the determinants of the impact of entrepreneurship.

4.1 Implications for future research on the impact of entrepreneurship

4.1.1 more variety in the measures of entrepreneurship.

A high variety of measures of entrepreneurship is required to test the robustness of results but international comparative studies, in particular, are mainly based on just two entrepreneurship datasets: Comparative Entrepreneurship Data for International Analysis (COMPENDIA) based on OECD statistics and data from the GEM research project. The use of a high variety of entrepreneurship definitions and measures of entrepreneurship across studies makes it difficult to compare the results of these studies. While some studies simply estimate entrepreneurship based on self-employment rates or business-ownership rates, others measure entrepreneurship by counting new firm formations and firm exits or use holistic measures based on, e.g., Schumpeter’s understanding of entrepreneurship.

In order to test the robustness of the results and, at the same time, to allow for comparability between different studies, researchers should employ not one but multiple common measures of entrepreneurship in future studies. To make this possible, policy makers need to encourage the creation of internationally harmonized entrepreneurship databases. Furthermore, due to the limited availability of entrepreneurship data, only a few empirical studies have made a distinction between different types of entrepreneurship. That is why, as recommended by many researchers before (e.g. Baptista and Preto 2011 ; Fritsch and Schroeter 2011 ; Urbano et al. 2019a ), this study calls for more diversity in the application of measures of entrepreneurship.

4.1.2 Implementation of measures of social and environmental welfare

Section  3.1 revealed that 95.1% of the examined empirical studies only analysed the impact of entrepreneurship on economic welfare. Politicians who have no information on the impact of entrepreneurship on social and environmental welfare and thus solely rely on this economic information, however, may implement unsustainable development strategies (Tietenberg and Lewis 2012 ). Indeed, the few empirical studies (n = 5) which go beyond a traditional economic analysis indicate that entrepreneurship also has a significant contribution to measures of social and environmental welfare such as HDI, CO 2 emissions or poverty, which must not be neglected by politicians and researchers alike. To fill the immense gap in research on the impact of entrepreneurship on social and environmental welfare, two simultaneous approaches are proposed. First, as mentioned before, future research should generally include a variety of dependent welfare variables—social and environmental as well as economic ones. Second, future research should adopt research designs that have already proved effective in the macroeconomic impact analysis to answer novel research questions that address the impact of entrepreneurship on social and environmental welfare. The required methods for such analyses have been tested many times and, at least at national level, data availability poses no problem. Most countries have not only been collecting specific social and environmental welfare data for many years, but also established more holistic measures of welfare such as the Index of Sustainable Economic Welfare. Accordingly, it is up to the research community to break with traditions and expand the field of research by analysing social and environmental welfare rather than just economic welfare.

4.1.3 More research on developing countries

Section  3.3.4 illustrated that the local level of development is a relevant determinant of the impact of entrepreneurship. Nevertheless, most of the research reviewed for this paper focused solely on developed countries. This can partly be explained by the fact that most of the authors of these studies are based in Europe and the US, as well as by the lack of adequate long-term data for developing countries. However, this has begun to change. In the past 5 years, the number of empirical studies on developing countries has more than doubled to n = 30. Nevertheless, regional-level studies as well as long-term studies for developing countries remain scarce. Because of the growing importance of developing and particularly BRICS countries, it is important to increase the knowledge on how the impact of entrepreneurship manifests in these countries.

4.1.4 More studies on the lag-structure of the impact of entrepreneurship

Section  3.1 illustrates that although the important indirect impact of entrepreneurship requires 5 or more years to unfold, most empirical research focuses on the direct short-term impact. Neglecting the long-term effects of entrepreneurship therefore results in an incomplete picture. Furthermore, the analysis of longitudinal data is required to conduct relevant causality tests. So far, the bottleneck for national-level long-term studies has been the lack of longitudinal data. But, due to more than 20 years of worldwide data collection for the GEM, there is now at least one sufficiently large entrepreneurship database. In line with other authors who have recognised this issue (e.g. Baptista et al. 2008 ; Carree and Thurik 2008 ; Fritsch 2013 ), this paper recommends that all future research should analyse not only the short-term but also the medium- and long-term impact of entrepreneurship.

4.2 Implications for future research on determinants

Table  3 summarizes key statistics for the determinants in the research reviewed for this paper. Comparing the last two rows, it seems that the studies analysing the determinants of the impact of entrepreneurship are a representative share of all reviewed studies. For this reason, the previously presented suggestions for future research also apply to literature on the determinants. On closer examination, however, Table  3 reveals further and more precise research gaps. These include, inter alia, the need to study particularly the environmental and firm level determinants in developing countries, and the analysis of individual level determinants in combination with the lag-structure of the impact of entrepreneurship. The requirement for more long-term studies is further highlighted here. This finding further specifies the previous call for more long-term studies. The following subsections present further research and research implications.

4.2.1 More variety in measures of entrepreneurship

Table  3 shows that research on environmental and firm level determinants are mainly based on new firm formations as a measure of entrepreneurship, and research on individual level determinants almost solely measures entrepreneurship using GEM data.

The only exceptions are studies on the determinants local level of development —which are comparing the entrepreneurial impact across countries and thus are also mostly based on GEM data—and on innovativeness . None of the studies on the determinants apply self-employment (for the sake of clarity not presented in Table  3 ) to estimate entrepreneurship. This illustrates that the research on all individual determinants, except for innovativeness , considerably lacks variety when it comes to the applied measures of entrepreneurship.

4.2.2 More variety in measures of welfare

In addition to the fact that there are no studies examining the determinants of the impact of entrepreneurship on social or environmental welfare, there is also a lack of variety in the studies of measures of economic welfare. Studies on all individual level determinants and particularly on the determinant local level of development almost exclusively analyse the impact of entrepreneurship on GDP-related measures of welfare. Studies on the determinants industry affiliation , population density , firm survival and firm size mainly analyse employment effects of entrepreneurship. Other common measures of economic welfare, such as innovativeness or competitiveness, are rarely studied and need further investigation.

4.2.3 Further research on determinants

Table  3 illustrates that the existing research is imbalanced and that it pays varying degrees of attention to individual determinants. Determinants such as innovativeness , motivations and most environmental level determinants have so far received a great deal of attention, while others have only been analysed in very few studies. However, some of these poorly researched factors promise to be relevant determinants. More specific, the few existing empirical results analysing firm survival , degree of internationalisation and growth - ambitions suggest that these determinants have a comparatively high effect on the relationship between entrepreneurship and economic welfare. Furthermore, these determinants as well as the largely unexplored determinant qualifications are of considerable practical and political relevance. More empirical research on these determinants and their moderating role is required to improve incentives and support programs for entrepreneurs.

4.2.4 New research focus on determinants not yet empirically investigated

Table  4 provides a short overview of determinants which are likely to shape the entrepreneurial macroeconomic impact, but which have not yet been empirically investigated. They are a selection of indicators which are believed to determine the impact of entrepreneurship on economic welfare or which are empirically related to the success and survival of new firms and thus are also likely to be of macroeconomic importance. The overview is based on a non-systematic scan of the microeconomic literature and makes no claim to completeness. Due to their particularly high microeconomic relevance highlighted by the authors listed in Table  4 , this paper specifically proposes additional research on how firm performance, organisational structure and strategies, networking activities and motivations (beyond necessity and opportunity entrepreneurship) determine the impact of entrepreneurship.

4.2.5 Methodological recommendations

Many of the determinants discussed here are highly interdependent, which makes it very difficult to extract and examine their separate effects. Individual level characteristics and environmental conditions are especially likely to affect the impact of entrepreneurship mainly indirectly through firm performance. The complexity is increased further as determinants may be indicators for other macroeconomically relevant effects. For instance, the numbers of highly innovative new firms and of highly qualified entrepreneurs may be positively correlated with the excellence of the regional educational infrastructure. This in turn could mean that the excellence of educational infrastructure is the true reason for economic growth and innovative new firms and highly qualified entrepreneurs have little or no economic impact but are merely indicators for the educational infrastructure. However, little is currently known about such interdependencies and research is required which particularly studies the path dependencies behind the impact of entrepreneurship. This is why future empirical research should examine determinants which are supposed to be interdependent as well as external effects which may be related to the determinants of interest.

5 Limitations and conclusion

This paper has shed light on the impact of entrepreneurship on economic welfare and the determinants of this impact, but it is not without limitations. First, this paper seeks to give a comprehensive overview of the empirical research, but the search was limited by a variety of in- and exclusion criteria as well as by the terms used in the search string. Although the exclusive focus on peer-reviewed articles is common practice in systematic literature reviews, this may have led to the systematic exclusion of potentially relevant research outcomes, e.g. from dissertation, book chapters, conference contributions or working papers. Furthermore, it is possible that individual studies were not identified by the automated search for the search string in keywords, titles and abstracts. These limitations were necessary to reduce the search results to a manageable level and to ensure a certain quality of the results. The additional screening of key journals, meta-studies and reviews as well as the applied back- and forward snowballing approach, however, weaken the effects of these limitations. Second, this paper only deals with empirical studies. The inclusion of qualitative studies might have revealed further studies dealing with the impact of entrepreneurship on environmental and social welfare. Additionally, the exclusion of qualitative studies limits the analytical depth within the discussion of the determinants. Third, the paper focused on research on a few selected measures of entrepreneurship. In doing so, intrapreneurship, entrepreneurship culture or diverse composed entrepreneurial activity measures of entrepreneurship were excluded. Fourth, it needs to be stated that large parts of the data selection and synthesis were only conducted by the author. Although the chosen procedure and the frequent consultation with the research panel reduced the likelihood of biases, the chance remains that the review is burdened with subjectivity and selection biases. Finally, the scope of this paper was to provide a first descriptive summary of the determinants analysed in the empirical literature and to derive research recommendation. Due to this clear focus this paper does not comprise extensive bibliometric- or meta-analyses that describe in detail the general literature on the impact of entrepreneurship.

