How Knowledge Shapes Entrepreneurial Action

What is it about?

This study investigates how people’s knowledge and exposure to entrepreneurship affect their likelihood of starting a business. Drawing on the literature on knowledge and self-efficacy, the authors propose that individuals with stronger educational backgrounds, practical skills, and personal contact with entrepreneurs are more inclined to take the step toward new business creation. The research focuses on how these knowledge-based influences shape the decision to engage in entrepreneurial activity rather than simply examining who becomes an entrepreneur. Using data from the 2002 Global Entrepreneurship Monitor, the study analyzes samples from Belgium and Finland to test how individuals’ education, skills, and exposure to entrepreneurial networks relate to their participation in business start-up activity. The findings reveal that knowledge-related factors strongly influence people’s likelihood of becoming entrepreneurs. The results also point to cross-country differences, suggesting that the impact of these knowledge factors may vary depending on broader national contexts, particularly regarding how growth-oriented start-ups are formed. For policymakers and educators, the results highlight the importance of developing education systems and community initiatives that build both entrepreneurial skills and connections to active entrepreneurs. By strengthening these foundations, societies can better support individuals who wish to pursue entrepreneurial opportunities, leading to more innovative and growth-oriented economic activity.

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Photo by Gabriella Clare Marino on Unsplash

Photo by Gabriella Clare Marino on Unsplash

Why is it important?

This research is among the first to offer empirical evidence that both knowledge and social exposure significantly affect the decision to start a business. It shows that entrepreneurship is not only driven by external opportunities but also by individuals’ internal resources—what they know and whom they know. Its relevance extends to current discussions about how to stimulate entrepreneurial ecosystems through education, mentorship, and knowledge-sharing networks. By linking personal knowledge to national variations in entrepreneurial behavior, the study provides important guidance for countries seeking to encourage innovation and sustainable business creation.