Entrepreneurship and economic growth: Fresh evidence of Iran

Aghaei, Majid Article Entrepreneurship and economic growth: Fresh evidence of Iran Revista de Métodos Cuantitativos para la Economía y la Empresa Provided in Cooperation with: Universidad Pablo de Olavide, Sevilla Suggested Citation: Aghaei, Majid (2024) : Entrepreneurship and economic growth: Fresh evidence of Iran, Revista de Métodos Cuantitativos para la Economía y la Empresa, ISSN 1886-516X, Universidad Pablo de Olavide, Sevilla, Vol. 38, pp. 1-18, https://doi.org/10.46661/rev.metodoscuant.econ.empresa.8424 This Version is available at: https://hdl.handle.net/10419/314484 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may be saved and copied for your personal and scholarly purposes. You are not to copy documents for public or commercial purposes, to exhibit the documents publicly, to make them publicly available on the internet, or to distribute or otherwise use the documents in public. If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-sa/4.0/ ARTÍCULOS 1 aghaei, majid. (2024). Emprendimiento y crecimiento económico: Nueva evidencia de Irán. Revista De Métodos Cuantitativos Para La Economía Y La Empresa, 38. https://doi.org/10.46661/rev.metodoscuant.econ.empresa.8424 Universidad Pablo de Olavide (España) Revista de Métodos Cuantitativos para la Economía y la Empresa número 38, 2024 ISSN: 1886-516X DOI: 10.46661/revmetodoscuanteconempresa.8424 Sección: Artículos Recibido: 31-07-2023 Aceptado: 05-04-2024 Publicado: 03-12-2024 Páginas: 1-18 Emprendimiento y crecimiento económico: Nueva evidencia de Irán Entrepreneurship and Economic Growth: Fresh Evidence of Iran Majid Aghaei University of Mazandaran (Irán) https://orcid.org/0000-0003-0833-9781 [email protected] RESUMEN El emprendimiento es un recurso vital e inagotable en todos los países, desempeñando un papel crucial en su desarrollo. Es un recurso valioso y rentable que gira en torno a la creatividad humana y la capacidad de innovar. Las sociedades que se basan en el capital humano y la capacidad intelectual en lugar de depender únicamente de los recursos naturales tienden a lograr un mayor éxito a largo plazo. Este estudio examina el impacto del emprendimiento en el crecimiento económico en Irán dentro del marco de un modelo de crecimiento. Se emplea el método de Rezagos Distribuidos Autorregresivos (ARDL) para analizar datos que abarcan desde 1980 hasta 2022. Los hallazgos revelan que varios índices de emprendimiento tienen un efecto positivo y significativo en el crecimiento económico de Irán durante el período de tiempo especificado. Los resultados del estudio indican la necesidad de implementar estrategias más avanzadas para acelerar la tasa de crecimiento y avanzar más rápidamente hacia el marco schumpeteriano. Los responsables de las políticas deben poner mayor énfasis en fomentar iniciativas emprendedoras innovadoras para lograr un crecimiento y desarrollo económico mejorados. PALABRAS CLAVE Emprendimiento; Crecimiento económico; Rezagos Distribuidos Autorregresivos (ARDL). Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 2 ABSTRACT Entrepreneurship is an essential and inexhaustible resource that significantly contributes to the development of countries. It embodies a valuable and cost-effective asset rooted in human creativity and innovation. Societies that prioritize human capital and intellectual capacity over reliance on natural resources tend to achieve greater long-term success. This study investigates the impact of entrepreneurship on economic growth in Iran through the lens of a growth model. Utilizing the Autoregressive Distributed Lags (ARDL) method, the analysis encompasses data from 1980 to 2022. The results indicate that various indices of entrepreneurship exert a positive and significant influence on Iran's economic growth during the specified period. The findings underscore the need for implementing advanced strategies to accelerate growth and align more closely with the Schumpeterian framework. Policymakers are encouraged to emphasize the promotion of innovative entrepreneurial activities to enhance economic growth and development . KEYWORDS Entrepreneurship; Economic growth; Autoregressive Distributed Lags (ARDL) . Clasificación JEL: M13; O40. MSC2010: 91B64,; 91B84. INTRODUCTION The economic structure of most countries has undergone significant changes in recent times. Traditional indicators and tangible assets that once determined the position of an economic enterprise have now been replaced by the importance of innovation and the creation of new products and software assets. In the past, wealth was predominantly measured by financial resources, whereas today, the wealthiest individuals are those who possess