The role of innovative entrepreneurship in the economic development of EU member countries

In the specialized literature, entrepreneurship has been acknowledged to have a salient role in driving innovation, economic growth, and welfare, in addition to its effect on job creation. Researchers have expressed different views about the relationship between economic development and entrepreneurship throughout time. It is also considered that innovation is a driving force in the economic development of nations. Therefore, innovative entrepreneurship started to be considered a key factor in modern economic development. For instance, SMEs and innovation lay at the core of the European Union's development strategy-Europe 2020 strategy. The aim of the article is to analyze the role of innovative entrepreneurship in the economic development of EU member states. Taking into consideration that both processes: economic development and innovative entrepreneurship are multi faceted, the article comes to express the relationship between the two phenomena and its specifics in EU member countries. Given the nature of contemporary highlights of the literature review and the stated research objective, in this article, a model was tested that captures the new or young and innovative firms, as aspects of innovative entrepreneurship and determinants of the economic growth rates. The research method used is regression model analysis. For the statistical data analysis and processing, Stata and SPSS soft ware tools were used. The key findings of the paper show that innovative entrepreneurs (being measured by the Total Early-stage Entrepreneurial Activity (TEA) innovation level) are more present in countries with higher development levels and higher incomes, being motivated by the improvement opportunity they see in becoming entrepreneurs. However, a higher degree of entrepreneurship, especially new firms' creation, does not substantially contribute to accelerated economic development. This is explained by the variation in the motivation (necessity or improvement oriented) entrepreneurs across EU countries. In the developed countries, the entrepreneurs are most likely to be the Schumpeterian type, while in developing countries most of them are shopkeepers. Consequently, it is clear that EU member countries need friendlier and more efficient new firms' creation policies, as well as SME supporting tools. The paper has significant practical implications for decision and policy-making authorities in terms of possible directions for innovative entrepreneurship policy development.