Business demographics and societal attitudes toward entrepreneurship in Europe: a chicken-and-egg problem?

Purpose The aim of this study is twofold. First, it seeks to reveal aspects of the relationship between business demographics and societal attitudes toward entrepreneurship. Second, it aims to investigate whether the direction of causality in this nexus of indicators varies across countries. Accordingly, two research questions are raised: Is there a link between firm birth and death rates and social perspectives? Does the direction of causality between societal attitudes and business demographic statistics vary across countries? Design/methodology/approach To answer these questions, we applied regression models in conjunction with the Granger causality test on a sample of 37 countries – 34 OECD-database countries including the EU-27 (except Malta), Ireland, North Macedonia, Norway, Serbia, South Korea, Switzerland, Turkey, and the United Kingdom. We supplemented this sample with national statistics from Israel, the United States, and Australia, using data from 2001 to 2021. We selected Global Entrepreneurship Monitor (GEM) indicators, such as fear of failure, entrepreneurial intentions, and viewing entrepreneurship as a good career choice as indicators of societal attitudes toward entrepreneurship. Findings The results support the hypotheses and reveal the link between societal attitudes and business demographics. The study shows that entrepreneurial intention has a positive statistically significant association with firm birth rates, rather than a fear of failure. For the first time, we found evidence of a positive lagged effect of firm birth and death rates on entrepreneurial intentions. Additionally, there is evidence that the direction of causality varies across countries. Originality/value This study adds sheds new light on the intention-to-action gap by examining lagged variables and emphasizing the diversity and uniqueness of social environments in seemingly economically similar countries.