knowledge and entrepreneurial skills. Therefore, economic development in today's world is based on innovation, creativity, and the effective utilization of knowledge, which characterizes a knowledge-based economy. Furthermore, this new era can be seen as an age of competition not only over resources and capital but also over human resources and talent, which play a crucial role in driving countries towards prosperity. Wealthy nations, particularly large industrial countries, have placed a strong emphasis on human capital and talent. They leverage educated and specialized individuals in their growth and development processes, leading to valuable innovations and creations. Entrepreneurship, in particular, has played a vital role in invigorating the economies of developed countries. Shan et al. (2003), emphasizes the importance of entrepreneurship in facilitating societal shifts towards innovative and technological changes, resulting in economic growth and the transformation of new knowledge into tangible products and services. Salazar (2004) also highlights that entrepreneurship not only contributes to job creation but also enhances the quality of life, promotes equitable income distribution, reduces social tensions, and optimizes the productivity of national resources. Entrepreneurship is a relatively recent phenomenon in the realm of technical and economic spheres, but it has made a significant impact on the global economy and industry over the past two decades. It is regarded as a symbol of effort and business success, with entrepreneurs being recognized as pioneers in achieving success within society. They play a crucial role in the Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 3 economic growth of countries through their leadership, management, innovation, efficiency, job creation, competition, productivity, and establishment of new companies. In recent research, alongside the consideration of quantitative variables such as human capital (Capelleras et al., 2019) and government expenditures (Dewi et al., 2018), and qualitative variables like income distribution (Neves et al., 2016), corruption and institutions (Galindo-Martin et al., 2020; Urbano et al., 2019), special attention has been given to entrepreneurship as one of the influential variables on economic growth (Cao & Shi, 2021; Prasetyo & Kistanti, 2020; Bosma et al., 2018; Urbano & Aparicio, 2016). Nevertheless, some empirical studies indicate that the role of entrepreneurship in economic growth varies based on business environment characteristics (such as unemployment and employment status) (Urbano et al., 2020; Aparicio et al., 2016). Moreover, the relationship between growth and entrepreneurship is somewhat unclear (Szerb et al., 2019) as a comprehensive and well-defined model has not yet been introduced (Urbano et al., 2019). More importantly, the existing entrepreneurship literature is mostly focused on advanced and developed economies like North America and Europe. Since the establishment of new businesses and entrepreneurship has gradually become a vital source for economic growth and employment development at the regional level in recent years (Stam & Van de Ven, 2021), therefore, the significance and role of entrepreneurial activities in economic performance may contribute to reducing the gap between advanced and emerging economies. In fact, entrepreneurship is now the most important global economic phenomenon in developing countries, which has received relatively less attention. Therefore, understanding the relationship between entrepreneurial activities and macroeconomic performance in developing economies is essential for researchers and entrepreneurship policymakers (Cao & Shi, 2020). In the current context, where Iran's economy is grappling with multiple challenges and mismanagement, such as abnormal rates of unemployment, low domestic production, weakened government investment power, and a decline in non-oil exports, it becomes imperative to examine the potential of entrepreneurship growth and fostering an entrepreneurial culture that aligns with Iranian culture, capabilities, preferences, and available resources. By doing so, entrepreneurship can be leveraged as a means to address the current economic challenges and prevent further deterioration of conditions in the future. Given the significance and role of entrepreneurship in generating new ideas and enhancing human capital, as well as the undeniable effect of human capital accumulation on economic growth and production, this study aims to analyze the impact of entrepreneurship capital on the economic growth of Iran. To this end, this paper sets out to analyze the interplay between entrepreneurship and economic growth in Iran, offering