Is entrepreneurship a key factor in the development of European countries? A proposal for an innovation readiness environment (IRE) index

Abstract

This study investigates the complex interplay among innovation, research and development (R&D), and entrepreneurship within the context of European nations. The focus of the study is also on the contributory role of tertiary educational institutions in nurturing entrepreneurial activities. To deepen the understanding of these multifaceted relationships and their subsequent impact on regional economies, the research introduces a novel metric termed the Innovation Readiness Environment (IRE) index. This index combines various indicators such as R&D expenditure, patenting rates, firm size, and educational levels, thereby providing a framework for evaluating the innovative capabilities and entrepreneurial success of firms in a given region. Utilization of this index offers policymakers and stakeholders a nuanced understanding of the regional innovation ecosystem, facilitating the identification of both strengths and deficiencies. This, in turn, enables the formulation of targeted policy interventions to enhance both innovation and entrepreneurship. One salient conclusion drawn from this study is the pivotal role of tertiary education in catalysing entrepreneurial ventures. The findings posit that higher levels of entrepreneurial education significantly supplement an individual's likelihood of entrepreneurial success by imparting the requisite skills and knowledge indispensable in a competitive business milieu. Higher education institutions, by fostering an environment conducive to innovation, emerge as critical agents in the cultivation of entrepreneurial acumen and the stimulation of economic expansion. The study further incorporates a spatial analytical framework to elucidate the regional specificities of innovation at the pan-European scale.