The systematic review presented in this paper was conducted for three main reasons. First, to summarize the current state of empirical research on the impact of entrepreneurship on economic, social and environmental welfare. Second, to identify the determinants of this impact and third, to develop a roadmap for future research. Due to the application of a broad entrepreneurship definition and due to the incorporation of economic, social and environmental welfare, this paper presents the most comprehensive overview, summary and synthesis of empirical research on this topic to date. The results confirm the findings and theories of previous literature reviews on the impact of entrepreneurship, provide an update and extension to the current knowledge and finally, represent a first attempt to structure the determinants of the impact of entrepreneurship. The new determinants-driven perspective on the research field reveals several shortcomings that would otherwise have gone unnoticed. The developed roadmap for future research—combined with a higher variety of applied measures of entrepreneurship and with an increased awareness of causality and interdependency issues—will allow future researchers to unravel the complex relationship between entrepreneurship and welfare and therewith to provide politicians the comprehensive information they need to promote the right types of entrepreneurship in the right situations.

For purposes of this study, the three welfare dimensions refer to the widely used definition of the three pillars of sustainable development (economic growth, social equality protection, environmental protection) of the Brundtland Report (World Development Commission on Environment and Development 1987 ). However, the reader should note that later sustainability models like the ‘prism model’ or the ‘concentric circles model’ illustrate that the three pillars of sustainable development (resp. the three welfare dimensions) are interlinked and not always clearly separable from one another.

Although the author is fully aware of their different meanings, for simplicity, the more general term ‘economic welfare’ is used throughout this paper as synonymous with the terms ‘economic growth’ and ‘economic development’.

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Acknowledgements

Open Access funding provided by Projekt DEAL. I like to thank Dirk Ludewig, of the Flensburg University of Applied Sciences and Olav Hohmeyer, of the Europa-Universität Flensburg, for their useful and valuable feedback on previous versions of this paper. Furthermore, I would like to express my appreciation to the participants of the G-Forum conference in Wien, Austria (September, 2019) and of the paper development workshop of the FGF e.V. working group on sustainable entrepreneurship in Flensburg, Germany (March, 2020), where earlier versions of the paper were discussed.

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Neumann, T. The impact of entrepreneurship on economic, social and environmental welfare and its determinants: a systematic review. Manag Rev Q 71 , 553–584 (2021). https://doi.org/10.1007/s11301-020-00193-7

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1.1: Chapter 1 – Introduction to Entrepreneurship

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• Lee A. Swanson
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Whilst there is no universally accepted definition of entrepreneurship, it is fair to say that it is multi-dimensional. It involves analyzing people and their actions together with the ways in which they interact with their environments, be these social, economic, or political, and the institutional, policy, and legal frameworks that help define and legitimize human activities. – Blackburn (2011, p. xiii)

Entrepreneurship involves such a range of activities and levels of analysis that no single definition is definitive. – Lichtenstein (2011, p. 472)

It is complex, chaotic, and lacks any notion of linearity. As educators, we have the responsibility to develop our students’ discovery, reasoning, and implementation skills so they may excel in highly uncertain environments. – Neck and Greene (2011, p. 55)

Learning Objectives

• Examine the challenges associated with defining the concepts of entrepreneur and entrepreneurship
• Discuss how the evolution of entrepreneurship thought has influenced how we view the concept of entrepreneurship today
• Discuss how the list of basic questions in entrepreneurship research can be expanded to include research inquiries that are important in today’s world
• Discuss how the concepts of entrepreneurial uniqueness, entrepreneurial personality traits, and entrepreneurial cognitions can help society improve its support for entrepreneurship
• Apply the general venturing script to the study of entrepreneurship

This chapter provides you with an overview of entrepreneurship and of the language of entrepreneurship. The challenges associated with defining entrepreneur and entrepreneurship are explored, as is an overview of how entrepreneurship can be studied.

The objective is to enable you to apply current concepts in entrepreneurship to the evaluation of entrepreneurs, their ventures, and the venturing environment. You will develop skills, including the capability to add value in the new venture sector of the economy. You will acquire and practice evaluation skills useful in consulting, advising, and making new venture decisions.

Entrepreneurs and Entrepreneurship

Considerations influencing definitions of entrepreneur and entrepreneurship.

It is necessary to be able to determine exactly who entrepreneurs are before we can, among other things, study them, count them, provide special loans for them, and calculate how and how much they contribute to our economy.

• Does someone need to start a business from scratch to be called an entrepreneur?
• Can we call someone an entrepreneur if they bought an ongoing business from someone else or took over the operations of a family business from their parents?
• If someone starts a small business and never needs to hire employees, can they be called an entrepreneur?
• If someone buys a business but hires professional managers to run it so they don’t have to be involved in the operations, are they an entrepreneur?
• Is someone an entrepreneur if they buy into a franchise so they can follow a well-established formula for running the operation?
• Is someone an entrepreneur because of what they do or because of how they think?
• Can someone be an entrepreneur without owning their own business?
• Can a person be an entrepreneur because of the nature of the work that they do within a large corporation?

It is also necessary to fully understand what we mean by entrepreneurship before we can study the concept.

Gartner (1990) identified 90 attributes that showed up in definitions of entrepreneurs and entrepreneurship provided by entrepreneurs and other experts in the field. The following are a few of these attributes:

• Innovation – Does a person need to be innovative to be considered an entrepreneur? Can an activity be considered to be entrepreneurial if it is not innovative?
• Activities – What activities does a person need to do to be considered an entrepreneur?
• Creation of a new business – Does someone need to start a new business to be considered to be an entrepreneur, or can someone who buys a business, buys into a franchise, or takes over an existing family business be considered an entrepreneur?
• Starts an innovative venture within an established organization – Can someone who works within an existing organization that they don’t own be considered an entrepreneur if they start an innovative venture for their organization?
• Creation of a not-for-profit business – Can a venture be considered to be entrepreneurial if it is a not-for-profit, or should only for-profit businesses be considered entrepreneurial?

After identifying the 90 attributes, Gartner (1990) went back to the entrepreneurs and other experts for help in clustering the attributes into themes that would help summarize what people concerned with entrepreneurship thought about the concept. He ended up with the following eight entrepreneurship themes:

1. The Entrepreneur – The entrepreneur theme is the idea that entrepreneurship involves individuals with unique personality characteristics and abilities (e.g., risk-taking, locus of control, autonomy, perseverance, commitment, vision, creativity). Almost 50% of the respondents rated these characteristics as not important to a definition of entrepreneurship (Gartner, 1990, p. 21, 24).

• “The question that needs to be addressed is: Does entrepreneurship involve entrepreneurs (individuals with unique characteristics)?” (Gartner, 1990, p. 25).

2. Innovation – The innovation theme is characterized as doing something new as an idea, product, service, market, or technology in a new or established organization. The innovation theme suggests that innovation is not limited to new ventures, but recognized as something which older and/or larger organizations may undertake as well (Gartner, 1990, p. 25). Some of the experts Gartner questioned believed that it was important to include innovation in definitions of entrepreneurship and others did not think it was as important.

• “Does entrepreneurship involve innovation?” (Gartner, 1990, p. 25).

3. Organization Creation – The organization creation theme describes the behaviors involved in creating organizations. This theme described acquiring and integrating resource attributes (e.g., Brings resources to bear, integrates opportunities with resources, mobilizes resources, gathers resources) and attributes that described creating organizations (new venture development and the creation of a business that adds value). (Gartner, 1990, p. 25)

• “Does entrepreneurship involve resource acquisition and integration (new venture creation activities)?” (Gartner, 1990, p. 25)

4. Creating Value – This theme articulated the idea that entrepreneurship creates value. The attributes in this factor indicated that value creation might be represented by transforming a business, creating a new business growing a business, creating wealth, or destroying the status quo.

• “Does entrepreneurship involve creating value?” (Gartner, 1990, p. 25).

5. Profit or Nonprofit

• “Does entrepreneurship involve profit-making organizations only” (Gartner, 1990, p. 25)?
• Should a focus on growth be a characteristic of entrepreneurship?

7. Uniqueness – This theme suggested that entrepreneurship must involve uniqueness. Uniqueness was characterized by attributes such as a special way of thinking, a vision of accomplishment, ability to see situations in terms of unmet needs, and creates a unique combination.

• “Does entrepreneurship involve uniqueness?” (Gartner, 1990, p. 26).

8. The Owner-Manager – Some of the respondents questioned by Gartner (1990) did not believe that small mom-and-pop types of businesses should be considered to be entrepreneurial. Some respondents felt that an important element of a definition of entrepreneurship was that a venture be owner-managed.

• To be entrepreneurial, does a venture need to be owner-managed?

Examples of Definitions of Entrepreneur

An entrepreneur can be described as “one who creates a new business in the face of risk and uncertainty for the purpose of achieving profit and growth by identifying significant opportunities and assembling the necessary resources to capitalize on them” (Zimmerer & Scarborough, 2008, p. 5).

An entrepreneur is “one who organizes, manages, and assumes the risks of a business or enterprise” (Entrepreneur, n.d.).