a comprehensive understanding of how entrepreneurial endeavors can contribute to overcoming existing economic challenges and steering the country towards sustained development. This study underscores the critical role entrepreneurship can play in aligning with Iran's unique socio-economic landscape to spur innovation, create employment opportunities, enhance productivity, and foster prosperity. By bridging the gap between theory and empirical analysis, this research aspires to provide fresh insights into the dynamics of entrepreneurship and its potential implications for Iran's economic trajectory. This study contributes to the literature contextually by focusing on the Iran’s economy where the relationship between entrepreneurship and economic growth is under-researched despite its importance. It is expected that the study will be helpful for both policymakers and researchers in Iran. The remaining sections of the paper are organized as follows. Section Two is dedicated to a comprehensive literature review and previous studies. In Section Three, we delve into the specifics of the data, methodology, and models employed for estimation, presenting our empirical results and interpretation. Finally, in Section Four, we draw our conclusions and highlight the implications of our findings. Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 4 LITERATURE REVIEW The analysis of factors influencing economic growth has been a subject of extensive study from various perspectives throughout history. Adam Smith (1776) proposed a wealth creation approach, emphasizing market expansion through division of labor and efficient allocation of manpower. Smith argued that innovation and entrepreneurship, in conjunction with market expansion, lead to increased allocation and division of labor, resulting in enhanced productivity, production, and wealth accumulation. Building upon Smith's theory, Kirzner (1973) introduced the concept of the entrepreneur as an individual whose intelligence enables the discovery of profitable opportunities, considering them as the driving force behind economic growth. Hayek (1945) presented his theory within the framework of a free economy, acknowledging that individuals, with their acuity and intelligence, create opportunities for society. He posited that an atmosphere of innovation fosters an increased number of entrepreneurs, thereby establishing the foundation for economic growth. Solow's (1956) neoclassical growth model emphasized the role of inputs such as manpower and physical capital as key determinants of growth. However, the shortcomings of the neoclassical approach in explaining economic growth solely through exogenously determined inputs led to the development of endogenous growth theories in the 1980s and 1990s. Lucas (1988) viewed human capital as the primary variable driving growth, highlighting the positive effects of human capital on the productivity of other individuals within the surrounding environment. Romer's (1990) endogenous growth theory also emphasized the role of knowledge as a key factor in growth. As a result, human capital emerged as a fundamental variable incorporated into growth models. The rise of endogenous growth models recognized entrepreneurship as a crucial factor in economic growth. Schmitz (1989) introduced a model based on endogenous growth theories, highlighting the creation of new enterprises as an endogenous growth factor that positively influences economic growth. The decision to become an entrepreneur or work for a company was rationalized within this model. The increased number of entrepreneurs was seen as an additional input in the economy, with entrepreneurs disseminating and applying knowledge and technology, contributing to increased economic growth. Holcombe (1998) regarded entrepreneurship as the engine driving economic growth. Audretsch & Thurik (2004) proposed a transition from a managed economy to an entrepreneurial economy, emphasizing the importance of knowledge and entrepreneurship capital as key factors in entrepreneurial activities. Schumpeter (1911) underscored the role of entrepreneurs in economic growth through innovation. He argued that entrepreneurs seek to introduce new products and methods, disrupting market equilibrium and leading to creative destruction, whereby existing enterprises struggle to compete and may exit the market. Kirzner (1973) approached the relationship between entrepreneurship and economic growth from the perspective of an entrepreneur's ability to discover profitable opportunities. He emphasized that entrepreneurship thrives on the identification and exploitation of unequal opportunities, driving improvements in market efficiencies and the emergence of more