Digital infrastructure and education as drivers of entrepreneurship in the European Union
DOI: https://doi.org/10.3846/tede.2026.27152Abstract
In the context of accelerated digital transformation, understanding the factors that stimulate entrepreneurship at the European level has become a strategic priority. This study investigates the impact of digital infrastructure and human capital on new business density in the European Union, testing the hypothesis that these determinants operate differently depending on countries’ innovation stage. The analysis is grounded in a balanced panel dataset covering 26 EU member states over the period 2010–2023, grouped into four innovation clusters according to the European Innovation Scoreboard. Empirical analysis adopts a dual econometric approach. Static relationships are estimated using a Panel EGLS framework with cross-section SUR weights to capture short-run correlations and cross-country interdependence. Dynamic relationships are examined through a Panel Autoregressive Distributed Lag (ARDL) model estimated via the Pooled Mean Group (PMG) method, allowing for the identification of long-run equilibrium effects and adjustment dynamics while accounting for structural heterogeneity. Results show substantial cross-cluster heterogeneity. For Moderate Innovators, primarily located in Southern and Central Europe, digital infrastructure acts as a clear catalyst for entrepreneurship, exerting positive effects on new business density in both the short and long run. In contrast, for Strong Innovators, digitalization displays a more complex temporal pattern, with short-run effects dominated by implementation and adjustment costs, while long-run benefits materialize as productivity gains. The analysis shows that tertiary education supports entrepreneurial entry in the short run, while its long-run effect becomes negative, reflecting rising opportunity costs and the increasing absorption of skilled labor into corporate employment. While emerging economies benefit directly from investments in digital infrastructure, mature economies require structural interventions to reduce market rigidities and better align human capital with entrepreneurial activity.
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entrepreneurship, digital infrastructure, human capital, innovation clusters, panel ARDL, European UnionHow to Cite
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Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
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Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
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