New Directions in Regional Economic Development

New Directions in Regional Economic Development

The Role of Entrepreneurship Theory and Methods, Practice and Policy

Edited by Sameeksha Desai, Peter Nijkamp and Roger R. Stough

The introduction of endogenous growth theory has led to new interest in the role of the entrepreneur as an agent driving technical change at the local regional level. This book examines theoretical and methodological issues surrounding the interface of the entrepreneur in regional growth dynamics on the one hand and on the other presents illuminating case studies. In total the book’s contributions amplify understanding of such critical issues as the relationship between innovation and entrepreneurship, the entrepreneur’s role in transforming knowledge into something economically useful, and knowledge commercialization with both conceptual and empirical contributions.

Chapter 9: Knowledge Accessibility and New Firm Formation

Charlie Karlsson and Kristina Nyström

Subjects: business and management, entrepreneurship, economics and finance, regional economics, urban and regional studies, regional economics


Charlie Karlsson and Kristina Nyström 9.1 INTRODUCTION It is obvious that knowledge plays a fundamental role for successful entrepreneurial activities. To have the chance to succeed, new firms must be based on a new combination of knowledge that is at least marginally superior to existing combinations in terms of product characteristics and/ or price. Thus, knowledge flows1 play an important role in fostering innovative and entrepreneurial activities (Sorensen and Audia, 2000). However, the generation of new knowledge by means of both university and company research and development (R&D) is strongly concentrated in a limited set of regions (Gråsjö, 2005). Hence, there are substantial spatial variations in the accessibility to existing as well as new knowledge, since flows of knowledge are often spatially bounded. The fact that knowledge can diffuse between locations does not imply that it transmits costlessly across geographic space. Accessing and absorbing knowledge is costly, and geographic proximity reduces these costs. Thus, we have reason to expect a substantial variation in entrepreneurial activities between regions, since the prospects for starting new firms are greater in locations offering higher accessibility to knowledge. The reason is, of course, that potential entrepreneurs can access external knowledge at a lower cost in locations with high knowledge accessibility than in locations with low knowledge accessibility. We expect, ceteris paribus, higher frequency of new firm start-ups in regions with high knowledge accessibility. There are (to our knowledge) relatively few empirical studies which analyse the effects of knowledge accessibility on entrepreneurship and...

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