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The prevailing theories of entrepreneurship have typically revolved around the ability of individuals to recognize opportunities and act on them by starting new ventures…
The prevailing theories of entrepreneurship have typically revolved around the ability of individuals to recognize opportunities and act on them by starting new ventures. This has generated a literature asking why entrepreneurial behavior varies across individuals with different characteristics, while implicitly holding the external context in which the individual finds oneself to be constant. Thus, where the opportunities come from, or the source of entrepreneurial opportunities, are also implicitly taken as given. By contrast, we provide a theory identifying at least one source of entrepreneurial opportunity – new knowledge and ideas that are not fully commercialized by the organization actually investing in the creation of that knowledge. The knowledge spillover theory of entrepreneurship holds individual characteristics as given, but lets the context vary. In particular, high knowledge contexts are found to generate more entrepreneurial opportunities, where the entrepreneur serves as a conduit for knowledge spillovers. By contrast, impoverished knowledge contexts are found to generate fewer entrepreneurial opportunities. By serving as a conduit for knowledge spillovers, entrepreneurship is the missing link between investments in new knowledge and economic growth. Thus, the knowledge spillover theory of entrepreneurship provides not just an explanation of why entrepreneurship has become more prevalent as the factor of knowledge has emerged as a crucial source for comparative advantage, but also why entrepreneurship plays a vital role in generating economic growth. Entrepreneurship is an important mechanism permeating the knowledge filter to facilitate the spillover of knowledge, and ultimately generating economic growth.
Why should entrepreneurship matter for economic growth, employment creation and international competitiveness? The entrepreneurship literature has traditionally suggested…
Why should entrepreneurship matter for economic growth, employment creation and international competitiveness? The entrepreneurship literature has traditionally suggested that entrepreneurship matters to individuals and firms, but rarely for economic growth.
The purpose of this paper is to provide a link between entrepreneurial activity on the one hand, and industry evolution and economic growth on the other. The role that…
The purpose of this paper is to provide a link between entrepreneurial activity on the one hand, and industry evolution and economic growth on the other. The role that entrepreneurship plays in innovative activity is explained. The link between entrepreneurship and industry evolution through the spillover of knowledge in generating entrepreneurial activity is analyzed. This implies that the relationship between entrepreneurship and growth is identified. In particular, this paper finds that entrepreneurship generates a positive pulse in the evolution of industries in such a way that fosters economic growth.
We study the implications of ownership and its induced incentives on firm survival on the stock market for young and high‐tech firms. Using a unique data set of all 341…
We study the implications of ownership and its induced incentives on firm survival on the stock market for young and high‐tech firms. Using a unique data set of all 341 firms listed on the Neuer Markt, the German equivalent of the NASDAQ, our results differ from studies on more traditional firms. Ownership by CEOs has no influence on firm survival when introducing measurements of human capital and intellectual property rights. This confirms assumptions that firms in the knowledge based industries differ in their governance structure from traditional firms.
In contrast to the predictions from the family business and the small- and medium-sized enterprise internationalization literatures, Hidden Champions are world-market…
In contrast to the predictions from the family business and the small- and medium-sized enterprise internationalization literatures, Hidden Champions are world-market leaders exhibiting a high share of exports. The purpose of this study is to analyze their strategy of internationalization of Hidden Champions in Germany and find that the international success and strong, sustained performance emanates from their product type, enabling to successfully pursue a niche strategy for differentiated premium products.
The authors first conceptually explore how Hidden Champions pursue strategic internationalization, and then analyze a sample of N = 2,690 Hidden Champions to examine why Germany has been able to generate the highest per capita share of Hidden Champions in the world.
The study finds that on both a micro and macro level, the strong and sustained performance of Hidden Champions is driven by product type and quality strategies. Niche strategies for a knowledge-intensive, technological product enable the firm to lock-in customers. However, to safeguard the internalization of highly specific quasi-rents, Hidden Champions enter foreign markets through fully owned subsidiaries, retaining control and residual property rights. The second finding of this paper is that Germany has succeeded in deploying its high level of human capital into the Mittelstand through highly skilled workers.
Unfortunately, no micro-level panel data are available. Still macro-level data beginning in the nineteenth century provide strong empirical support for the hypothesized causality.
This is the first paper to link the strong and sustained export performance of Germany to the Hidden Champions by examining the origins of the German Mittelstand model, dating back to the social, political and economic developments of nineteenth century.
Globalization has shifted the comparative advantage in the OECD countries away from being based on traditional inputs of production, such as land, labor and capital…
Globalization has shifted the comparative advantage in the OECD countries away from being based on traditional inputs of production, such as land, labor and capital, towards knowledge. This has triggered a divergence between the competitiveness of firms and the competitiveness of locations. As the strategic management of firms dictated a response to globalization of outward foreign direct investment combined with employment downsizing at high cost locations, public policy has responded by developing the strategic management of places. Policy to promote entrepreneurship has emerged as playing a central role in the strategic management of places, because entrepreneurial activity is the conduit between investments in knowledge and economic growth at the particular location. However, due to the two sources of market failure associated with investments in knowledge and entrepreneurial activity identified in this paper, private agents will tend to under invest in entrepreneurial activity. A major goal of the strategic management of places is to pursue policies that will compensate for this market failure by promoting knowledge-based entrepreneurship as a vehicle for the employment growth and global competitiveness. The purpose of this paper is to explain why and how globalization has triggered the emergence of a new type of public policy – the strategic management of places – and the central role that entrepreneurship plays in this new policy.
The purpose of this paper is to study the development of the biotechnology industry at the industry and firm level when the financing environment becomes hostile and…
The purpose of this paper is to study the development of the biotechnology industry at the industry and firm level when the financing environment becomes hostile and assess the reasons for this development.
An organizational evolution perspective to analyze the case of the German biotech sector was applied and its response to the hostile financing environment in the years 2002‐2004, which followed the burst of the high‐tech bubble at the stock markets. Population ecology and data from biotech reports to investigate the pattern of external adaptation processes at the industry level were used. The evolutionary economics perspective, multiple case studies of bioventures, and biotech reports to study internal adaptation processes at the firm level was employed.
The assumption of both external and internal adaptation processes was found in parallel is necessary to explain the evolution of the biotech industry in a hostile financing environment. Although external adaptation takes place to some extent through insolvencies and a reduced rate of new firm foundations, many bioventures adapt internally by downsizing, changing their business models, and entering into strategic alliances and M&As. This results in surprisingly weak consolidation at the industry level.
This paper provides an explanation why the consolidation of the German biotech industry in 2002‐2004 was much weaker than expected by experts. Moreover, the paper shows that application of population ecology and evolutionary economics in parallel well describes industry evolution and organizational change. Finally, the paper demonstrates how bioventures can adapt their financing strategies to hostile environments.