The Entrepreneurial Society

The Entrepreneurial Society

How to Fill the Gap Between Knowledge and Innovation

Edited by Jean Bonnet, Domingo García Pérez De Lima and Howard Van Auken

This timely book analyzes the emergence of new firms in a broad context where economics, management and sociological approaches are joined. The market benefits of an entrepreneurial economy are evident in the new technology that has been made available to consumers over the past ten to twenty years. Entrepreneurial firms provide the market with innovations that create new products and, in turn, generate new employment and tax revenue, thus playing a critical role in surviving the economic crisis. The book explores diverse conditions that explain, permit and support entrepreneurship, allowing thinking outside the box and enhancing breakthrough innovations. At a time when new challenges are appearing regarding the ecological footprint, this is crucial.

Chapter 2: High Education, Sunk Costs and Entrepreneurship

Jean Bonnet and Pascal Cussy

Subjects: business and management, entrepreneurship

Extract

Jean Bonnet and Pascal Cussy INTRODUCTION 2.1 Baumol (1990) observes that if the total number of entrepreneurs varies in different societies their contribution to growth varies even more according to their allocation in time and space between more or less productive activities depending on periods and cultures. The lack of entrepreneurship capital leads to the European paradox, a high level of knowledge investments for poor results in terms of growth and reduction of unemployment (Audretsch, 2007). Even though entrepreneurship has been acknowledged as a factor of growth by economists for a long time (Leibenstein, 1968), the difficulty in integrating all the idiosyncratic features of the entrepreneur1 has prevented the entrepreneur being taken into account in a formalized theory. The microeconomic decision to get into entrepreneurship nevertheless enables an approach to entrepreneurship in terms of occupational choice. The decision to become an entrepreneur is mainly a decision of allocation of one’s human capital considering the comparison between an entrepreneurship opportunity cost with a reward (financial, symbolic – social status – indeed psychological) prospect. Part of the strong growth experienced over recent years in the USA comes from new knowledge economy companies. This contrasts with Europe where there is a need for developing entrepreneurial intensity, especially in innovative sectors. The setting up of innovative companies then constitutes the missing link to go from a knowledge economy to what can be named an innovation economy. There are numerous reasons for this deficit in entrepreneurship (culture, financial means, fiscal policy and so on). One of the...

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