Entrepreneurship plays a critical role in national and regional economic development (Linan & Fernandez-Serrano 2014; Matejovsky, Mohapatra & Steiner 2014). Entrepreneurship, as a driver of an economy, determines the prospects of the economy and sets the pace of economic growth through creating employment opportunities, spurring innovation, facilitating effective and creative ways of utilising resources, expanding and extending economic boundaries and, ultimately, improving social welfare and growth (Driga et al. 2009; Johnson et al. 2015; Thornton et al. 2011; Wennekers et al. 2010).

Notwithstanding the advantages that entrepreneurship provides to economic growth, there is a concern about the kind of entrepreneurship that countries need to promote. Research has attested that the contributions of different kinds of entrepreneurship vary from one economy to another (Vallierea & Peterson 2009).

Apparently, meaningful early entrepreneurial activities are stronger in well-developed economies than in economies in transition or efficiency-driven economies. Researchers found that the significant investments in research and development, strong technological environments and robust economic standards of innovation-driven economies enabled them to create entrepreneurs with high impact (Colovic & Lamotte 2015). As a result, they enjoy an abundance of high-impact technological entrepreneurs to a greater extent than economies dominated by necessity entrepreneurs. This creates a formidable basis for new entrepreneurs to meaningfully contribute to their country’s economic development (Koster & Rai 2008; Pfeifer & Sarlija 2010).

According to many researchers, innovation-driven economies are benefiting greatly from the proliferation of high-growth-expecting firms (Vallierea & Peterson 2009). As per these researchers, high-growth entrepreneurs basically represent opportunity-motivated ones (Lecuna, Cohen & Chavez 2017) because opportunity entrepreneurs are always keen for growth and recognise opportunities arising from innovative ideas, whereas necessity entrepreneurs intentionally avoid growth because their ultimate goal is survival (Capelleras et al. 2010; Valdeza et al. 2011).

Having recognised the strong contribution opportunity entrepreneurship makes to economic growth, many researchers question why innovation-driven economies are a fertile ground for high-impact entrepreneurs while others are not. The results have never been conclusive. Some attribute this to the well-entrenched entrepreneurial culture of these countries. The culture in developed economies encourages a significant portion of their population to become self-employed (Krasniqi 2009) and to focus mainly on technological breakthroughs that create added value in high-tech and knowledge-intensive sectors (Herrmann & Kritikos 2013).

Apart from the culture, their success signifies the availability of quality institutions that promote impactful entrepreneurship. Various studies have confirmed that fostering innovation and a robust entrepreneurial environment, which will make a meaningful contribution to the economy, is impossible without the prevalence of strong institutional frameworks and infrastructures (Feki & Mnif 2016; Martinez-Fierro, Biedma-Ferrer & Ruiz-Navarro 2016; Mendonça & Grimpe 2016). Thus, we can take the strong economic system that promotes new technology, increased pace of innovation and a short product life cycle (Baptista & Thurik 2007) as a solid manifestation of the robust and supportive institutional frameworks that these countries have built over some years.

Moreover, the advantages of such institutions, culture and infrastructure are not limited just to the support that they provide to existing entrepreneurs; they also encourage the rise of many new wealth creators. As Autio and Fu (2015) argue, improved economic and political institutions boost formal entrepreneurship and reduce informal entrepreneurship tendencies. This implies that in well-structured economies, such as those in innovation-driven countries, the chance of obtaining subsistence entrepreneurship that relies on the informal sector is greatly limited. Thus, in developed economies, the U-shaped relationship between nascent opportunity entrepreneurship and economic development holds true, indicating the creation of many new ventures that focus mainly on innovation (Wennekers et al. 2010).

Research suggests that economies (innovation-driven economies) which foster the creation of firms that are inspired by innovation and high-growth potential see their actions lifting their GDP significantly (Aubry, Bonnet & Renou-Maissant 2015; Wong, Ho & Autio 2005). This condition is further reinforced through favourable institutional frameworks, helping innovators to have a remarkable impact on economic growth attempts (Amaghouss & Ibourk 2013).