Examples of Definitions of Entrepreneurship

Entrepreneurship can be defined as a field of business that

seeks to understand how opportunities to create something new (e.g., new products or services, new markets, new production processes or raw materials, new ways of organizing existing technologies) arise and are discovered or created by specific persons, who then use various means to exploit or develop them, thus producing a wide range of effects (Baron, Shane, & Reuber, 2008, p. 4)

A concise definition of entrepreneurship “is that it is the process of pursuing opportunities without limitation by resources currently in hand” (Brooks, 2009, p. 3) and “the process of doing something new and something different for the purpose of creating wealth for the individual and adding value to society” (Kao, 1993, p. 70)

The Evolution of Entrepreneurship Thought

This section includes an overview of how entrepreneurship has evolved to the present day.

The following timeline shows some of the most influential entrepreneurship scholars and the schools of thought (French, English, American, German, and Austrian) their perspectives helped influence and from which their ideas evolved. Schools of thought are essentially groups of people who might or might not have personally known each other, but who shared common beliefs or philosophies.

Figure 1 – Historical and Evolutionary Entrepreneurship Thought (Illustration by Lee A. Swanson)

The Earliest Entrepreneurship

The function, if not the name, of the entrepreneur is probably as old as the institutions of barter and exchange. But only after economic markets became an intrusive element of society did the concept take on pivotal importance. Many economists have recognized the pivotal role of the entrepreneur in a market economy. Yet despite his central importance in economic activity, the entrepreneur has been a shadowy and elusive figure in the history of economic theory (Hebert & Link, 2009, p. 1).

Historically those who acted similarly to the ways we associate with modern day entrepreneurs – namely those who strategically assume risks to seek economic (or other) gains – were military leaders, royalty, or merchants. Military leaders planned their campaigns and battles while assuming significant risks, but by doing so they also stood to gain economic benefits if their strategies were successful. Merchants, like Marco Polo who sailed out of Venice in the late 1200s to search for a trade route to the Orient, also assumed substantial risks in the hope of becoming wealthy (Hebert & Link, 2009).

The entrepreneur, who was also called adventurer , projector , and undertaker during the eighteenth century, was not always viewed in a positive light (Hebert & Link, 2009).

Development of Entrepreneurship as a Concept

Risk and uncertainty.

Richard Cantillon (1680-1734) was born in France and belonged to the French School of thought although he was an Irish economist. He appears to be the person who introduced the term entrepreneur to the world. “According to Cantillon, the entrepreneur is a specialist in taking on risk, ‘insuring’ workers by buying their output for resale before consumers have indicated how much they are willing to pay for it” (Casson & Godley, 2005p. 26). The workers’ incomes are mostly stable, but the entrepreneur risks a loss if market prices fluctuate.

Cantillon distinguished entrepreneurs from two other classes of economic agents; landowners, who were financially independent, and hirelings (employees) who did not partake in the decision-making in exchange for relatively stable incomes through employment contracts. He was the first writer to provide a relatively refined meaning for the term entrepreneurship . Cantillon described entrepreneurs as individuals who generated profits through exchanges. In the face of uncertainty, particularly over future prices, they exercise business judgment. They purchase resources at one price and sell their product at a price that is uncertain, with the difference representing their profit (Chell, 2008; Hebert & Link, 2009).

Farmers were the most prominent entrepreneurs during Cantillon’s lifetime, and they interacted with “arbitrageurs” – or middlemen between farmers and the end consumers – who also faced uncertain incomes, and who were also, therefore, entrepreneurs. These intermediaries facilitated the movement of products from the farms to the cities where more than half of the farm output was consumed. Cantillon observed that consumers were willing to pay a higher price per unit to be able to purchase products in the smaller quantities they wanted, which created the opportunities for the intermediaries to make profits. Profits were the rewards for assuming the risks arising from uncertain conditions. The markets in which profits were earned were characterized by incomplete information (Chell, 2008; Hebert & Link, 2009).

Adolph Reidel (1809-1872), form the German School of thought, picked up on Cantillon’s notion of uncertainty and extended it to theorize that entrepreneurs take on uncertainty so others, namely income earners, do not have to be subject to the same uncertainty. Entrepreneurs provide a service to risk-averse income earners by assuming risk on their behalf. In exchange, entrepreneurs are rewarded when they can foresee the impacts of the uncertainty and sell their products at a price that exceeds their input costs (including the fixed costs of the wages they commit to paying) (Hebert & Link, 2009).

Frank Knight (1885-1972) founded the Chicago School of Economics and belonged to the American School of thought. He refined Cantillon’s perspective on entrepreneurs and risk by distinguishing insurable risk as something that is separate from uncertainty, which is not insurable. Some risks can be insurable because they have occurred enough times in the past that the expected loss from such risks can be calculated. Uncertainty, on the other hand, is not subject to probability calculations. According to Knight, entrepreneurs can’t share the risk of loss by insuring themselves against uncertain events, so they bear these kinds of risks themselves, and profit is the reward that entrepreneurs get from assuming uninsurable risks (Casson & Godley, 2005).

Distinction Between Entrepreneur and Manager

Jean-Baptiste Say (1767-1832), also from the French School, advanced Cantillon’s work, but added that entrepreneurship was essentially a form of management. Say “put the entrepreneur at the core of the entire process of production and distribution” (Hebert & Link, 2009, p. 17). Say’s work resulted in something similar to a general theory of entrepreneurship with three distinct functions; “scientific knowledge of the product; entrepreneurial industry – the application of knowledge to useful purpose; and productive industry – the manufacture of the item by manual labour” (Chell, 2008, p. 20).

Frank Knight made several contributions to entrepreneurship theory, but another of note is how he distinguished an entrepreneur from a manager. He suggested that a manager crosses the line to become an entrepreneur “when the exercise of his/her judgment is liable to error and s/he assumes the responsibility for its correctness” (Chell, 2008, p. 33). Knight said that entrepreneurs calculate the risks associated with uncertain business situations and make informed judgments and decisions with the expectation that – if they assessed the situation and made the correct decisions – they would be rewarded by earning a profit. Those who elect to avoid taking these risks choose the relative security of being employees (Chell, 2008).

Alfred Marshall (1842-1924), from the English School of thought, was one of the founders of neoclassical economics. His research involved distinguishing between the terms capitalist, entrepreneur, and manager. Marshall saw capitalists as individuals who “committed themselves to the capacity and honesty of others, when he by himself had incurred the risks for having contributed with the capital” (Zaratiegui & Rabade, 2005, p. 775). An entrepreneur took control of money provided by capitalists in an effort to leverage it to create more money; but would lose less if something went wrong then would the capitalists. An entrepreneur, however, risked his own reputation and the other gains he could have made by pursuing a different opportunity.

Let us suppose that two men are carrying on smaller businesses, the one working with his own, the other chiefly with borrowed capital. There is one set of risks which is common to both; which may be described as the trade risks of the particular business … But there is another set of risks, the burden of which has to be borne by the man working with borrowed capital, and not by the other; and we may call them personal risks (Marshall, 1961, p. 590; Zaratiegui & Rabade, 2005, p. 776).

Marshall recognized that the reward capitalists received for contributing capital was interest income and the reward entrepreneurs earned was profits. Managers received a salary and, according to Marshall, fulfilled a different function than either capitalists or entrepreneurs – although in some cases, particularly in smaller firms, one person might be both an entrepreneur and a manager. Managers “were more inclined to avoid challenges, innovations and what Schumpeter called the ‘perennial torment of creative destruction’ in favour of a more tranquil life” (Zaratiegui & Rabade, 2005, p. 781). The main risks they faced from firm failure were to their reputations or to their employment status. Managers had little incentive to strive to maximize profits (Zaratiegui & Rabade, 2005).

Amasa Walker (1799-1875) and his son Francis Walker (1840-1897) were from the American School of thought, and they helped shape an American perspective of entrepreneurship following the Civil War of 1861-1865. These scholars claimed that entrepreneurs created wealth, and thus played a different role than capitalists. They believed that entrepreneurs had the power of foresight and leadership qualities that enabled them to organize resources and inject energy into activities that create wealth (Chell, 2008).

Entrepreneurship versus Entrepreneur

Adam Smith (1723-1790), from the English School of thought, published An Inquiry into the Nature and Causes of the Wealth of Nations in 1776. In a departure from the previous thought into entrepreneurship and economics, Smith did not dwell on a particular class of individual. He was concerned with studying how all people fit into the economic system. Smith contended that the economy was driven by self-interest in the marketplace (Chell, 2008).

Also from the English School, David Ricardo (1772-1823) was influenced by Smith, Say, and others. His work focused on how the capitalist system worked. He explained how manufacturers must invest their capital in response to the demand for the products they produce. If demand decreases, manufacturers should borrow less and reduce their workforces. When demand is high, they should do the reverse (Chell, 2008).

Carl Menger (1840-1921), from the Austrian School of thought, ranked goods according to their causal connections to human satisfaction. Lower order goods include items like bread that directly satisfy a human want or need like hunger. Higher order goods are those more removed from satisfying a human need. A second order good is the flour that was used to make the bread. The grain used to make the flour is an even higher order good. Entrepreneurs coordinate these factors of production to turn higher order goods into lower order goods that more directly satisfy human wants and needs (Hebert & Link, 2009).

Menger (1950 [1871], p. 160) established that entrepreneurial activity includes: (a) obtaining information about the economic situation, (b) economic calculation – all the various computations that must be made if a production process is to be efficient, (c) the act of will by which goods of higher order are assigned to a particular production process, and (d) supervising the execution of the production plan so that it may be carried through as economically as possible (Hebert & Link, 2009, p. 43).

Entrepreneurship and Innovation

Jeremy Bentham (1748-1832), from the English School of thought, considered entrepreneurs to be innovators. They “depart from routine, discover new markets, find new sources of supply, improve existing products and lower the costs of production” (Chell, 2008).

