Technological Environment and Technology Entrepreneurship: A Cross-Country Analysis

Recent years have seen growing interest in the influence of the environment on entrepreneurship. However, little is known about the impact of the country-level technological environment on the creation of new technology-based firms. This study investigates the relationship between the technological environment (measured by the amount of investment in R&D, and access to information and communication technology [ICT] infrastructure) and technology entrepreneurship, in 54 countries during the years 2005 to 2010. Using data from the Global Entrepreneurship Monitor, and the World Bank Development Indicators, we identify a significant, robust inverted U-shaped relationship between R&D investment at country level and the likelihood of technology entrepreneurship. We also find evidence of a positive relationship between access to ICT infrastructure and the likelihood of technology entrepreneurship.