Based on the above-mentioned information, we contend that innovative economies have higher propensities and capacities for producing TEAs that could meaningfully contribute to their GDP. Hence, we hypothesise a positive and strong relationship between the TEA rate and economic development as measured by GDP.

Treating the entrepreneurial conditions of efficiency economies from the standpoint and vantage point of developed countries could lead to some terrible mistakes and may be considered as being in complete ignorance of the peculiarities of the two economic contexts. Indeed, the relationship between entrepreneurship and economic growth is stable across different categorisations of economies, but the level and magnitude of the impact differs significantly. For this reason, Vallierea and Peterson (2009) remarked that entrepreneurship matters, but it matters differently for emerging and developed countries.

Contrary to innovation-based economies, entrepreneurship in efficiency-driven economies is characterised by decreasing rates of self-employment (Acs, Desai & Hessels 2008), high levels of volatility (Pfeifer & Sarlija 2010), economic unpredictability (Ahlstrom & Bruton 2010), low entrepreneurial culture (Lee & Peterson 2000) and rampant numbers of necessity entrepreneurs who are mainly motivated by the lack of job opportunities or some other push factors (Yalcin & Kapu 2008) as well as low growth prospects and low aspirations (Capelleras et al. 2010).

However, these economies are known for the abundance of untapped opportunities, although exploitation is a major problem (Yalcin & Kapu 2008) because of the lack of strong and quality institutions that support the contributions of entrepreneurial initiatives (Ahlstrom & Bruton 2010; Smallbone & Welter 2001). In addition to this, entrepreneurship initiatives in these economies are constrained by the scarcity of resources (Ahlstrom & Bruton 2010) and the finance required to carry out innovative projects (Smallbone & Welter 2001). In these economies, although the venture creation speed is relatively fast, the growth is slow (Capelleras et al. 2010).

Consequently, it is concluded that starting and maintaining the survival of new ventures in less affluent, developing and transitional economies is burdensome (Yalcin & Kapu 2008). As a result, the contribution of entrepreneurial start-ups to economic growth is not as strong as it should be (Aubry et al. 2015; Baptista & Thurik 2007), while, sadly, the relationship between entrepreneurial activity and economic development is negative (Acs et al. 2008).

Contrary to these results, there are, however, authors who argue the other way around (see, for instance, Hashi & Krasniqi 2011; Govindarajan & Ramamurti 2011). These researchers contend that entrepreneurial activities in efficiency-based countries are contributing a great deal to economic growth and development, to the extent of influencing large multinationals in the developed world.

We believe that entertaining the two contrasting views is important in doing research of this nature. Therefore, it is hypothesised that a positive but weak correlation between new entrepreneurial start-up rates and GDP of efficiency economies exists.

As stipulated in the GEM framework, TEA represents the share of adults in the total population of 18 to 64 years old, who are actively involved either in starting a new business (nascent entrepreneurship) or in managing a business that is less than 42 months old (Reynolds et al. 2005).

The prevalence of TEAs is found to be high in developing economies; however, their contribution is not as strong as their counterparts in well-developed economies (Kelley, Singer & Herrington 2016; Wennekers et al. 2010).

As described in our previous discussion, the rates of early entrepreneurial activities differ from economies to economies, raising the question of what this difference means. According to many research findings, it reveals variations in countries’ domestic productivity and economic growth (Aubry et al. 2015; Hashi & Krasniqi 2011; Stel et al. 2005).

These findings imply that every single new entrant adds value in some form and helps countries to expand and boost their production. New firms, particularly those in transition economies, displace obsolete incumbents, fill existing market gaps and create new value (Stam & Stel 2009). Moreover, such entrepreneurial activities are found to be essential to commercialise innovative technologies and for healthy development of the business population (Stel et al. 2005). Hence, any new addition always connotes a possible improvement in GDP and enhanced growth prospects.

