Innovation and Entrepreneurship in the Global Economy: Knowledge, Technology and Internationalization

Citation

Constantinos Choromides (2016), "Innovation and Entrepreneurship in the Global Economy: Knowledge, Technology and Internationalization", International Journal of Entrepreneurial Behavior & Research, Vol. 22 No. 4, pp. 587-586. https://doi.org/10.1108/IJEBR-01-2016-0010

In a stimulating and original book Karlsson, Gråsjö and Wixe explore some of the key drivers and elements of innovation and entrepreneurship by providing a mixture of perspectives for explaining the complex and diverse interplay between innovation, entrepreneurship, and internationalization. Although these relationships have been subject of considerable scholarship, by exploring simultaneously the meso and micro economic drivers on innovation and entrepreneurship in the global economy, the objective of this edited book is to contribute with substantial theoretical and empirical perspectives into several research topics including the economics of innovation and entrepreneurship, regional and international economics, and economic geography as facilitators of growth and development in the global economy. The editors have compiled this book by incorporating a selection of 13 papers across a breadth of topics that presented at the 16th Uddevalla Symposium, which has held in Kansas City in June 2013. The book is divided into three clearly delineated parts: innovation, entrepreneurship and internationalization.

The first part explores the concept of innovation under the prism of theoretical approaches and practical applications through various international cases, including the relationship between R & D and firm survival, the value of R & D partnerships, the process and challenges of technological advancement through imitations in strategic alliances, the scope and pattern of innovation cooperation from the international new ventures perspective, and the effects of routine in learning and innovation in industrial production.

In Chapter 1 Madrid et al. analyse the relation between R & D and firm survival in Spain, highlighting the positive relationship between R & D expenditure and survival probability, with differences depending on the environment. The research findings generate economic policy recommendations, as the authors provide evidence that suggest where to allocate R & D resources. In Chapter 2 Broström and McKelvey contribute with an empirical assessment of whether the two parallel systems of public research organization serve different functions as collaboration partners for industry in Sweden, concluding that a partnership with universities is focused on generation of impulses to innovation as compared with partnership with research institutes. In Chapter 3 Mary George et al. suggest that imitation and not innovation is the main source of technological advancement in strategic alliances. Evidence from a longitudinal study of 153 corporations with varying levels of technological development that established partnerships with both startups and fellow incumbents across various industries, demonstrates that lagging established corporations prefer to imitate start-ups and not fellow incumbents. The results provide novel guidelines for startup companies seeking to align with industry leaders and extend the literature on strategic alliances, entrepreneurship and technological innovation.

In Chapter 4, Abrahamsson et al. examine the scope and pattern of inter-organizational collaboration of Swedish international new ventures and propose that firms in the early growth stage are more proactive in scanning for potential foreign network partners and market opportunities, while firms that formed as a spinoff or as a merger have a broader scope of international partnerships compared to greenfield establishments. Their evidence contribute with several interesting guidelines for international entrepreneurs and policy makers, especially in small countries where the need for international development programmes and competences, building network capabilities, is of the utmost importance. In Chapter 5, Westeren discusses how definitions of the concept of routines have advanced the different characteristics that can be linked to the concept of routines and whether routines stimulate or hinder learning and innovation in industrial production. Important characteristics are stability of routines, how they repeat themselves and to what extent they are context and path dependent. All the issues are then empirically discussed in relation to learning and innovation, with an example of how learning and innovation can be seen in relation to creation, maintenance and changes in routines.

The second part set the stage for the entrepreneurial call in the title by exploring the concept of entrepreneurship through the prism of the role of creativity and human in economic development, the regional entrepreneurship culture as a source of persistent differences in regional rates of new firm formation, the characteristics and patterns of immigrant entrepreneurship in high-tech industries, the relationship between broadband infrastructure and new firm formation, and the role of cognitive bias as a reinforcing mechanism that facilitates start-ups on the local level.

In Chapter 6 Audretsch and Belitski provide evidence on the impact of creativity and human capital in regional economic development based on data from European cities. Their contribution to the entrepreneurship and regional literature lies in the evidence that the size of the impact depends on the propensity of skills and knowledge to spill over, an open and diverse environment promoting creativity and exchange of ideas, agglomeration economies and a diverse culture supportive to entrepreneurship. They confirm that the availability of creative capital does not per se result in economic development, rather than entrepreneurship moderates this complex mechanism for regional development, by facilitating the spillover and commercialization of creative skills and knowledge. In Chapter 7 Andersson discusses the regional entrepreneurship culture as a source of persistent differences in regional rates of new firm formation, presenting a number of empirical regularities to illustrate the empirical relevance of the main arguments. Using data on rates of new firm formation over time in Sweden, the association between start-up activity and the business cycle, as well as how the geographic distribution of start-up rates changes during a major economic crisis is explored. Given the role played by entrepreneurship cultures, their evidences are particularly relevant in the context of policy aimed at stimulating regional entrepreneurship.