entrepreneurs. Kirzner believed that markets, characterized by imperfect information, are inherently imbalanced, and entrepreneurs, through their intelligence and information acquisition, identify profitable opportunities that lead markets towards equilibrium through increased productivity and production. Moreover, scholars such as Bamol (1993), Wennekers et al. (1997), and Gould (1972) have emphasized the significance of institutions in fostering entrepreneurship, which, in turn, promotes economic growth and innovation. They argue that economic growth is facilitated when institutions are efficient and incentivize desirable activities. Table 1 provides an overview of various empirical studies conducted in the field of entrepreneurship and economic growth. Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 5 Table 1 – Summary of previous studies. Main results Entrepreneursh ip indicator Econ omic grow th indic ator Sample Time Period Author/A uthors Entrepreneurship has a positive relationship with economic growth. Entrepreneurship increases innovations and increased innovations in turn increases economic growth rate. The number of employers GDP 13 developed countries 2002 to 2007 Galindo & Mendez (2014) The increase in entrepreneurship rates in developing countries has a positive impact on economic growth. However, this effect is not observed in developed countries. Global Entrepreneurship Monitor (GEM) Index Per Capita GDP Two group of developed and developin g countries 2003-2011 Prieger et al. (2016) The positive and significant effect of employers on economic growth, Creative and entrepreneurial ideas are the key to economic growth in examined countries. The number of employers GDP Latin American Countries and all countries 2004-2012 Aparicio et al. (2016) In the long run, entrepreneurship has a positive impact on economic growth, but in the short run, this relationship is not always consistent. Three indicators: Total early-stage entrepreneurial activity (TEA), Perceived capabilities (PEC) and perceived opportunities (PEO) Per Capita GDP Eurozone countries 2001-2016 Pradhan et al. (2020) Entrepreneurship has a positive effect on economic growth selfemployment Per Capita GDP European countries 2010-2019 GonzalezSanchez et al. (2020) There is a significant positive relationship between entrepreneurial activities and economic growth Global Entrepreneurship Monitor (GEM) index Per Capita GDP G-20 economie s 2001-2016 Gautam & Lal (2021) Sustainable entrepreneurship promotes regional economic growth. there is a positive mediation effect of sustainable entrepreneurship influencing regional economic growth through technical R&D new time-varying index of entrepreneurship based on innovative spirit, entrepreneurial spirit and decision-making Per Capita GDP China 2000-2018 Gu & Wang (2022) Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 6 spirit EI is a significant determinant for economic growth. The study added to the prior literature by confirming that EI drives economic growth which can be useful for the policymakers entrepreneurial intention (EI), total early-stage entrepreneurial activity (TEA), established business ownership (EBO) rate and high job creation expectation (HJCE) rate GDP BRICS countries 2014 - 2018 Gaba & Gaba (2022) entrepreneurship has a positive and significant influence on economic growth in the BRICS economies. the causality testing revealed a one-way relationship running from entrepreneurship towards economic growth. Percentage of 18– 64 population who are either a nascent entrepreneur or owner-manager of a new business per capita GDP BRICS countries 2002-2021 Tahir & Burki (2023) Source: Authors’ finding EMPIRICAL ESTIMATION Model and data The research implemented the endogenous growth framework pioneered by Romer (1990) and Lucas (1988), building upon the neoclassical growth theory advanced by Ramsey (1928). Solow (1956) is credited with popularizing the neoclassical model, which posits technological change as exogenous and maintains constant returns to scale. According to this model, capital and labor are interchangeable, with diminishing marginal products. Considering the development of growth models and the identification of various factors affecting economic growth, the role of entrepreneurship capital in economic growth has gained significant attention in recent years. In this section, we utilize a modified version of the neoclassical growth model with fixed returns to scale to examine the impact of entrepreneurship on economic growth in Iran. The basic form of the model is as follows: (1) Where, Y represents total real products in an economy; A represents technology of the total production; L represents total labor force, K represents total