However, there are several scholars who assert that the number does not matter, but the quality does. Shane (2009), who is a strong proponent of this claim, says countries need to focus on quality entrepreneurship that will make significant contributions to economic growth and, therefore, stresses the importance of focusing entirely on firms with high-growth potential. Mason and Brown (2013), concurring with his reasoning, have clarified policy measures that need to be taken to effectively support these firms. Yet, Shane’s view was not insulated from criticisms. For instance, Daunfeldt, Elert and Johansson (2014) argued that policymakers should focus on conditions for new firm formation and early growth of new firms rather than targeting particular high-growth firms. They claimed that it is impossible for policymakers to know which firm will become a high-growth firm, ex ante.

Despite the inconsistencies with regard to where the focus must be, both research perspectives are in agreement on the importance of the rise and formation of new firms. Even Mason and Brown (2013) said policymakers cannot ignore support for start-ups, despite the strong support needed for high-growth firms. Therefore, countries aiming to expand and strengthen their economy are strongly advised to maintain an entrepreneurial environment that encourages citizens to pursue and allow their entrepreneurial ideas and intentions to materialise.

Identifying the factors that trigger individuals to pursue the entrepreneurial path is substantive to this discussion. We expect two factors to play a critical role with respect to this: an individual’s ability to perceive opportunities and his or her entrepreneurial intention. It is solely when an entrepreneur possesses competencies such as the ability to perceive opportunities (Barazandeh et al. 2015) and the intention to act entrepreneurially (Río‑Rama et al. 2016) that business ideas become a reality.

Johnson et al. (2015) argue that decisions to start and engage in entrepreneurial activities are not just driven by manic tendencies. Such activities are initiated by recognising an opportunity, which is apparently influenced by many factors (Wasdani & Mathew 2014), and by having the commitment to materialise the said perceived opportunity (PO). Thus, we can say that hoping for a strong TEA rate without a significant percentage of people with the required capacity to see opportunities and the intention to pursue their entrepreneurial aspirations, is an illusion.

What then do we mean by opportunity perception and entrepreneurial intention? Let us first consider and explain opportunity perception and then the latter. Following the debate on the nature and source of entrepreneurial opportunity, opportunity perception becomes a very problematic concept. In this article, our intention is not to delve deep into the inconsistencies; thus, we have adopted the simplest definition. Opportunity perception is a perception of what can be done to earn a profit (Lewin 2012). It is also viewed as a process of identifying business opportunities, which normally represent market imperfections that give agents, entrepreneurs, the chance to obtain economic benefit by introducing new and/or improved products, the better to serve customer needs (Alvarez, Barney & Anderson 2013).

Perceived opportunity triggers entrepreneurial actions through identifying what can be done in light of market gaps. With regard to the impact of PO, Herrington, Kew and Kew (2014) describe it as one of the two critical factors that force a person to consider starting their own business.

Perceived opportunity, in the GEM conceptual framework, denotes ‘the percentage of individuals aged 18–64 involved in any stage of entrepreneurial activity excluded who see good opportunities to start a business in area where they live’ (Singer, Amorós & Arreola 2015:23).

Global Entrepreneurship Monitor (GEM) reports consistently indicate that perceptions favouring the existence of good business opportunities are higher in factor-driven economies, while the strength of these perceptions declines as we move towards innovation-driven economies (Herrington et al. 2011). The findings suggest the existence of a large pool of people who could possibly take action to exploit the identified opportunity in efficiency countries compared to innovation-based countries. Therefore, we expect higher TEA rates in efficiency-driven countries than in innovation-driven countries because of the strong association between recognising opportunities and engaging in early entrepreneurial activities. Based on this assumption, we developed the following two hypotheses:

The other major force that paves the way for a high TEA is strong entrepreneurial intention. The latter intention is defined as a conscious and planned resolve that drives the actions necessary to start a business (Thompson 2009).

