Innovative activity and entrepreneurial rates in Mexico

Abstract

The examination of entrepreneurial rates can provide information on the contribution of innovative activity to the local economy, given the functions of project selection and risk assessment. The goal of this paper is to evaluate entrepreneurial dynamics. Our hypothesis is that greater innovation activity offers more business opportunities, creating groups of entrepreneurs who will positively contribute to local economies. The GMM estimation was conducted by a dynamic panel with data from the 32 Mexican states from the 2005-2014 period. It was found that innovative activity, measured based on patenting and FDI, fosters the emergence of business-to-business (B2B) entrepreneurs. A significant innovation impact when grouping all entrepreneurs (consumers and industrial B2B markets) was not found. However, all entrepreneurs contributed positively as entrepreneurial capital to a greater per capita GDP. These results contribute to the literature on entrepreneurship and developing economies.