The creative economy, innovation and entrepreneurship: an empirical examination

Abstract

We analyze the interrelationships among entrepreneurship, innovation and the creative economy. Ordinarily the word ‘entrepreneurship’ implies financial (or commercial) enterprise undertaken with a profit motive whereas the phrase ‘social entrepreneurship’ implies, on average, a non-profit activity undertaken to improve a particular societal unfavourable condition or ill. The word ‘innovation’ implies an improved or new idea, product, production technology or any one of the myriad of business processes. The word ‘creative’ is perhaps the most nebulous and accommodates a variety of meanings. In finance and economics, however, the word ‘creative’ imparts a specific meaning in the sense of knowledge-based and traditional artisan-based craft products and services. We use a sample of 160 countries of the world for an empirical examination of the relationships among these three concepts. The results demonstrate that social entrepreneurship and the creative economy vary systematically across the sample countries and they are positively associated. In two subsamples, the creative economy is positively associated with the rule-of-law and market-size. The results explain more than three-quarters of the variability in the creative economy and suggest that the creative economy can change and develop over time as societies build the institutions for fostering social entrepreneurship and social innovation.