Entrepreneurial intention (EI) does not refer to a whimsical desire to have a business; rather, it signifies a self-acknowledged conviction to set up a business and intentionally plan to do so at some point in the future (Thompson 2009). Thus, it can be said that a genuine intent is action oriented and this action is expected to result in nascent entrepreneurship. This is why entrepreneurial intention is depicted as a force that has a significant impact on new venture organising activities (Hopp & Sonderegger 2015).

As presented by GEM, entrepreneurial intention refers to people who intend to start a business in the next 3 years; the intent is considered critical in the entrepreneurial process given its strong association with actual entrepreneurial behaviour (Herrington et al. 2014). And likewise, with the association discussed between PO and TEA, researchers found that entrepreneurial intention is higher among factor-driven economies and lower among innovation-driven countries (Singer et al. 2015). Based on this elucidation, we propose the following two hypotheses to examine the relation between TEA and EI, both in efficiency- and innovation-driven economies:

Countries always aspire to attain the next higher economic level. To achieve this substantial vision, they employ various macro- and micro-level economic and business strategies. In situations where there is a need to bring the majority of actors on board and to generate capital that would allow people at the bottom of the hierarchy to benefit, entrepreneurship remains as the most satisfactory solution (Bruton et al. 2015).

In addition to the job opportunity, increasing money flow and the sense of accomplishment that entrepreneurship provides at the individual level, it also plays a crucial role at national level through improving competitiveness among countries, promoting economic growth and increasing employment opportunities (Feki & Mnif 2016). These virtues make entrepreneurship the best strategy and/or enabler compared to any other macro interventions aimed at transforming economic structures.

Entrepreneurship in efficiency-driven economies remains the major driver of economic growth (Stam & Stel 2009). If we consider the BRICS countries (Brazil, Russia, India, China, and South Africa), which, with the exception of India, are good representatives of efficiency-driven economies, entrepreneurial activities at small and medium business level are contributing a great deal to employment creation and the GDP. In BRICS countries, small- and medium-scale enterprises (SMEs) are the major employers, absorbing 60% of job seekers and making 42% of their GDP (Hoeppli 2013).

Yet the quality of entrepreneurship in efficiency-driven economies is a matter of concern for many. For years, the relationship between GDP and TEA reported to be U-shaped, wherein entrepreneurial activity tended to be higher for affluent and developing economies and less in transition economies (Pfeifer & Sarlija 2010). This relationship implies an increasing and growing trend of entrepreneurial activities in developing countries because of an increase in necessity-based entrepreneurship, when innovation-driven economies take advantage of their strong institutions and infrastructure to promote opportunity-driven entrepreneurs (Wennekers et al. 2010). According to this relationship, efficiency economies apparently experience a decrease in self-employment and exhibit a negative relationship between entrepreneurial activities and economic development (Acs et al. 2008).

The question which then arises focuses on why the relationship is inverse in efficiency economies. The causes are too numerous to mention all. Institutional barriers (Hashi & Krasniqi 2011), a preference for waged employment because of the higher opportunity cost of starting one’s own business (Koellinger & Thurik 2012), an unfavourable institutional framework (Ahlstrom & Ding 2014), the lack of a welfare system that supports entrepreneurs (Chowdhury et al. 2015) and institutional instability (Ahlstrom & Bruton 2010) are some of the factors that appear frequently.

It is understood that transformation is impossible given all these deficiencies. Thus, many researchers call for an improvement in the overall entrepreneurial climate of transition economies (Koster & Rai 2008) and in the transformation process, they stress the role of governments (Martinez-Fierro et al. 2016). Accordingly, they argue that governments need to take the central role in creating an entrepreneurial environment that promotes and fosters innovation (Maradana et al. 2017), high-growth potential entrepreneurs (Koster & Rai 2008; Shane 2009) and export-oriented firms (Lecuna et al. 2017).

