Edited by John B. Davis and Wilfred Dolfsma
Chapter 19: Knowledge Spillover Entrepreneurship and Innovation in Large and Small Firms
19 Knowledge spillover entrepreneurship and innovation in large and small ﬁrms David B. Audretsch and Max Keilbach 1. Introduction 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...
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