Joseph Schumpeter’s (1883-1950) parents were Austrian, he studied at the University of Vienna, conducted research at the University of Graz, served as Austria’s Minister of Finance, and was the president of a bank in the country. Because of the rise of Hitler in Europe, he went to the United States and conducted research at Harvard until he retired in 1949. Because of this, he is sometimes associated with the American School of thought on entrepreneurship (Chell, 2008).

Whereas Menger saw entrepreneurship as occurring because of economic progress, Schumpeter took the opposite stance. Schumpeter saw economic activity as leading to economic development (Hebert & Link, 2009). Entrepreneurs play a central role in Schumpeter’s theory of economic development, and economic development can occur when the factors of production are assembled in new combinations .

Schumpeter (1934) viewed innovation as arising from new combinations of materials and forces. He provided the following five cases of new combinations.

• The introduction of a new good – that is one with which consumers are not yet familiar – or of a new quality of good.
• The introduction of a new method of production, that is one not yet tested by experience in the branch of manufacture concerned, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially.
• The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before.
• The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created.
• The carrying out of the new organisation of any industry, like the creation of a monopoly position … or the breaking up of a monopoly position (Schumpeter, 1934, p. 66).

Another concept popularized by Schumpeter – in addition to the notion of new combinations – was creative destruction . This was meant to indicate that the existing ways of doing things need to be dismantled – to be destroyed – to enable a transformation through innovation to a new way of doing things. Entrepreneurs use innovation to disrupt how things are done and to establish a better way of doing those things.

Basic Questions in Entrepreneurship Research

According to Baron (2004a), there are three basic questions of interest in the field of entrepreneurship:

• Why do some persons but not others choose to become entrepreneurs?
• Why do some persons but not others recognize opportunities for new products or services that can be profitably exploited?
• Why are some entrepreneurs so much more successful than others (Baron, 2004a, p. 221)?

To understand where these foundational research questions came from and what their relevance is today, it is useful to study what entrepreneurship research has uncovered so far.

Entrepreneurial Uniqueness

Efforts to teach entrepreneurship have included descriptions of entrepreneurial uniqueness based on personality, behavioural, and cognitive traits (Chell, 2008; Duening, 2010).

• Need for achievement
• Internal locus of control (a belief by an individual that they are in control of their own destiny)
• Risk-taking propensity
• Behavioural traits
• Cognitive skills of successful entrepreneurs

Past studies of personality characteristics and behavioural traits have not been overly successful at identifying entrepreneurial uniqueness.

As it turned out, years of painstaking research along this line has not borne significant fruit. It appears that there are simply not any personality characteristics that are either essential to, or defining of, entrepreneurs that differ systematically from non-entrepreneurs…. Again, investigators proposed a number of behavioural candidates as emblematic of entrepreneurs. Unfortunately, this line of research also resulted in a series of dead ends as examples of successful entrepreneurial behaviours had equal counterparts among samples of non-entrepreneurs. As with the personality characteristic school of thought before it, the behavioural trait school of thought became increasingly difficult to support (Duening, 2010, p. 4-5).

This shed doubt on the value of trying to change personality characteristics or implant new entrepreneurial behaviours through educational programs in an effort to promote entrepreneurship.

New research, however, has resurrected the idea that there might be some value in revisiting personality traits as a topic of study. Additionally, Duening (2010) and has suggested that an important approach to teaching and learning about entrepreneurship is to focus on the “cognitive skills that successful entrepreneurs seem uniquely to possess and deploy” (p. 2). In the next sections we consider the new research on entrepreneurial personality traits and on entrepreneurial cognitions.

Entrepreneurial Personality Traits

While acknowledging that research had yet to validate the value of considering personality and behaviour traits as ways to distinguish entrepreneurs from non-entrepreneurs or unsuccessful ones, Chell (2008) suggested that researchers turn their attention to new sets of traits including: “the proactive personality, entrepreneurial self-efficacy, perseverance and intuitive decision-making style. Other traits that require further work include social competence and the need for independence” (p. 140).

In more recent years scholars have considered how the Big Five personality traits – extraversion, agreeableness, conscientiousness, neuroticism (sometimes presented as emotional stability ), and openness to experience (sometimes referred to as intellect) – might be used to better understand entrepreneurs. It appears that the Big Five traits might be of some use in predicting entrepreneurial success. Research is ongoing in this area, but in one example, Caliendo, Fossen, and Kritikos (2014) studied whether personality constructs might “influence entrepreneurial decisions at different points in time” (p. 807), and found that “high values in three factors of the Big Five approach—openness to experience, extraversion, and emotional stability (the latter only when we do not control for further personality characteristics)—increase the probability of entry into self-employment” (p. 807). They also found “that some specific personality characteristics, namely risk tolerance, locus of control, and trust, have strong partial effects on the entry decision” (p. 807). They also found that people who scored higher on agreeableness were more likely to exit their businesses, possibly meaning that people with lower agreeableness scores might prevail longer as entrepreneurs. When it came to specific personality traits, their conclusions indicated that those with an external locus of control were more likely to stop being self-employed after they had run their businesses for a while. There are several implications for research like this, including the potential to better understand why some entrepreneurs behave as they do based upon their personality types and the chance to improve entrepreneurship education and support services.

Entrepreneurial Cognitions

It is only fairly recently that entrepreneurship scholars have focused on cognitive skills as a primary factor that differentiates successful entrepreneurs from non-entrepreneurs and less successful entrepreneurs. This approach deals with how entrepreneurs think differently than non-entrepreneurs (Duening, 2010; Mitchell et al., 2007).

Entrepreneurial cognitions are the knowledge structures that people use to make assessments, judgments or decisions involving opportunity evaluation and venture creation and growth. In other words, research in entrepreneurial cognition is about understanding how entrepreneurs use simplifying mental models to piece together previously unconnected information that helps them to identify and invent new products or services, and to assemble the necessary resources to start and grow businesses (Mitchell, Busenitz, et al., 2002, p. 97).

Mitchell, Smith, et al. (2002) provided the example of how the decision to create a new venture (dependent variable) was influenced by three sets of cognitions (independent variables). They described these cognitions as follows:

Arrangements cognitions are the mental maps about the contacts, relationships, resources, and assets necessary to engage in entrepreneurial activity; willingness cognitions are the mental maps that support commitment to venturing and receptivity to the idea of starting a venture; ability cognitions consist of the knowledge structures or scripts (Glaser, 1984) that individuals have to support the capabilities, skills, norms, and attitudes required to create a venture (Mitchell et al., 2000). These variables draw on the idea that cognitions are structured in the minds of individuals (Read, 1987), and that these knowledge structures act as “scripts” that are the antecedents of decision making (Leddo & Abelson, 1986, p. 121; Mitchell, Smith, et al., 2002, p. 10)

Cognitive Perspective to Understanding Entrepreneurship

According to Baron (2004a), by taking a cognitive perspective, we might better understand entrepreneurs and the role they play in the entrepreneurial process.

The cognitive perspective emphasizes the fact that everything we think, say, or do is influenced by mental processes—the cognitive mechanisms through which we acquire store, transform, and use information. It is suggested here that this perspective can be highly useful to the field of entrepreneurship. Specifically, it can assist the field in answering three basic questions it has long addressed: (1) Why do some persons but not others choose to become entrepreneurs? (2) Why do some persons but not others recognize opportunities for new products or services that can be profitably exploited? And (3) Why are some entrepreneurs so much more successful than others (Baron, 2004a, p. 221-222)?

Baron (2004a), illustrated how cognitive differences between people might explain why some people end up pursuing entrepreneurial pursuits and others do not. For example, prospect theory (Kahneman & Tversky, 1977) and other decision-making or behavioural theories might be useful in this regard. Research into cognitive biases might also help explain why some people become entrepreneurs.

Baron (2004a) also revealed ways in which cognitive concepts like signal detection theory, regulation theory, and entrepreneurial might help explain why some people are better at entrepreneurial opportunity recognition. He also illustrated how some cognitive models and theories – like risk perception, counterfactual thinking, processing style, and susceptibility to cognitive errors – might help explain why some entrepreneurs are more successful than others.

Cognitive Perspective and the Three Questions

• Prospect Theory
• Cognitive Biases
• Signal Detection Theory
• Regulation Theory
• Entrepreneurial Alertness
• Risk Perception
• Counterfactual Thinking
• Processing Style
• Susceptibility to Cognitive Errors

Entrepreneurial Scripts

• “Cognition has emerged as an important theoretical perspective for understanding and explaining human behavior and action” (Dutta & Thornhill, 2008, p. 309).
• Cognitions are all processes by which sensory input is transformed, reduced, elaborated, stored, recovered, and used (Neisser, 1976).
• Cognitions lead to the acquisition of knowledge, and involve human information processing.
• Is a mental model, or information processing short-cut that can give information form and meaning, and enable subsequent interpretation and action.
• The subsequent interpretation and actions can result in expert performance … they can also result in thinking errors.
• the processes that transfer expertise, and
• the actual expertise itself.
• Scripts are generally framed as a linear sequence of steps, usually with feedback loops, that can explain how to achieve a particular task – perhaps like developing a business plan.
• Sometimes scripts can be embedded within other scripts. For example, within a general venturing script that outlines the sequences of activities that can lead to a successful business launch, there will probably be sub-scripts describing how entrepreneurs can search for ideas, screen those ideas until one is selected, plan how to launch a sustainable business based upon that idea and including securing the needed financial resources, setting up the business, starting it, effectively managing its ongoing operations, and managing the venture such that that entrepreneur can extract the value that they desire from the enterprise at the times and in the ways they want it.
• The most effective scripts include an indication of the norms that outline performance standards and indicate how to determine when any step in the sequence has been properly completed.