Moreover, it is the government’s responsibility to develop supportive institutions that encourage a competitive business environment by reducing the burden imposed by formal institutions (Krasniqi & Desai 2016), improving the social image of entrepreneurs (Barazandeh et al. 2015), ensuring corruption-resistant structures, strong property rights and reducing tax and administrative burdens (Chowdhury et al. 2015).

In this attempt, improving the quality of institutions stands out as a priority area. As argued by Autio and Fu (2015), economic and political institutional quality has a strong and meaningful relationship with the emergence and type of entrepreneurship. They claim that one standard deviation improvement in the quality of economic and political institutions could double formal entrepreneurship and reduce informal entrepreneurship by half.

The other frequently aired suggestion revolves around promoting innovation. According to this line of research, promoting innovation creates a comfortable platform for the generation of opportunity entrepreneurs who will make a meaningful contribution to economic growth (Aubry et al. 2015). In support of this claim, some suggest rechanneling entrepreneurship support programmes from necessity entrepreneurs to high-growth potential firms (Shane 2009) and encouraging policymakers to give due care to activities that help improve the quality of entrepreneurship and the emergence of ventures with strong growth prospects (Bruton et al. 2015; Koster & Rai 2008).

In addition to the roles that governments could play, extant research also stresses the part played by existing entrepreneurial firms. The latter must be an integral part of the transformation endeavour and they must assume a leadership role (Aubry et al. 2015). It is suggested that private firms must be prepared to develop the capabilities that would allow them to differentiate their offerings and focus on strategic leadership that could help them build the competencies and resources necessary to compete and respond to the changes that the transformation brings (González-Corzo 2015).

Generally, researchers call for well thought out and controlled government interventions in order to create a conducive entrepreneurial ecosystem (Fuerlinger, Fandl & Funke 2015) accompanied by a reallocation of capital and promotion of innovation (Bradley et al. 2012), careful management of money supply and interest rates (Galindo & Méndez 2014) and revisiting of regulatory requirements (Gupta et al. 2014) as well as readjusting economic structure from one that places emphasis on efficiency and scope to one that appreciates effectiveness (Baptista & Thurik 2007).

As depicted in Table 1, the correlation between GDP and the measure of entrepreneurial activities is positive and strong. As we proposed, the correlation between GDP and TEA is significant at the 99% confidence interval and the relationship is very strong (r = 0.795, p < 0.01). The result supports our first hypothesis (H1a) which states that TEA and GDP are positively and strongly correlated in innovation-driven economies. The result implies that any new entrepreneurial activity in an innovation economy will make a positive and strong contribution to economic development.

Our result agrees with the many research works that explored the relationship between the two factors (Aubry et al. 2015; Feki & Mnif 2016; Stel et al. 2005; Yolaç 2015). As argued by Aubry et al. (2015), fluctuations in GDP in developed countries could be an indicator of early entrepreneurial activities.

The strong relationship between GDP and TEA also reflects the eutaxy of entrepreneurial activities developed in innovation-based economies. Furthermore, we believe that the strong presence of firms expecting high-growth (Vallierea & Peterson 2009), a prevalence of innovative and knowledge firms (Zsuzsannaa & Hermana 2012), the presence of favourable institutions (Amaghouss & Ibourk 2013), a strong and quality institutional infrastructure (OECD 2008) and a well-developed entrepreneurial culture (Pinillos & Reyes 2011) are contributing greatly to this.

Moreover, having noted the emphasis given to opportunity entrepreneurship (Valdeza et al. 2011) and the high prevalence of a voluntary mindset that encourages the development of innovative TEAs (Urbano & Alvarez 2014), we expect this trend to continue.

