Global Experience in Policy and Program Development
Edited by Sarfraz A. Mian
Chapter 14: The Israel Case of Science and Technology Based Entrepreneurship: An Exploration Cluster
Uzi de Haan INTRODUCTION A recent article in The Economist (2009) calls Israel, Singapore and Denmark the ‘lands of opportunity’ and refers to them as role models to show how entrepreneurship can thrive and flourish in small states with different cultures. The article lists some of the factors that helped make Israel a hotbed of innovation and entrepreneurship. It argues that innovation is perhaps the only way for this security-conscious state to compensate for its constant inferiority in population, land and other natural resources (except the human resource). The book, The Start-Up Nation (Senor and Singer, 2009) describes in more detail the story of Israel’s economic success. The title aptly alludes to the competitive edge of Israel’s high-tech industry. Israel lacks significant domestic or neighbouring markets, forcing start-ups to go international from day one and to grow international or to be acquired by an incumbent company in order to avoid the sizeable investments and skill-building in international marketing. The latter alternative is chosen by the vast majority of start-ups as they address a growing need by incumbent companies that have to cope with an exponential growth of new technologies and potential new business applications. A large stream of research literature following the seminal papers by March (1991) and Levinthal and March (1993) describes the difficulties incumbent companies face in engaging simultaneously in exploration and exploitation, with exploitation often overriding exploration. However, the exponential growth in new technologies and patents makes exploration by incumbent companies more important than ever to remain...
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