High-tech Entrepreneurship and Total Factor Productivity: the Case of Innovation-Driven Economies

This article aims to shed light on the relationship between total factor productivity (TFP) growth and high-tech entrepreneurship in a group of innovation-driven economies during the period 2007-2014. In this regard, we outline a panel data analysis method. For measuring high-tech entrepreneurship, we consider proportion of early-stage entrepreneurs and established business owners in high or medium technology sectors provided by the Global Entrepreneurship Monitor. Based on the Global Competitiveness Report 2014-2015, business sophistication and innovation are considered control variables. Our findings reveal a non-linear high-tech entrepreneurship-TFP growth relationship in an innovation-driven context after the inclusion of control variables. A disappointing finding is that business sophistication and innovation exert negative impacts on TFP growth. Policy makers should put in place a whole new policy approach accordingly. Policies facilitating innovative start-ups are an important tool to enhance knowledge diffusion and stimulate productivity growth.