Abstract
Using recent data drawn from the European Working Conditions Survey for 32 European countries, we explore the relationship between country-level expenditures on R&D, Intellectual Property Rights (IPR), and individual-level entrepreneurial performance as measured by earnings. Our results show that both R&D expenditures and IPR are positively associated with earnings (and hence the quality) of individual entrepreneurs. However, we also find an intriguing moderation effect in the sense that IPR reduces the positive relationship between country R&D and entrepreneurial earnings. This suggests that too strict IPR legislation may hamper the diffusion of knowledge created by R&D. Hence, governments need to carefully consider the level of IPR they want to install, especially in countries with high R&D expenditures.
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Notes
Other market failures (in the form of entry barriers) include high risks and sunk costs, scientific, technological and market uncertainty, and unavailability of appropriate financing (European Commission 2017).
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This figure varies substantially across European countries and is correlated with the level of economic development of the country’s economy. Thus, this figure rises above 2.5% in countries like Sweden, Austria, Germany, Denmark, and Finland. By contrast, this figure lies below 1% in countries such as Poland, Turkey, and Slovakia, Romania and Latvia (OECD 2018). This large cross-country variation can also be observed in Table 1 in Sect. 3.3.
Note that the present paper focuses on high-income (i.e. European) countries.
This set includes the EU-28 together with 5 candidate countries (Albania, the Former Yugoslav Republic of Macedonia, Montenegro, Serbia and Turkey) and 2 EFTA countries (Norway and Switzerland).
The interviewer is asked to explain, if necessary, that net monthly earnings are the earnings at one’s disposal after taxes and social security contributions.
PPS is the technical term used by Eurostat for the common (artificial) currency in which national accounts aggregates are expressed when adjusted for price level differences using PPPs. Thus, PPPs can be interpreted as the exchange rate of the PPS against the €.
The WEF-EOS draws on the views of over 14000 executives in over 140 economies and captures valuable information on a broad range of factors that are critical for a country’s competitiveness and sustainable development, and for which data sources are scarce or, frequently, non-existent on a global scale. Among several examples of otherwise unavailable data are the quality of the educational system, indicators measuring business sophistication, and labor market variables such as flexibility in wage determination. The Survey results are used in the calculation of the Global Competitiveness Index (GCI) and other indexes of the WEF. Further information about WEF can be found at https://www.weforum.org. Further information about the GCI can be found at https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018.
Results concerning the situation when the IPP indicator is above 4.62 can be achieved by adding marginal effects associated with GERD and the interaction term in Model 4 (i.e. 7.49–4.21). .
Further information about the EFW index can be found at https://www.fraserinstitute.org/economic-freedom/approach. Further information about the Fraser Institute can be found at https://www.fraserinstitute.org.
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Acknowledgements
All authors contributed equally to the manuscript. The authors would like to thank Andrew Burke, the guest editors—Maribel Guerrero and David Urbano—, and two anonymous reviewers for their insightful comments that contributed substantially to the development of this paper. This paper is part of Serhiy Lyalkov’s doctoral dissertation, which has been written under the framework of the PhD Program in Economics, Business, Finance and Computer Science at the University of Huelva and the International University of Andalusia, Spain.
Funding
This work was supported by the Spanish Ministry of Economy and Competitiveness (Ministerio de Economía y Competitividad) under Grants number ECO2017-86305-C4-2-R and ECO2017-86402-C2-2-R; Regional Government of Andalusia (Junta de Andalucía) through Research Group SEJ-487 (Spanish Entrepreneurship Research Group—SERG); and University of Huelva through Research and Transfer Policy Strategy (Estrategia de Política de Investigación y Transferencia) 2018.