General Venturing Script

Generally, entrepreneurship is considered to consist of the following elements, or subscripts (Brooks, 2009; Mitchell, 2000).

• Idea Screening
• Planning and Financing
• Ongoing Operations

Searching (also called idea formulation or opportunity recognition)

• This script begins when a person decides they might be a potential entrepreneur (or when an existing entrepreneur decides they need more ideas in their idea pool ).
• This script ends when there are a sufficient number of ideas in the idea pool.
• overcome mental blockages to creativity which might hinder this person’s ability to identify viable ideas;
• implement steps to identify a sufficient number of ideas (most likely 5 or more) which the person is interested in investigating to determine whether they might be viable given general criteria such as this person’s personal interests and capabilities;

Idea Screening (also called concept development)

• This script begins when the person with the idea pool is no longer focusing on adding new ideas to it; but is instead taking steps to choose the best idea for them given a full range of specific criteria .
• This script ends when one idea is chosen from among those in the idea pool.
• Evaluate the political, economic, social, technological, environmental, and legal climates
• Evaluate the degree of competitiveness in the industry, the threat of substitutes emerging, the threat of new entrants to the industry, the degree of bargaining power of buyers, and the degree of bargaining power of suppliers.
• Do a market profile analysis to assess the attractiveness of the position within the industry that the potential venture will occupy.
• Formulate and evaluate potential strategies to leverage organizational strengths, overcome/minimize weaknesses, take advantage of opportunities, and overcome/minimize threats;
• Complete financial projections and analyze them to evaluate financial attractiveness;
• Assess the founder fit with the ideas;
• Evaluate the core competencies of the organization relative to the idea;
• Assess advice solicited from trusted advisers

Planning and Financing (also called resource determination and acquisition)

• This script begins when the idea screening script ends and when the person begins making the plans to implement the single idea chosen from the idea pool, which is done in concert with securing financing to implement the venture idea.
• This script ends when sufficient business planning has been done and when adequate financing has been arranged.
• The scripting process involves a logical flow of steps to develop a business plan and secure adequate financing to start the business.

Set-Up (also called launch)

• This script begins when the planning and financing script ends and when the person begins implementing the plans needed to start the business.
• This script ends when the business is ready to start-up.
• The scripting process involves a logical flow of steps, including purchasing and installing equipment, securing the venture location and finishing all the needed renovations, recruiting and hiring any staff needed for start-up, and the many other steps needed to prepare for start-up.
• Start-Up (also called launch)
• This script begins when the set-up script ends and when the business opens and begins making sales.
• This script ends when the business has moved beyond the point where the entrepreneur must continually fight for the business’s survival and persistence. It ends when the entrepreneur can instead shift emphasis toward business growth or maintaining the venture’s stability.
• The scripting process involves a logical flow of steps needed to establish a new venture.

Ongoing Operations (also called venture growth)

• This script begins when the start-up script ends and when the business has established persistence and is implementing growth (or maintenance) strategies.
• This script ends when the entrepreneur chooses to harvest the value they generated with the venture.
• The scripting process involves a logical flow of steps needed to grow (or maintain) a venture.

Studying Entrepreneurship

The following quotations from two preeminent entrepreneurship and entrepreneurship education researchers indicate the growing interest in studies in this field.

Entrepreneurship has emerged over the last two decades as arguably the most potent economic force the world has ever experienced. With that expansion has come a similar increase in the field of entrepreneurship education. The recent growth and development in the curricula and programs devoted to entrepreneurship and new-venture creation have been remarkable. The number of colleges and universities that offer courses related to entrepreneurship has grown from a handful in the 1970s to over 1,600 in 2005 (Kuratko, 2005, p. 577).

Interest in entrepreneurship has heightened in recent years, especially in business schools. Much of this interest is driven by student demand for courses in entrepreneurship, either because of genuine interest in the subject, or because students see entrepreneurship education as a useful hedge given uncertain corporate careers (Venkataraman, 1997, p. 119).

Approaches to Studying Entrepreneurship

Entrepreneurship is a discipline, which means an individual can learn about it, and about how to be an effective entrepreneur. It is a myth that people are born entrepreneurs and that others cannot learn to become entrepreneurs (Drucker, 1985). Kuratko (2005) asserted that the belief previously held by some that entrepreneurship cannot be taught has been debunked, and the focus has shifted to what topics should be taught and how they should be covered.

Solomon (2007) summarized some of the research on what should be covered in entrepreneurship courses, and how it should be taught. While the initial focus was on actions like developing business plans and being exposed to real entrepreneurs, more recently this approach has been supplemented by an emphasis on technical, industry, and personal experience. “It requires critical thinking and ethical assessment and is based on the premise that successful entrepreneurial activities are a function of human, venture and environmental conditions” (p. 172). Another approach “calls for courses to be structured around a series of strategic development challenges including opportunity identification and feasibility analysis; new venture planning, financing and operating; new market development and expansion strategies; and institutionalizing innovation” (p. 172). This involves having students interact with entrepreneurs by interviewing them, having them act as mentors, and learning about their experiences and approaches through class discussions.

Sources of Information for Studying Entrepreneurship

According to Kuratko (2005), “three major sources of information supply the data related to the entrepreneurial process or perspective” (p. 579).

• Academic journals like Entrepreneurship Theory and Practice , Journal of Business Venturing , and Journal of Small Business Management
• Proceedings of conferences like Proceedings of the Academy of Management and Proceedings of the Administrative Sciences Association of Canada
• Textbooks on entrepreneurship
• Books about entrepreneurship
• Biographies or autobiographies of entrepreneurs
• News periodicals like Canadian Business and Profit
• Trade periodicals like Entrepreneur and Family Business
• Government publications available through sources like the Enterprise Saskatchewan and Canada-Saskatchewan Business Service Centre (CSBSC) websites and through various government resource centers
• Data might be collected from entrepreneurs and about entrepreneurs through surveys, interviews, or other methods applied by researchers.
• Speeches and presentations by practicing entrepreneurs

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• v.6(9); 2020 Sep

The impact of entrepreneurship education and students' entrepreneurial mindset: the mediating role of attitude and self-efficacy

Ludi wishnu wardana.

a Faculty of Economics, Universitas Negeri Malang, Indonesia

Bagus Shandy Narmaditya

Agus wibowo.

b Faculty of Economics, Universitas Negeri Jakarta, Indonesia

Angga Martha Mahendra

c Department of Accounting, STIE Al-Anwar, Indonesia

Nyuherno Aris Wibowo

d Department of Management, STIE Indonesia Malang, Indonesia

Gleydis Harwida

e Department of Sharia Banking, Universitas Nahdlatul Ulama Blitar, Indonesia

Arip Nur Rohman

f Faculty of Economics and Islamic Business, IAIN Kediri, Indonesia

The main purpose of this study is to investigate the relationship between students' entrepreneurship education and entrepreneurial mindset as well as understanding the mediating role of attitude and self-efficacy. The approach adopted in this study is a convenience random sampling method, which is widely used in entrepreneurship research. Participants were recruited from several universities in Malang of East Java in Indonesia undergoing an online survey and were calculated using structural equation modeling (SEM). The findings of this current study indicate that entrepreneurship education successfully influences entrepreneurial self-efficacy, entrepreneurial attitude, and the entrepreneurial mindset. On the other hand, entrepreneurial self-efficacy promotes entrepreneurial attitude instead of the entrepreneurial mindset. Furthermore, entrepreneurial attitude plays an essential role in mediating both entrepreneurship education and self-efficacy toward students' entrepreneurial mindset.

Education; Entrepreneurship education; Entrepreneurial self-efficacy; Attitudes towards entrepreneurship; Entrepreneurial mindset.

1. Introduction

An entrepreneurial mindset has been acknowledged in providing success and failure among entrepreneurs ( Belousova et al., 2020 ; Aima et al., 2020 ). Inevitable scholars underlie the entrepreneurial mindset as a considerable variables in entrepreneurship studies ( Allen, 2020 ; Ajor and Alikor, 2020 ; Kouakou et al., 2019 ; Schaefer and Minello, 2019 ). In particular, Cui et al. (2019) noted that the entrepreneurial mindset is linked with more profound cognitive phenomena that reflect the unique engagement of entrepreneurial activities. In addition, the foundation of entrepreneurial intention reclines cognitive adaptability ( Haynie et al., 2010 ), which plays a crucial role in accomplishing desirable outcomes following entrepreneurial action.

In some developing countries, the lack of success in running a business can be explained by entrepreneurial mindset ( Cummings et al., 2019 ; Sihotang et al., 2020 ; Kawulur et al., 2019 ; Pfeifer et al., 2016 ; Piperopoulos and Dimov, 2015 ). Therefore, to foster a mindset for business startups, there are several supporting dimensions which include entrepreneurial education ( Lindberg et al., 2017 ; Solesvik et al., 2013 ), attitudes towards entrepreneurship ( Ayalew and Zeleke, 2018 ; Sowmya et al., 2010 ) and self-efficacy ( Aima et al., 2020 ; Pfeifer et al., 2016 ). The theory of social cognitive proposed by Bandura (2012) demonstrated that entrepreneurship education enhances an individual self-efficacy. First, entrepreneurship education allows students to have an opportunity in entrepreneurship tasks such as analyzing business feasibility, writing a business plan, performing their business plan. Furthermore, entrepreneurial education presents a social coercion through response from peers in class discussions cand performance on course assignments.

