Understanding the Role of Entrepreneurship for Economic Growth, 1976-2000

Throughout the first three-quarters of the last century, the economies of scale and scope present in production, distribution, management and R&D dictated increasing firm size (Chandler, 1990). Moreover, the growing but relatively low level of economic development went together with high price elasticities stimulating price competition that again favoured large scale production. Statistical evidence points towards an increasing presence and role of large enterprises in the economy during this period (Caves, 1982; Teece, 1993; Brock and Evans, 1989). This development towards large-scale activity was visible in most of the OECD countries (Audretsch, Thurik, Verheul and Wennekers, 2002). The importance of entrepreneurship and small business seemed to be fading. At the same time it was recognized that the small business sector was in need of protection for both social and political reasons, but not on the grounds of economic efficiency (Audretsch and Thurik, 2000).