Entrepreneurship as a Predictive Factor for Employment and Investment: the Case of Selected European Countries
Entrepreneurship as a Predictive Factor for Employment and Investment: the Case of Selected European Countries

Summary/Abstract: The link between entrepreneurship and economic prosperity has continuously been pointed out by researchers and government institutions. Several studies have proven that a clear relationship between entrepreneurship, economic growth and development (positive in many instances) exist. Within the broader context of growth and development, various other variables also play a significant role such as employment and investment amongst others. The objective of this study was, therefore, to determine the relationship between entrepreneurship, employment and domestic investment specifically focussing on selected European countries (Austria, Croatia, Hungary, Poland and Slovenia). The study made use of a quantitative empirical approach (econometric analysis) using secondary data from 2001 to 2019. Countries were selected based on their homogeneous traits and availability of data. Both, long and short- run relationships between various entrepreneurial variables, employment and investment were tested using a pooled panel analysis. Results indicated a long-run relationship between the variables by using the Fisher-Johansen cointegration analysis. Long-run results via the FMOLS and DOLS econometric models, confirmed the results as estimated in the Fisher-Johansen cointegration tests. It was found that both early entrepreneurial activity (TEA) and established business ownership (EBO) are significant predicators of employment and domestic investment. In the short-run via a Granger causality tests, all of the independent variables of entrepreneurial intentions (EI), TEA and EBO were found to cause changes in employment, while only EBO causes changes in domestic investment. In conclusion, the study proved that links between the mentioned variables do exist and that entrepreneurial activity should be stimulated and supported as it has a significant impact on employment and domestic investment.

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