In acquaintance with entrepreneurship study, an entrepreneurial attitude has highlighted among scholars as a determinant variable. The term entrepreneurial attitude is defined as an individual response of information, events, and critics toward the existing opportunities. Ajzen (2002) have provided several categories of entrepreneurial attitude: the need for attainment, personal behavior control, innovation, and self-esteem. Additionally, those scholars measure each entrepreneurial attitude in several aspects, including (feelings and emotions), cognition (thoughts and beliefs), and conation (actions and behaviors). Therefore, a significant component of entrepreneurship education on attitudes is cognitive, affective, psychomotor ( Ayalew and Zeleke, 2018 ; Botsaris and Vamvaka, 2016 ; Jena, 2020 ; Mahendra et al., 2017 ; Denanyoh et al., 2015 ).

Since some consensus believe that the crucial role of the cognitive process, scholars involve this matter on entrepreneurship research ( Bandura, 2001 ; Krueger, 2003 ). For example, Krueger (2003) argued that the understanding of entrepreneurship is important, especially on how to start, manage, and evolve the business. Additionally, some scholars believe that perceived self-efficacy on an individual's behavior and attitude will lead to a greater cognitive ( Pihie and Bagheri, 2010 ). Bandura (1986) pointed out that self-efficacy as a social-cognitive process can explain the causality between cognitive and individuals in the form of entrepreneurial attitude.

Entrepreneurial mindset and attitudes on entrepreneurship have dual variables, including personal background and environment. Davis et al. (2016) ; Jabeen et al. (2017) remarked a bi-causality between attitude and entrepreneurial mindset. The relationship between those variables is symbolized as an entrepreneurial image ( Commarmond, 2017 ; Jena, 2020 ; Mahendra et al., 2017 ; Ndou et al., 2018 ). The proposed model of this study measures the entrepreneurial attitude towards the entrepreneur mindset, while the entrepreneurial image is obtained only by the interpretation of these two variables. In feeling a positive image of entrepreneurship is achieved when respondents are prepared to stop entrepreneurial opportunities, which are generally considered appropriate and desirable. Students have an obligation to develop their mindset so that their business can survive and grow. Five concepts of mindset that must be possessed to be an entrepreneur include a dare to take risks, look for new opportunities, action-oriented, continuous learning, and big vision ( Botsaris and Vamvaka, 2016 ; Davis et al., 2015 ; Magdaraog, 2015 ).

The contributions of this present study are three folds. First, it provides an insight into the existing literature on the entrepreneurship study by engaging entrepreneurial attitude and entrepreneurial mindset, which is missing in the prior studies. Despite the heightening studies on entrepreneurship study, however, the lack of study into an entrepreneurial mindset has been recently highlighted ( Cui et al., 2019 ). Second, the study of entrepreneurship education, self-efficacy, and entrepreneurial mindset in different areas are examined in Malaysia ( Pihie and Bagheri, 2013 ), Africa ( Puni et al., 2018 ), India ( Jena, 2020 ), while little attention scholars in the context of Indonesia. A prior study by Mahendra et al. (2017) concerned with entrepreneurial motivation and attitude, whilst Sihotang et al. (2020) focused on women entrepreneurship. Since the preliminary theory of self-efficacy by Bandura (1977) , this variable is widely considered in social psychological research. Some researchers have observed the mediating role of self-efficacy. For instance, Zhao et al. (2005) were the first scholar who examined the chain of causality with a focused on entrepreneurial self-efficacy and provided a discussing the mediation effect of self-efficacy and entrepreneurial mindset. For this reason, the last contribution of this study attempts to investigate the crucial role of entrepreneurial attitude and self-efficacy in explaining students' entrepreneurial mindset, which eventually leads to students in setting new ventures.

2. Theoretical review

2.1. entrepreneurship education.

Entrepreneurial education is a learning activity that discusses the enhancement of knowledge, skills, attitudes, and personal character related to entrepreneurship ( Hussain and Norashidah, 2015 ). Indeed, it is also narrated by Kirkwood et al. (2014) as the ability to reflect one's actions in support of learning. In this study, we use student reflection about their entrepreneurial learning as our data collection to understand entrepreneurial education. Entrepreneurship, like other disciplines, can be learned and developed in which activities that discuss and learn about entrepreneurship are published advancement knowledge, skills, attitudes, and characters that support the students' success.

The gesticulation of education approach from teacher-centered to learner-centered education enables students to enhance their critical thinking on entrepreneurship ( Commarmond, 2017 ). Students can also recognize the primary essential teaching approach after taking entrepreneurship courses, including providing a business practice, visiting company, interviewing a successful entrepreneur. This teaching technique, which applied contextual learning and providing a real experience instead of a theory, is considered as the most essential in enhancing their entrepreneurship and entrepreneurial skills ( Farny et al., 2016 ; Potishuk and Kratzer, 2017 ).

Entrepreneurship education at the university level should consider the appropriate teaching approach, which allows students to obtain first-hand experience about business together with practice. This entrepreneurial approach can improve students’ entrepreneurial mindset ( Ndou et al., 2018 ; Cui et al., 2019 ). By paying attention to the curriculum and techniques of teaching practical entrepreneurship courses to these students will form an even better entrepreneurial mindset. Bringing up these theories, numerous prior researchers have proposed on the nexus between entrepreneurship education, perception of self-efficacy and entrepreneurial attitude ( Abaho, 2017 ; Hassi, 2016 ; Lackéus, 2014 ; Lindberg et al., 2017 ; Pfeifer et al., 2016 ; Piperopoulos and Dimov, 2015 ; Denanyoh et al., 2015 ).

• H1. Entrepreneurial education positively influences self-efficacy
• H2. Entrepreneurial education positively influences entrepreneurial attitude
• H5. Entrepeneurial education influences entrepreneurial mindset

2.2. Entrepreneurial self-efficacy

Since the escalating study of the importance of cognition, some scholars have highlighted the role of self-efficacy as a variable in affecting individual behavior ( Pihie and Bagheri, 2010 ). The concept of self-efficacy is constructed from the social cognitive theory by Bandura (1977) and developed by Bandura (2012) , which demonstrated that individual behavior is devised by several activities, such as the interaction of intrapersonal, individuals involvement, and the circumstance. Interactions between these matters can shape an individual's belief in encompassing the ability to conduct certain behaviors in certain situations and their expectations of behavioral outcomes ( Pihie and Bagheri, 2013 ). The point is that self-efficacy, which is determined as a social-cognitive process, can explain the impact of individuals' knowledge and action in the form of attitude toward entrepreneurship.

Self-efficacy greatly affects the selection of human action regardless of the existence of alternatives, the amount of effort they spend to carry out the action, their perseverance in facing obstacles, and opportunities in taking action ( Pihie and Bagheri, 2013 ; Shane, 2004 ). Similarly, Bandura (2012) argued that self-efficacy is the essential factor that influences behavior through the process, goal setting, outcome expectations, and challenges in the circumstances. The underlying impact of entrepreneurial self-efficacy on individuals' behavior has driven researchers to examine the concept in the entrepreneurship subject ( Piperopoulos and Dimov, 2015 ; Zhao et al., 2005 ).

• H3: Entrepreneurial self-efficacy positively influences entrepreneurial attitude
• H4: Entrepreneurial attitude positively influences entrepreneurial mindset
• H6: Entrepreneurial self efficacy positively influences entrepreneurial mindset

2.3. The mediation role of entrepreneurial attitude and self-efficacy

The concept of mindset originates from the field of cognitive psychology. This mindset is influenced and studied by the knowledge of individuals who interact with the current environment ( Mathisen and Arnulf, 2012 ). Rita et al. (2000) stated that the entrepreneur mindset is the aptitude to feel, act, and motivate despite very uncertain situations. The enhancement of the mindsets is acquaintance with entrepreneurship education, which supports the proposed hypothesis. Prior studies have demonstrated the role of mediating self-efficacy ( Luthans and Ibrayeva, 2006 ). Additionally. Zhao et al. (2005) were among the first scholar who provided the chain of entrepreneurial self-efficacy and providing a discussion of a mediation role of self-efficacy toward entrepreneurial mindset. Additionally, a prior study believes that entrepreneurial self-efficacy can explain the relationship between perceived formal education, entrepreneurial experience, and entrepreneurial mindset ( Burnette et al., 2020 ).

• H7. Entrepreneurial education indirectly influences entrepreneurial mindset toward entrepreneurial attitude
• H8. Entrepreneurial self-efficacy indirectly influences entrepreneurial mindset toward entrepreneurial attitude

3. Materials and method

This study used a quantitative research method to acquire a detailed understanding of how entrepreneurial education can affect entrepreneurial mindset as well as understanding the mediating role of entrepreneurial attitude and entrepreneurial self-efficacy (see Figure 1 ). The approach adopted in this study is a convenience random sampling method, which widely used in entrepreneurship research. In total, approximately 390 students have participated in this quantitative research. After the validation process, we found that about 14 questionnaires were provided incompletely. However, 376 questionnaires proved useful for further analysis. Participants were recruited from several universities in Malang of East Java in Indonesia undergoing an online survey. Ethical approval was conducted from the Institutional Research Committee of Universitas Negeri Malang for all aspects of this research. In more detail, it consisted of two students in the five-year study, about eight students in the fourth-year study, and approximately a hundred participants of the third-year study. Additionally, it also involved students in the first-year and second-year study by approximately 2.6 percent and 2.4 percent, respectively. The demographics respondents were dominated by women instead of men with the percentage of 65 percent and 35 percent, respectively. The respondents came from the various subject studies, including economics, social sciences and humanities, sciences and engineering.

The theoretical framework.