The other result that deserves attention is the correlation among the three measures of entrepreneurial characteristics. As may be perceived from Table 1, the three factors exhibit positive and strong significant correlations among each other. Total early-stage entrepreneurial activity has a positive significant and strong correlation with EI and PO at a 99% confidence interval (r = 0.863, p < 0.01; r = 0.633, p < 0.01, respectively). These results partially support our hypotheses (hypotheses H2b and H3b), implying the existence of an inherent relationship between early entrepreneurial activities and entrepreneurial intention and PO, despite the lesser prevalence of EI and PO in innovation-driven countries as argued by Herrmann and Kritikos (2013).

However, our result supports prior findings such as the claim by Baumol and Strom (2007), who argue that only when individuals are able to notice and have the intention to exploit opportunities, entrepreneurial activities that reduce waste, improve macro-economic performance, increase productivity and enhance total welfare start to emerge.

The result also reinforces the notion that it is impossible to think in terms of a strong TEA rate when countries are characterised by an entrepreneurial atmosphere which is fragile and a populace which is incapable of acting entrepreneurially. More importantly, this relationship can be taken as the manifestation of the strong entrepreneurial culture enshrined in innovation-driven countries.

Table 2 presents the correlation between GDP and TEA rate of efficiency-driven economies. It also exhibits the correlation between factors identified as drivers of TEA (PO and EI) and TEA rate of efficiency-driven countries.

The correlation between GDP and TEA in efficiency-based countries reveals results similar to that of innovation-based economies, albeit the correlation is not as strong as it is in the latter. As shown in Table 2, TEA and GDP are significantly correlated at a 99% confidence interval and the correlation is moderate in terms of strength (r = 0.570, p < 0.01). This result partially supports our hypothesis (H1b) which states that the correlation between TEA and GDP in efficiency-driven economies is positive but weak.

The result opposes findings that posit entrepreneurial activities in an efficiency economy as being less of a contributor to economic development (Acs et al. 2008; Aubry et al. 2015), but supports many other prior research findings (Hashi & Krasniqi 2011; Stam & Stel 2009; Zhang & Duysters 2010) that stress the role of early entrepreneurial initiatives in economic development in transition economies.

Our result implies that despite the less accommodative entrepreneurial environment of efficiency-driven economies, every entrepreneurial initiative plays a positive and satisfactory role in the economic development endeavours of these countries. Nonetheless, the need for opportunity and/or high-growth entrepreneurs is still pressing and the contribution of the existing entrepreneurial activities cannot be undermined. They assist the economies to prosper by providing millions of jobs (Ayyagari, Demirguc-Kunt & Maksimovic 2014), fostering reverse innovation (Govindarajan & Ramamurti 2011), creating efficient utilisation of resources and developing positive externalities (González-Corzo 2015).

Yet comparing the result with innovation economies suggests the existence of considerable differences. We presume that the difference is rooted in factors inherent to the economic structure, institutional arrangements that are hostile for the growth of entrepreneurial attempts (Ahlstrom & Bruton 2010), an immature entrepreneurship culture (Lee & Peterson 2000), the proliferation of marginal entrepreneurs (Stel et al. 2005) and an underdeveloped welfare system for supporting entrepreneurs (Chowdhury et al. 2015). Generally speaking, the overall economic, entrepreneurial and societal environment is crippling entrepreneurs in efficiency economies, thereby preventing them from contributing much to the economic development there.

The other interesting result evident from Table 2 is that of the correlation among the three entrepreneurial factors. As can be inferred, each of these variables has positive and significant relationships among themselves. We found a strong positive correlation between EI and TEA at the 99% confidence interval (r = 0.855, p < 0.01). Similarly, the correlations between TEA and PO are significant and positive at the 95% confidence interval (r = 0.405, p < 0.05). Both results provide partial support for hypothesis H2a and fully support hypothesis H3a. The results imply that governments aiming to improve their TEA rate need to work on boosting the skills of citizens to perceive opportunity and foster an entrepreneurial intention that could encourage people to pursue entrepreneurial paths.