Edited by David B. Audretsch, Oliver Falck, Stephan Heblich and Adam Lederer
Chapter 15: Innovation, Entrepreneurship and the Search for Knowledge Spillovers
Zoltan J. Acs INTRODUCTION David B. Audretsch and Zoltan J. Acs were attracted to the economics of technological change by the innovative prowls of new-technology-based firms in the 1980s. While the conventional wisdom held that large firms had an innovative advantage over small firms, in a 1988 article in the American Economic Review they discovered an anomaly instead of solving a problem: A perhaps somewhat surprising result is that not only is the coefficient of the large-firm employment share positive and significant for small-firm innovations, but it is actually greater in magnitude than for large firms. This suggests that, ceteris paribus, the greater extent to which an industry is composed of large firms, the greater will be the innovative activity, but that increased innovative activity will tend to emanate more from the small firms than from the large firms. (Acs and Audretsch, 1988, p. 686) The anomaly of where new technology-based startups acquire knowledge was unresolved. Building on the work of Griliches (1979), Adam Jaffe (1989) was the first to identify the extent to which university research spills over into the generation of commercial activity. Building on Jaffe’s work, Maryann Feldman (1994) at Carnegie Mellon University expanded the knowledge production function to innovative activity and incorporated aspects of the regional knowledge infrastructure. Attila Varga (1998) at West Virginia University extends the Jaffe–Feldman approach by focusing on a more precise measure of local geographic spillovers. Varga approaches the issue of knowledge spillovers from an explicit spatial econometric perspective. The Jaffe...
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