In Chapter 8 Liu et al. explore the characteristics and patterns of immigrant entrepreneurship in high-tech industries in the USA, and the factors that shape the residential patterns of immigrant entrepreneurs across metropolitan areas, and contribute with several implications for policy makers aiming to promote and advance immigrant and high-tech entrepreneurship. Their empirical findings suggest that supporting industries are very important for immigrant high-tech businesses, while higher ethnic diversity and a larger share of the foreign-born population are crucial factors in attracting or fostering high-tech entrepreneurship. In Chapter 9, Parajuli and Haynes contribute to the literature by empirically examining the relationship between broadband internet and new firm formation in the USA, demonstrating that single-unit firm births and the provision of broadband are positively related across almost all industry sectors. However, as the authors argue, the impact of broadband provisioning on new firm formation is sensitive not only to agglomeration but also to differences between states and industry sectors since no all sectors or states benefit equally from broadband.

Svensson in Chapter 10 examine the importance of entrepreneurship as this is reflected in a number of regularities regarding start-up companies entering the market despite low probabilities for survival, addressing this matter by highlighting the role of cognitive bias arguing that regularity is driven by the interaction between the cognitive behaviour of entrepreneurs and contextual conditions. Svensson put emphasis on to how this cognitive bias acts as mechanism that causes overweight of unlikely conditions resulting in lower risk perceptions, that make start-up creation possible, and suggest that the entrepreneurs’ cognitive bias although not beneficial to the individual agent as it negatively affect survival rates, yet at the system level may have a positive effect as it supports spillover effects.

The final part of the book, discuss the concept of internationalization by providing a review of empirical research that explores the factors that drive the emerging pattern of bringing back production to Western countries from less developed economies, the source of firms’ productivity by examining the link from R & D investments and innovation output to firms’ productivity and export performance, and finally the effect of social capital and transport infrastructures on the decision to fully or partially outsource production activities.

Tavassoli et al. in Chapter 11 based on the product life-cycle theory explain how the location of production progressively shifts to the West, using evidences from the USA, contributing to the study of the recent developments on the location of manufacturing by identifying and discussing the main factors that drive this new trend: the convergence of the labour costs between emerging and developed economies, the falling quality of business environment in emerging economies, the emergence of new process innovations and improvements in technology in Western economies, and the rising demand for Western-made manufacturing. In Chapter 12, Jienwatcharamongkhol and Tavassoli empirically examine the relationship between productivity and export performance of firms by incorporating innovation in a structural model, contributing to the literature not only by closing the gap between the productivity-exporting and innovation-productivity literature, but also by providing insights into the internationalization process of firms and how innovation policies might increase the competitiveness of the economy. They suggest that export performance of firms is explained by the productivity of those firms that have succeeded in adopting innovation output in the past, since these firms are expected to improve their productivity and will be in better position to manage the entry costs for exporting at a later stage.

In the final chapter Antonietti et al. using a dataset of small firms located in Emilia Romagna, Italy, examine the effect of social capital on the propensity to fully or partially outsource production activities, and whether this effect depends on the local endowment of transport infrastructures. They provide a framework of the system in which the environment that firms are settled influences their organization of production and examine the various influences impact of opportunistic behaviour in favouring subcontracting when the local level of infrastructure endowment is included. The authors found that the propensity to fully outsource production activities increases with the local level of social capital, and this effect is more evident in regions with good infrastructure.

Although at the introductory chapter authored by the editors, a summary of the papers is provided along with a reflective commentary of the concepts that motivated the compilation of the volume, the book however is weakened by the lack of a final chapter drawing the different chapters and arguments together and in relation to the themes of innovation and entrepreneurship in the global environment followed by suggestions for linked policy actions. Since this is an edited volume, we would want to see the editors’ personal opinion and reflection on the chapters and how the content of the book has affected their views on entrepreneurship and innovation. Still this is by no means a significant weakness.

Taken as a whole, this edited volume is well conceived, written with clarity successfully match its title and objectives. It benefits from the use of a balanced mix of broad theoretical frameworks and original empirical research which are used to develop to the targeted audience of students, researchers, entrepreneurs and policy makers not only the necessary mindset needed in order to understand innovation and entrepreneurship in a global world, but also significant practical considerations. Each chapter has clear research objectives, updated reference list and ends with a number of critical questions and propositions highlighting potential future research. The discussion sections clearly demonstrate the contribution, originality and value of the research, giving emphasis on the applicability of the results. Moreover the limitations of the research are explained and discussed, making suggestions for future research and consideration on the topics. There is no doubt that the book will spark the interest and engage the reader, as it offers many contemporary and practical examples that allow the reader to develop a progressive and embedded understanding of the process on the formation of entrepreneurship and innovation.