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Appendix: Variable definitions
Appendix: Variable definitions
Variable | Description |
|---|---|
Dependent variables | |
Earnings | |
Net monthly earnings -PPP $ of 2015 (logs) | Average net earnings in recent months. The variable is defined in PPP $ of 2015 and converted to natural logarithms. |
Main independent variables | |
Hypotheses related variables | |
GERD PPS per inhab. | Gross Domestic Expenditure on R&D by business enterprises, higher education institutions, as well as government and private non-profit organisations. Data for periods 2010 and 2015 are used. The variable is expressed as Purchasing Power Standards—PPS—per inhabitant at constant 2005 prices (Data source: Eurostat). |
IPP | Intellectual Property Protection indicator. Data for periods 2010 and 2015 are used. The variable is evaluated on a scale of 1 to 7, from extremely weak to extremely strong protection (Data source: World Economic Forum’s Executive Opinion Survey). |
Strict IPP | Dummy equals 1 for observations corresponding to countries which’ IPP is above 4.62, this benchmark being the unweighted average IPP for the 32 countries in our sample during the periods 2010 and 2015 (Data source: World Economic Forum’s Executive Opinion Survey). |
Control variables | |
Entrepreneurship types | |
Self-employed with employees | Dummy equals 1 for workers who declare being self-employed with employees. |
Own-account self-employed worker | Dummy equals 1 for individuals who declare being self-employed without employees |
Educational attainment | |
Basic education | Dummy equals 1 for workers with less than lower secondary education (ISCED-1997, 0–1). |
Secondary education | Dummy equals 1 for workers with, at least, lower secondary education but non-tertiary education (ISCED-1997, 2–4). |
Tertiary education | Dummy equals 1 for workers with tertiary education (ISCED-1997, 5–6). |
Job aspects | |
Tenure | Years of experience in the company or organization. |
Working hours | Working hours per week. |
Business sector dummies | |
Agriculture | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is A = Agriculture, forestry and fishing. |
Industry | Dummy equals 1 for workers whose codes of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) are B = Mining and quarrying, C = Manufacturing, D = Electricity, gas, steam and air conditioning supply, and E = Water supply; sewerage, waste management and remediation activities. |
Construction | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is F = Construction. |
Commerce and hospitality | Dummy equals 1 for workers whose codes of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) are G = Wholesale and retail trade; repair of motor vehicles and motorcycles, and I = Accommodation and food service activities. |
Transport | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is H = Transportation and storage. |
Financial services | Dummy equals 1 for workers whose codes of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) are K = Financial and insurance activities, and L = Real estate activities. |
Public administration and defence | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is O = Public administration and defence; compulsory social security. |
Education | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is P = Education. |
Health | Dummy equals 1 for workers whose code of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) is Q = Human health and social work activities. |
Other services | Dummy equals 1 for workers whose codes of main activity of the local unit of the business, by means of the Nomenclature of Economic Activities (NACE rev. 2, 2008) are J = Information and communication, M = Professional, scientific and technical activities, N = Administrative and support service activities, R = Arts, entertainment and recreation, S = Other service activities, T = Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use, and U = Activities of extraterritorial organisations and bodies. |
Demographic characteristics | |
Female | Dummy equals 1 for females. |
Immigrant | Dummy equals 1 for citizens of a different country from that of residence. |
Age | Age reported by the workers. |
Cohabiting | Dummy equals 1 for individuals cohabiting with spouse/partner. |
Children under 14 | Dummy equals 1 for individuals cohabiting with any son or daughter aged under 14. |
Health | Variable ranging from 1 to 5. The scale refers to the level of health declared by the worker. It equals 1 for individuals whose health is very bad and 5 for individuals whose health is very good. |
Business cycle | |
Unemployment rate | National annual unemployment rate for periods 2010 and 2015 (source: Eurostat, World Bank). |
Wave | |
2015 | Dummy equals 1 for observations corresponding to the EWCS 2015 and 0 for observations corresponding to the EWCS 2010. |
Country dummies | 32 dummies equaling 1 for individuals living in the named country: Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey and the United Kingdom. |
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van Stel, A., Lyalkov, S., Millán, A. et al. The moderating role of IPR on the relationship between country-level R&D and individual-level entrepreneurial performance. J Technol Transf 44, 1427–1450 (2019). https://doi.org/10.1007/s10961-019-09731-2
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DOI: https://doi.org/10.1007/s10961-019-09731-2