Q1: Why is last year GDP growth one of the independent variables?
A1: To limit the potential impact of reverse causality.
Q2: What is knowledge spillover effect?
A2: According to the knowledge spillover theory of entrepreneurship, the context in which decision-making is derived can influence one’s determination to become an entrepreneur. In particular, a context that is rich in knowledge generates entrepreneurial opportunities from those ideas. By commercializing ideas that evolved from an incumbent organization via the creation of a new firm, the entrepreneur (human capital) not only serves as a conduit for the spillover of knowledge, but also for the ensuing innovative activity and enhanced economic performance through resource allocation.
Q3: Why not putting in all 5 entrepreneurship variables as independent variables?
A3: As some of the definitions of entrepreneurship variables are quite similar, it may lead the regression model to suffer from multicollinearity problem.