The neoclassical model of the production function, as applied by Robert Solow to build the neoclassical model of growth, linked labor and capital to output. More recently, Romer and others have expanded the model to include measures of knowledge capital. In this paper we introduce a new factor, entrepreneurship capital, and link it to output in the context of a production function model. This paper explains what is meant by entrepreneurship capital and why it should influence economic output. A production function model including several different measures of entrepreneurship capital is then estimated for German regions. The results indicate that entrepreneurship capital is a significant and important factor shaping output and productivity. These results suggest a new direction for policy that focuses on instruments to enhance entrepreneurship capital...
M13 - Entrepreneurship ; O32 - Management of Technological Innovation and R&D ; O47 - Measurement of Economic Growth; Aggregate Productivity ; Entrepreneurship. Biographies of entrepreneurs ; Management and organisation. Other aspects ; Individual Working Papers, Preprints ; No country specification