physical capital; and Z represents all other factors which are effective on economic growth based on existing economic literature. Considering the pivotal role of entrepreneurship capital in economic growth, we incorporate this variable as a determinant of economic growth in our research model. This reflects our acknowledgment of entrepreneurship's significant contribution to driving economic expansion. The empirical analysis in our study adopts an extended version of the Cobb-Douglas production function. Known as the Cub-Douglas extended production function, this form is extensively employed in growth accounting to scrutinize the relationship between inputs and economic output. (2) Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 7 Where, t represents time; Y represents GDP, E represents certain entrepreneurship indicators, K and L represents physical capital and labor force, respectively. Estimation of the effect of entrepreneurship capital on economic growth in this study is performed based on production function method and first, it is assumed that the form of production function would be similar to extended Cub-Douglas form and as following. (3) by taking the natural logarithms of both sides of above equation, production function is turned into a linear function as following. (4) Assuming the availability of variable information, the parameters of the production function can be estimated. This function can be estimated for analyzing time series data within a country or across multiple countries. If we consider the assumption of fixed return to production scale and also if, payment to production factors would be equal to final production size, the coefficient of represents the share of factors in total GDP. All the factors, except for technology changes, can be seen in the above equation and that these changes also are obtained as the residuals and mainly are known as total growth rate or multifactor productivity. Based on the mentioned empirical studies and theoretical framework of research and also considering the extended growth model of Solow, for studying the effect of entrepreneurship capital on GDP growth in Iran the following final model is presented: Where: : logarithm of GDP in constant price of 1997 in Billion Rial. : The logarithm of real physical capital in billions Rial. : The logarithm of the number of skilled and trained labor force which has been also incorporated into the model as a proxy for human capital. and : Entrepreneurship indicators used in this study which indicate to the number of employers and Self-employed. t: Represents time. The dependent variable in equation (5), denoting economic growth, is GDP measured in constant prices of 1997. The data for this variable have been sourced from the Central Bank of Iran. Another crucial explanatory variable in the model is physical capital, which is widely recognized for its substantial influence on GDP growth as per various economic growth theories. The data for this variable have similarly been acquired from statistics provided by the Central Bank of Iran. Another pivotal variable influencing economic growth is the labor force. Extensive research in the realm of economic growth underscores the substantial impact of a skilled and educated labor force, often characterized as a knowledge-based workforce. In this study, the number of labor force members possessing higher education and secondary education is Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 8 utilized as a proxy for the effective labor force's impact on economic growth, which concurrently serves as a proxy for human capital. The data pertaining to this variable have been collected from the Statistics Center of Iran. Moreover, entrepreneurship capital serves as another explanatory variable in this study. To scrutinize its effect on economic growth in Iran, two indicators are utilized: the number of selfemployed individuals and the number of employers. Quantitatively gauging entrepreneurship poses a challenge in empirical studies due to its multifaceted and intricate nature. However, the number of self-employed individuals is commonly employed as an indicator of entrepreneurship, as these individuals have opted for autonomous economic endeavors, assuming associated risks, rather than working for other entities. This choice to pursue selfemployment embodies one of the attributes of an entrepreneur. The data on the number of employers and self-employed individuals across different years are sourced from the Statistics Center of Iran, which acquires the data from censuses. By incorporating these variables into the analysis, our aim is to evaluate the influence of entrepreneurship capital and the composition of the labor force on economic growth in Iran. 3.1.1 Descriptive statistic of variables Table 2 – Descriptive statistics. GDP L K EKH EK Source: Research finding Table 2 shows descriptive statistics for the variables utilized in this research. The initial row of the table exhibits the average values of the variables. Subsequent rows provide details such as the mean, maximum, and minimum observations, alongside standard deviation, skewness, and kurtosis for each variable. Jarque-Bera statistics and corresponding probability percentages are Average 489175.1 444446 8. 