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Entrepreneurial Regions: Do Macro-Psychological Cultural Characteristics of Regions Help Solve the "Knowledge Paradox" of Economics?

Obschonka M, Stuetzer M, Gosling SD, Rentfrow PJ, Lamb ME, Potter J, Audretsch DB - PLoS ONE (2015)

Bottom Line: However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates).A series of nine additional robustness checks underscored the robustness of these results.Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries.

View Article: PubMed Central - PubMed

Affiliation: Department of Psychology, Saarland University, Saarbrücken, Germany.

ABSTRACT
In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this "knowledge paradox" has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that "hidden" regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on "hidden" regional differences in entrepreneurial culture. To capture such "hidden" regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.

No MeSH data available.


Related in: MedlinePlus

Interaction plots from OLS regression: Industry diversity X Entrepreneurial culture.(A) Fig 2A (top): US, N = 366. (B) Fig 2B (bottom): GB, N = 375.
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pone.0129332.g002: Interaction plots from OLS regression: Industry diversity X Entrepreneurial culture.(A) Fig 2A (top): US, N = 366. (B) Fig 2B (bottom): GB, N = 375.

Mentions: Table 1 shows the main results from OLS regressions in US regions (Models 1–3) and GB regions (Models 4–6). The models have a high explanatory power by explaining more than 60% of the regions’ variation in entrepreneurship rates. All regressions are weighted by the number of respondents per region in the personality data set, cf., [4]. As shown in Model 1 for the US and Model 4 for GB, human capital had a significant main effect on entrepreneurship rates in the US (B = .19, β = .16, P = .016) but not in GB (B = -.24, β = -.06, P = .142). Also industry diversity had a positive main effect on entrepreneurship rates in the US (B = .34, β = .32, P = .000) but not in GB (B = .23, β = .05, P = .104). Entrepreneurial culture had a significant main effect on entrepreneurship rates in both countries (US: B = .22, β = .15, P = .000; GB: B = .92, β = .20, P = .000). In the next step we test for the hypothesized interaction effects. The interaction between the entrepreneurial culture and the knowledge-creation indexes (human capital: Model 2 for US and Model 5 for GB; industry diversity: Model 3 for US and Model 6 for GB) was significant in both countries (US human capital: B = .11, β = .08, P = .038; US industry diversity: B = .19, β = .18, P = .000; GB human capital: B = .53, β = .15, P = .000; GB industry diversity: B = .54, β = .13, P = .000). Consistent with predictions, in both countries the local entrepreneurship rate was highest when high human capital came together with an entrepreneurial culture (Fig 1) and when high industrial diversity came together with an entrepreneurial culture (Fig 2). In fact, the positive effects of human capital and industry diversity are substantially weaker or even vanish in regions where the entrepreneurial culture is weak.


Entrepreneurial Regions: Do Macro-Psychological Cultural Characteristics of Regions Help Solve the "Knowledge Paradox" of Economics?

Obschonka M, Stuetzer M, Gosling SD, Rentfrow PJ, Lamb ME, Potter J, Audretsch DB - PLoS ONE (2015)

Interaction plots from OLS regression: Industry diversity X Entrepreneurial culture.(A) Fig 2A (top): US, N = 366. (B) Fig 2B (bottom): GB, N = 375.
© Copyright Policy
Related In: Results  -  Collection

License
Show All Figures
getmorefigures.php?uid=PMC4476658&req=5

pone.0129332.g002: Interaction plots from OLS regression: Industry diversity X Entrepreneurial culture.(A) Fig 2A (top): US, N = 366. (B) Fig 2B (bottom): GB, N = 375.
Mentions: Table 1 shows the main results from OLS regressions in US regions (Models 1–3) and GB regions (Models 4–6). The models have a high explanatory power by explaining more than 60% of the regions’ variation in entrepreneurship rates. All regressions are weighted by the number of respondents per region in the personality data set, cf., [4]. As shown in Model 1 for the US and Model 4 for GB, human capital had a significant main effect on entrepreneurship rates in the US (B = .19, β = .16, P = .016) but not in GB (B = -.24, β = -.06, P = .142). Also industry diversity had a positive main effect on entrepreneurship rates in the US (B = .34, β = .32, P = .000) but not in GB (B = .23, β = .05, P = .104). Entrepreneurial culture had a significant main effect on entrepreneurship rates in both countries (US: B = .22, β = .15, P = .000; GB: B = .92, β = .20, P = .000). In the next step we test for the hypothesized interaction effects. The interaction between the entrepreneurial culture and the knowledge-creation indexes (human capital: Model 2 for US and Model 5 for GB; industry diversity: Model 3 for US and Model 6 for GB) was significant in both countries (US human capital: B = .11, β = .08, P = .038; US industry diversity: B = .19, β = .18, P = .000; GB human capital: B = .53, β = .15, P = .000; GB industry diversity: B = .54, β = .13, P = .000). Consistent with predictions, in both countries the local entrepreneurship rate was highest when high human capital came together with an entrepreneurial culture (Fig 1) and when high industrial diversity came together with an entrepreneurial culture (Fig 2). In fact, the positive effects of human capital and industry diversity are substantially weaker or even vanish in regions where the entrepreneurial culture is weak.

Bottom Line: However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates).A series of nine additional robustness checks underscored the robustness of these results.Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries.

View Article: PubMed Central - PubMed

Affiliation: Department of Psychology, Saarland University, Saarbrücken, Germany.

ABSTRACT
In recent years, modern economies have shifted away from being based on physical capital and towards being based on new knowledge (e.g., new ideas and inventions). Consequently, contemporary economic theorizing and key public policies have been based on the assumption that resources for generating knowledge (e.g., education, diversity of industries) are essential for regional economic vitality. However, policy makers and scholars have discovered that, contrary to expectations, the mere presence of, and investments in, new knowledge does not guarantee a high level of regional economic performance (e.g., high entrepreneurship rates). To date, this "knowledge paradox" has resisted resolution. We take an interdisciplinary perspective to offer a new explanation, hypothesizing that "hidden" regional culture differences serve as a crucial factor that is missing from conventional economic analyses and public policy strategies. Focusing on entrepreneurial activity, we hypothesize that the statistical relation between knowledge resources and entrepreneurial vitality (i.e., high entrepreneurship rates) in a region will depend on "hidden" regional differences in entrepreneurial culture. To capture such "hidden" regional differences, we derive measures of entrepreneurship-prone culture from two large personality datasets from the United States (N = 935,858) and Great Britain (N = 417,217). In both countries, the findings were consistent with the knowledge-culture-interaction hypothesis. A series of nine additional robustness checks underscored the robustness of these results. Naturally, these purely correlational findings cannot provide direct evidence for causal processes, but the results nonetheless yield a remarkably consistent and robust picture in the two countries. In doing so, the findings raise the idea of regional culture serving as a new causal candidate, potentially driving the knowledge paradox; such an explanation would be consistent with research on the psychological characteristics of entrepreneurs.

No MeSH data available.


Related in: MedlinePlus