DP5326 The Knowledge Spillover Theory of Entrepreneurship

Author(s): Zoltán J Acs, David B Audretsch, Pontus Braunerhjelm, Bo Carlsson
Publication Date: October 2005
Keyword(s): entrepreneurship, knowledge, management science, opportunity
JEL(s): J24, M13, O3, R1
Programme Areas: Industrial Organization
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=5326

Contemporary theories of entrepreneurship generally focus on the decision-making context of the individual. The recognition of opportunities and the decision to commercialize them is the focal concern. While the prevalent view in the entrepreneurship literature is that opportunities are exogenous, the most prevalent theory of innovation in the economics literature suggests that opportunities are endogenous. This paper bridges the gap between the entrepreneurship and economic literature on opportunity by developing a knowledge spillover theory of entrepreneurship. The basic argument is that knowledge created endogenously via R&D results in knowledge spillovers. Such spillovers give rise to opportunities to be identified and exploited by entrepreneurs. Our results show that there is a strong relationship between knowledge spillovers and new venture creation.