Space - Time Patterns of Entrepreneurial Expectations and Performance

Economie research in the past decade has paid much attention to the motives of entrepreneurial behaviour in a Neo-Schumpeterian spirit. Entrepreneurial decisions are by definition characterized by uncertainty regarding future events. Rational expectations theories have become a major new line of thought in dealing with future uncertainty. In the literature we find mainly attempts to estimate indirectly relationships on observable behaviour and strategies, which are derived from postulated expectations of decision-makers. Normally, such expectations are not directly observed. In our paper we have analyzed a set of empirical regional micro data on entrepreneurial expectations regarding their future decisions, whilst for the same period the observed and realized data are also available. This allows for a test between expectations and realizations. The paper develops a model to test correspondence between facts and expectations and comes to the conclusion that in all regions and all time periods a structural under-estimation of performance has taken place. This leads to the question to which extent statistical data on expectations are coloured by strategie considerations. 1. Introductlon Economie research in the past decade has paid much attention to the motives of entrepreneurial behaviour. An important reason for this renewed interest has been the 'neo-Schumpeterian wave' for the explanation of economie dynamics, in which the 'animal spirits' of entrepreneurs were supposed to exert a critical influence on economie restructuring and technological innovation (see e.g. Davelaar 1991, Freeman et al. 1982, and Kleinknecht 1987). Another reason for the recognition of the importance of entrepreneurial decisions has been the observed close mutual relationship between spatial developments and macro-economie progress, as reflected amongst others in incubator theories and gateway concepts (see e.g. Cappellin and Nijkamp 1990, and Nijkamp 1990). Entrepreneurial decisions are by definition characterized by uncertainty regarding future events, which may be both internal and external to the firm (cf. Kantor 1979; Theil 1964). In contrast to traditional accelerator and multiplier theories, recent research on entrepreneurial strategies is much more centred around the notion of rational expectations (Hansen and Sargent 1980; cf. Lucas and Sargent 1981). Such rational expectations form a common element in both Keynesian views on economics and supply side economics. However, the empirical validation of the significance of entrepreneurial expectations is relatively weak. Clearly, in the literature (cf. Spear 1989) we often find an intriguing analysis of both adaptive and rational expectations, but the formulation and specification of such models has hardly been tested. In most cases, only relationships on observable behaviour or strategies (derived from postulated expectations of decision-makers) are usually indirectly estimated (see for instance earlier studies by Cagan 1956 and Koyck 1954). Direct estimations are found in Brown and Maitel (1981), Figlewski and Wachtel (1981) and Frankel and Froot (1987). The main cause of the unsatisfactory indirect approach is lack of empirical data on entrepreneurial expectations at a disaggregate level. Normally, such expectations are not directly observed, but only their consequences in terms of measurable and actual entrepreneurial behaviour. Thus in empirical research there has been a trend to