The first couple of questions were designed to understand students' entrepreneurship education by adapting six indicators from Denanyoh et al. (2015) . Meanwhile, to measure entrepreneurial self-efficacy, we adapted four indicators from Zhao et al. (2005) . In addition, the entrepreneurial attitude was explained by five indicators by Liñán and Chen (2009) . Lastly, to understand the entrepreneurial mindset, researchers applied seven items from Mathisen and Arnulf (2013) . Participants were asked to respond using a 5-point Likert scale ranging from 1, indicating “strongly disagree” to 5 indicating “strongly agree”.).

The analysis data of this study was conducted in two folds: exploratory factor analysis and confirmatory factor analysis. The first analysis is aimed at validating, exploration data, maintaining indicators, and continuing a reliability test using SPSS (version 25) ( Allen and Bennett, 2010 ). The construct variable used in this study followed the criteria from Hair et al. (2006) , with the Cronbach alpha score of 0.6 and higher. The further test was the confirmatory factor analysis which calculated undergoing AMOS software (version 25). To achieve a fit model, this research adopted criteria and cut-off values from Schermelleh-Engel et al. (2003) (probability) p > 0.5, CMIN/DF of <2 ( Tabachnick and Fidell, 2007 ), and RMSEA of ≤0.06 ( Hu and Bentler, 1999 ).

4. Results and discussion

4.1. exploratory factor analysis.

Table 1 provides the result of the exploratory factor analysis of the variables studied. From the analysis, it can be seen that, in general, there are 14 factors, including entrepreneurship education (3), entrepreneurial self-efficacy (3), entrepreneurial attitude (4), and entrepreneurial mindset (4). Also, it can be known that all variables has Cronbach's alpha score which ranging from 0.599 to 0.975, and it can be concluded reliable for the next analysis.

Table 1

The summary of exploratory factor analysis test.

4.2. Hypotheses testing

Based on the Structural Equation Modeling (SEM) calculations, a fitting model was calculated with a probability value of 0.095, a CMIN/DF score of 1233, a CFI score of 0.996, and an RMSEA score of 0.025. As illustrated in Table 2 , it can be known that H 1 , H 3 , H 4 , H 5 , H 7 and H 8 are categorized significant with C.R scores of 10.670, 8.596, 4.402, 3.837, 2.380, 3.380, 3.918, and 0.466, respectively. This score indicates significance ( Hair et al., 2020 ). In contrast, H 2 and H 6 were not significant with C.R scores of 2.830 and 1.875 (See Table 2 and Figure 2 ).

Table 2

Theoretical Framework Testing.

The result of structural equation model.

5. Discussion

This study addressed eight hypotheses proposed through structural equation modeling. It is interesting to note that this study confirms seventh hypotheses proposed and rejects one hypothesis. In more detail, the first hypothesis of this study indicates that entrepreneurship education positively affects entrepreneurial self-efficacy. The finding of this research is in agreement with antecedent studies by Ao and Liu (2014) ; Küttim et al. (2014) ; Mahendra et al. (2017) ; Godwin et al. (2016) ; Neck and Greene (2011) ; Opoku-antwi (2012) ; Denanyoh et al. (2015) ; Pihie and Bagheri (2013) ; Shane (2004) , Bandura (2012) ; Piperopoulos and Dimov (2015) ; Wolters et al. (1996) ; Zhao et al. (2005) . The university provides knowledge about entrepreneurship that makes students capable and experts in business subject. The enhancement of this entrepreneurship education model is supported by a curriculum that has been prepared. This condition will bring to an entrepreneurial atmosphere in the universities and lead to entrepreneurial self-efficacy. The increase is proven by students' ability to identify business opportunities or new ventures. They have also been able to think more creatively and are able to commercialize new ideas in the form of product development. Lastly, the use of the internet by utilizing YouTube tutorials and e-commerce networks will enhance students' entrepreneurial self-efficacy.

The second hypothesis is mentioned that is a positive impact between entrepreneurship education and attitudes toward entrepreneurship. This finding supports numerous study by Ao and Liu (2014) ; Küttim et al. (2014) ; Mahendra et al. (2017) ; Godwin et al. (2016) ; Neck and Greene (2011) ; Opoku-antwi (2012) ; Denanyoh et al. (2015) ; Elfving (2008) ; Díaz-García and Jiménez-Moreno (2010) ; Guerrero et al. (2008) ; Liñán et al. (2011) ; Ajzen and Fishbein (1997) ; Eagly and Chaiken (1993) ; Fini et al. (2012) ; Botsaris and Vamvaka (2016) ; Mahendra et al. (2017) ; Pihie and Bagheri (2013) . The fundamental reason is that the university support in developing expertise in entrepreneurship that is sufficiently utilized by students. This result is logical due to a number of previous studies mentioned that entrepreneurship education can image the students' mindset, attitudes, and behavior of being entrepreneurs and drive them to choose a career as an entrepreneur. Moreover, entrepreneurship education allows students to have both a theoretical foundation on the concept of entrepreneurship and attitudes, behaviors, and mindset of being an entrepreneur. This is an investment in human capital to prepare students to start a new business through experience integration, skills advancement, and knowledge, which essential to developing and expanding a business.

Third, this present finding seems to be consistent, which remarked that a positive correlation between entrepreneurial self-efficacy and entrepreneurial attitude. This result agrees with inevitable previous studies by Pihie and Bagheri (2013) ; Shane (2004) ; Bandura (2012) ; Piperopoulos and Dimov (2015) ; Wolters et al. (1996) ; Zhao et al. (2005) ; Elfving (2008) ; Ajzen (1991) ; Díaz-García and Jiménez-Moreno (2010) ; Guerrero et al. (2008) ; Liñán et al. (2011) ; Ajzen and Fishbein (1997) ; Eagly and Chaiken (1993) ; Fini et al. (2012) ; Botsaris and Vamvaka (2016) ; Mahendra et al. (2017) ; Pihie and Bagheri (2013) . In this study, students have started to having a compentency to identify business opportunities by engaging in an online shop that is currently more familiar with using all e-commerce facilities. By following these conditions, they think creatively and learn to increase their ability to commercialize new ideas and modify products currently trending and have good market opportunities. Students are starting to be interested in choosing careers to become entrepreneurs because of the several choices available. It is reasonable because students are more satisfied since they have been able to be independent without relying on a company that is only an employee. Students also hope they can employ human resources or other resources in starting entrepreneurship.

Fourth, the result additionally revealed that entrepreneurial attitude positively impacts entrepreneurial mindset. These results corroborate the findings of a great deal of the previous work by Elfving (2008) ; Ajzen (1991) ; Díaz-García and Jiménez-Moreno (2010) ; Guerrero et al. (2008) ; Liñán et al. (2011) ; Ajzen and Fishbein (1997) ; Eagly and Chaiken (1993) ; Fini et al. (2012) ; Botsaris and Vamvaka (2016) ; Mahendra et al. (2017) ; Pihie and Bagheri (2013) ; Mathisen and Arnulf (2012) ; Rita et al. (2000) ; Shepherd et al. (2010) ; McMullen and Kier (2016) ; Schmidt and Ford (2003) ; Cui et al. (2019) ; Haynie et al. (2010) ; Kouakou et al. (2019) . Students choose an entrepreneur as the first career because they will be more satisfied by being able to choose the opportunities that exist. They feel happy when they can empower all aspects of resources, which is realized by starting to learn entrepreneurship in practical ways. This shows that the current entrepreneurial mindset of students has considered the positive and negative aspects of engaging in entrepreneurship. This consideration is because they still have less time to be able to practice entrepreneurial activities. With the better ability of students in Information Technology and the knowledge, they get in entrepreneurship courses. Therefore, they are easier to find information on the advantages and disadvantages of doing business activities. Moreover, with the online shop technology facility, the involvement of students is more practical in running their business that is not limited by time and space.

Fifth, the study indicated that entrepreneurship education influences on the entrepreneurial mindset. This corroborates with the previous entrepreneurship literature by Küttim et al. (2014) ; Mahendra et al. (2017) ; Godwin et al. (2016) ; Neck and Greene (2011) ; Opoku-antwi (2012) ; Denanyoh et al. (2015) ; Mathisen and Arnulf (2012) ; Rita et al. (2000) ; Shepherd et al. (2010) ; McMullen and Kier (2016) ; Schmidt and Ford (2003) ; Cui et al. (2019) ; Haynie et al. (2010) ; Kouakou et al. (2019) . By conducting an Entrepreneurial Education conditioning at the university for entrepreneurship courses that have applied to learn theoretically and practically. At present, the university has developed creative ideas and the development of knowledge about entrepreneurship to improve entrepreneurial skills. This has a positive impact on the entrepreneurial mindset of students who currently have been able to make consideration of both positive and negative aspects of business activities. Students also choose to do business because they have time available in entrepreneurial activities. With the support of the growing development of technology information, they have monitored the advantages and disadvantages of their business.

This sixth hypothesis in this study sought to determine the impact of entrepreneurial self-efficacy and entrepreneurial mindset. However, the finding showed that entrepreneurial self-efficacy unsuccessful in affecting students' entrepreneurial mindset. The result of the present study has been unable to explain the relationship between variables. This findings is in contrast with the major research by Pihie and Bagheri (2013) ; Shane (2004) ; Bandura (2012) ; Piperopoulos and Dimov (2015) ; Wolters et al. (1996) ; Zhao et al. (2005) ; Mathisen and Arnulf (2012) ; Rita et al. (2000) ; Shepherd et al. (2010) ; McMullen and Kier (2016) ; Schmidt and Ford (2003) ; Cui et al. (2019) ; Haynie et al. (2010) ; Kouakou et al. (2019) . A possible explanation for this result is that the students may partly explain that these relationships were unable to create original new products instead of developing existing products. This is due to the fact that students are still constrained by financial resources and have not been able to create new business ideas where they are still unable to carefully consider the chosen business choices that are in accordance with their competencies. They still have an Entrepreneurial Mindset that still needs to be developed further by providing more comprehensive training.

