The Elgar Companion to Social Economics, Second Edition
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The Elgar Companion to Social Economics, Second Edition

Edited by John B. Davis and Wilfred Dolfsma

Social economics is a dynamic and growing field that emphasizes the key roles social values play in the economy and economic life. This second edition of the Elgar Companion to Social Economics revises all chapters from the first edition, and adds important new chapters to reflect the expansion and development of social economics. The expert contributions explain a wide range of recent developments across different subject areas and topics in the field, mapping out possible directions of future social economic research. Social economics treats the economy and economics as embedded in a web of social and ethical relationships. It considers economics and ethics as essentially connected, and adds values such as justice, fairness, dignity, well-being, freedom, and equality to the standard emphasis on efficiency. This book will be a leading resource and guide to social economics for many years to come.
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Chapter 21: Knowledge spillover entrepreneurship and innovation in large and small firms

David B. Audretsch and Max Keilbach


Where do new opportunities come from and what is the response of decision-makers when confronted by such new opportunities? The disparate approaches pursued to answer these questions distinguish the literature on entrepreneurship from that on firm innovation. The model of the knowledge production function of the firm has assumed the firm to be exogenous, while opportunities are endogenously created through purposeful investments in the creation of new knowledge, such as expenditures on research and development and augmentation of human capital. By contrast, in the entrepreneurship literature the opportunities are generally viewed as exogenous but the start-up of the new firm is endogeneous to characteristics specific to the individual. The focus of the entrepreneurship literature in general, and entrepreneurship theory in particular, has been on the cognitive process by which individuals recognize entrepreneurial opportunities and then decide to attempt to actualize them through the process of starting a new business or organization. This approach has typically taken the opportunities as given and focused instead on differences across individual-specific characteristics, traits and conditions to explain variations in entrepreneurial behavior. The purpose of this chapter is to reconcile these two disparate literatures on entrepreneurship and firm strategy. We do this by considering entrepreneurship to be endogenous – not just to differences in individual characteristics, but rather to differences in the context in which a given individual, with an endowment of personal characteristics, propensities and capabilities, finds herself.

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