846369. 5 11989607 234649.1 Mean 215680.2 4177447. 885956.1 10797531 211302.5 Max. 1893834. 7897504 . 2227193. 2272981 5 596414.8 Min. 88033.5 8 2517490. 73915.00 6322197. 43911.00 Standard deviation 495432. 3 1706161. 574813.3 4835824 . 136668.1 Skewness 1.501395 0.483514 0.47497 2 0.708221 0.83257 2 Kurtosis 4.013729 1.930518 2.58885 8 2.361663 3.290102 Jarque-Bera value 21.76287 4.50436 0 2.321433 5.22986 6 6.189873 Probability 0.120019 0.105170 0.313262 0.073173 0.06527 8 Revista de Métodos Cuantitativos para la Economía y la Empresa N. 38, 2024 – ISSN: 1886-516X – DOI: 10.46661/revmetodoscuanteconempresa.8424 – [Págs. 1-18] Emprendimiento y crecimiento económico: Nueva evidencia de Irán Majid Aghaei ARTÍCULOS 15 Figure 2CUSUM and CUSUMSQ graphs. Source: Research findings CONCLUSION AND POLICY IMPLICATIONS Undoubtedly, a nation's capacity for wealth accumulation and overall well-being hinges on its ability to cultivate, harness, and disseminate knowledge. Throughout history, monumental strides and advancements have been propelled by expansive scientific domains and technological breakthroughs. Entrepreneurship, deeply intertwined with human intellect and skills, assumes a paramount role in societal economic evolution and expansion. Entrepreneurs possess the prowess to transmute ideas into novel products and services, whether by establishing small to medium-sized enterprises, pioneering innovative market introductions, or revolutionizing existing markets. They wield the capacity to implement novel production methodologies within pre-existing firms or startups, while also proffering cutting-edge technical and engineering services to the market. Recent years have witnessed a resurgence in scholarly and policymaker interest surrounding entrepreneurship's pivotal role in industrial dynamics and economic advancement. Schmitz (1989) have propounded models underscoring how an augmented entrepreneurial presence can foster sustained growth through imitation. Echoing similar sentiments, Lucas (1988) accentuates entrepreneurs' significance in embodying distinct values and wielding a distinctive form of human capital, positing divergent growth trajectories across nations. This acknowledgment of entrepreneurship's catalytic role in economic advancement has spurred intensified efforts toward nurturing an entrepreneurial ecosystem. By championing and incentivizing entrepreneurship, nations can unleash their populace's innovative potential, propel economic advancement, and lay the groundwork for enduring development. This study has rigorously investigated the influence of entrepreneurship indicators on GDP growth in Iran spanning from 1980 to 2022, employing time series models and the Autoregressive Distributed Lags (ARDL) method. The outcomes underscore a noteworthy and statistically significant positive relationship between indicators associated with employers and selfemployed individuals, serving as proxies for entrepreneurship, and GDP growth in Iran. These findings hold profound policy implications for Iran's developmental trajectory, accentuating the pivotal role of entrepreneurship. Alongside human and physical capital, entrepreneurship capital emerges as a linchpin in the production function and growth model. Entrepreneurs wield a direct impact on production and growth through innovation, with the dissemination of knowledge further augmenting their catalytic influence on growth and development. Hence, it is imperative for the Iranian government and policymakers to prioritize the enhancement of entrepreneurship capital from multifaceted aspects. Establishing an enabling environment for entrepreneurial endeavors should be of paramount importance, necessitating a holistic approach to evaluate and enhance economic, political, social, cultural, and legal factors shaping the business landscape. This entails fostering a competitive ambiance conducive to entrepreneurship and fostering heightened investment by entrepreneurs in Iran. By directing efforts towards bolstering entrepreneurship, Iran can harness the latent potential of its human capital and nurture innovation and creativity. 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