Seventh, this study found that entrepreneurial attitude mediates entrepreneurial education and students' mindset. This finding broadly supports the work of other studies by Godwin et al. (2016) ; Neck and Greene (2011) ; Opoku-antwi (2012) ; Denanyoh et al. (2015) ; Ajzen (1991) ; Díaz-García and Jiménez-Moreno (2010) ; Guerrero et al. (2008) ; Liñán et al. (2011) ; Mathisen and Arnulf (2012) ; Rita et al. (2000) ; Shepherd et al. (2010) ; McMullen and Kier (2016) ; Schmidt and Ford (2003) . This outcome implies that currently, students do business with the provision of entrepreneurial education carried out at universities in the form of education and training. Therefore, this has the impact of entrepreneurial mindset students become a person who has an entrepreneurial mindset: alertness to opportunities, risk tendencies, tolerance for ambiguity, and optimism in doing business. With entrepreneurial education, it can form an entrepreneurial attitude and form a better Entrepreneurial Mindset.

Lastly, the result of this study showed that an indirect positive impact between entrepreneurial self-efficacy and entrepreneurial mindset through entrepreneurial attitude. This finding is in accord with recent studies by Pihie and Bagheri (2013) ; Shane (2004) , Bandura (2012) ; Piperopoulos and Dimov (2015) ; Wolters et al. (1996) ; Eagly and Chaiken (1993) ; Fini et al. (2012) ; Botsaris and Vamvaka (2016) ; Mahendra et al. (2017) ; Pihie and Bagheri (2013) ; Cui et al. (2019) ; Haynie et al. (2010) ; Kouakou et al. (2019) . In conditions with Entrepreneurial Self Efficacy owned by students, making students have reasonably good entrepreneurship attitudes. This will directly impact the formation of an entrepreneurial mindset from better students.

6. Conclusion and recommendation

This study is aimed at investigaing the impact of entrepreneurial education toward an entrepreneurial mindset as well as understanding the mediating role of self-efficacy and attitude. From this study, it can be confirmed that entrepreneurship education can influence entrepreneurial self-efficacy, entrepreneurial attitude and entrepreneurial mindset. On the other hand, entrepreneurial self-efficacy successfully impacts entrepreneurial attitude instead of the entrepreneurial mindset. Also, the entrepreneurial attitude positively affects students' entrepreneurial mindset. Furthermore, entrepreneurial attitude plays a vital role in mediating both entrepreneurship education and entrepreneurial self-efficacy to students' entrepreneurial mindset.

These findings suggest that, first, the university needs to change the curriculum of entrepreneurship courses by bringing practitioners as instructors, conducting fieldwork with more compositions than theories in the classroom. Second, the university provides assistance to students in making new products by facilitating several supporting activities, including business capital, in financial matters. Furthermore, the need for attitudes towards entrepreneurship students in their business is expected to create a more profitable business financial condition by making efficiency in several production aspects while still producing the best quality products. Lastly, the university makes support to students in forming an entrepreneurial mindset. Although data were collected in several state universities, the findings cannot be generalized to represent real conditions in all the university students. Future research needs to involve public and private universities in Indonesia so that research results are more diverse and generalizable.

Declarations

Author contribution statement.

L. W. Wardana: Conceived and designed the experiments; Contributed reagents, materials, analysis tools or data; Wrote the paper.

B. S. Narmaditya: Conceived and designed the experiments; Wrote the paper.

A. Wibowo: Performed the experiments; Analyzed and interpreted the data; Wrote the paper.

A. M. Mahendra: Conceived and designed the experiments; Analyzed and interpreted the data.

N. A. Wibowo, G. Harwida: Performed the experiments; Contributed reagents, materials, analysis tools or data.

A. N. Rohman: Analyzed and interpreted the data.

Funding statement

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Competing interest statement

The authors declare no conflict of interest.

Additional information

No additional information is available for this paper.

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2024 IEEE International Conference on Acoustics, Speech and Signal Processing

• Welcome Message
• Organizing Committee
• Conference Policies

Important Dates

• Call for Papers
• Call for Special Sessions
• Call for Satellite Workshops
• Call for SP Grand Challenges
• Call for Tutorials
• Call for Short Courses
• Call for Show & Tell Demos
• Call for Industry Colloquiums
• Call for Spotlight Talks
• Call for Enterpreneurship Forum
• Submit ICASSP Conference Paper
• ICASSP Paper Guidelines
• OJSP/ICASSP Submission
• SPS Journal Presentation Requests
• Student Volunteer Program
• Program at A Glance
• Program Schedule
• Plenary Talks (Morning)
• Plenary Talks (Afternoon)
• Innovation Forum
• SP Grand Challenges
• Satellite Workshops
• Education Short Courses
• Show & Tell Demos

SPS Entrepreneurship Forum

• Spotlight Talks & Colloquiums
• Industry Workshop
• Signal Processing Cup
• 5-Minute Video Clip Contest
• Student Job Fair & Luncheon
• Young Professionals Networking
• Author Ethics and IEEE Author Tools
• Women in Signal Processing Luncheon
• Micro Mentoring Experience Program (MiME)
• IEEE PROGRESS Events
• AI Panel Series
• Climate Change Interactive
• Social Programs
• Seoul, Korea
• Tour Program
• Patrons & Exhibitors
• Editorial Policies

Date: 14 April 2024 Venue: Same location as ICASSP 2024

Entrepreneurship Forum Organizing Committee

Sanghoon Lee Yonsei University (Korea)

Eliathamby Ambikairajah UNSW (Australia)

Shoko Araki NTT Communications Science Laboratories (Japan)

Siqi Cai National University of Singapore (Singapore)

Haizhou Li National University of Singapore (Singapore)

Jiwoo Kang Sookmyung Women’s University (Korea)

Taewan Kim Dongduk Women’s University (Korea)

Theme of Entrepreneurship Forum: Exploring Entrepreneurship: From Idea to Startup Success

About the 3 rd SPS Entrepreneurship Forum at ICASSP 2024

Welcome to the 3rd Signal Processing Society (SPS) Entrepreneurship Forum at ICASSP 2024! We are thrilled to announce that this time, we will be gathering in the dynamic city of Seoul, Korea. Building on the successes of our inaugural event held in Singapore in 2022 and the 2nd SPS Entrepreneurship Forum that took place in Greece in 2023, the third forum is set to bring together a diverse group of professionals, including seasoned entrepreneurs, visionary startup founders, signal processing researchers, and investors.

The aim of this 1-day event is to promote entrepreneurship amongst the signal processing community by:

• Sharing entrepreneurship journeys,
• Discussing challenges and opportunities in translating signal processing research into commercial applications,
• Providing a platform for pitching and receiving valuable feedback from experts.
• Training a new generation of signal processing entrepreneurs.

Join us as we come together to share valuable insights, nurture collaborations, and ignite inspiration for the next generation of signal processing entrepreneurs.

Registration

For registration fees and details check through

Call for Pitch Competition Proposals: 3rd SPS Entrepreneurship Forum   at ICASSP 2024  

We are calling for ICASSP attendees and others with the early-stage companies to join us for this exciting startup Pitch Competition!

The Signal Processing Society (SPS) is soliciting proposals for a Pitch Competition, a part of the SPS Entrepreneurship Forum at ICASSP 2024. This   1-day event held before the ICASSP conference, aims to foster entrepreneurship within the signal processing and information technology community.

Pitch Competition Details:

The Pitch Competition is designed to highlight and promote the next generation of signal processing entrepreneurs and their startups. It will be a key event at the Entrepreneurship Forum that will be held in Seoul, South Korea:

Date: Sunday, 14 April 2024, in-person in Seoul, South Korea.

Prizes: Winner – $5,000 (USD), Runner-up – $2,000 (USD).

Submit your pitch video proposals of no more than 5 minutes https://www.asianlp.sg/conferences/entforum2024/wp/pitch-video-proposal-upload/   by Monday 26 February 2024. Your pitch proposals should clearly explain the value proposition of your startup including who your customers are and how your product satisfies their needs.

The best five pitches will be chosen to present live at the Entrepreneurship Forum on Sunday 14 April 2024

• Pitch video proposals due Monday 26 February 2024
• Successful shortlist notified by Monday 11 March 2024
• Live pitch on Sunday 14 April 2024

Contact Information

• Sanghoon Lee, Academic Chair of SPS Entrepreneurship Forum at ICASSP 2024, Professor of Yonsei University, Seoul, Korea ( slee@yonsei.ac.kr )
• Shoko Araki, Industry Innovation (Forum) at ICASSP 2024, Senior Research Scientist of NTT Communications Science Laboratories, Kyoto, Japan (araki.shoko@ieee.org)

EliathambyAmbikairajah, Industry Chair of SPS Entrepreneurship Forum at ICASSP 2024, Professor ofUNSW,Sydney, Australia (e.ambikairajah@unsw.edu.au)  

About ICASSP 2024

The 49th edition of the International Conference on Acoustics, Speech, & Signal Processing (ICASSP) will be held in Seoul, Korea from 14-19 April 2024. The programme will include keynotes by pre-eminent international speakers, cutting-edge tutorial topics, SP Grand Challenges, and forward-looking special sessions. ICASSP also provides a great networking opportunity with a wide range of like-minded professionals from academia.