1.5: The Knowledge Spillover View of Entrepreneurship Flashcards Preview

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Flashcards in 1.5: The Knowledge Spillover View of Entrepreneurship Deck (22)
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1
Q

Is there a link between investment in knowledge by universities and entrepreneurial activity?

A

There is a link between of investment in knowledge by universities and regions to the amount of entrepreneurial activity associated with each.

2
Q

Which institution has a key role in the creation of knowledge?

A

Universities:
– Academic research
– Provision of human capital

3
Q

How do the Universities provide knowledge through Academic research?

A

– Publications in scholarly journals
– Knowledge provided by articles can be transferred and transmitted with low costs
– Access is invariant to locational distance from the university that provides the knowledge

4
Q

How do the Universities provide knowledge through Provision of human capital?

A

– Embodied in students graduating from universities
– Employment of university graduates: most frequent type of interaction between universities and firms [Schartinger et al., 2001]
– Spatial proximity to universities can generate positive externalities that can be accessed by firms through the spillover mechanism of human capital

5
Q

What is the Traditional View of Knowledge and Innovation?

A

• Exogenously existing firms
• Firms invest in research and development or augmentation of human capital through training and education of workers
• Endogenous creation of new knowledge and ideas
–> Model of the Firm Knowledge Production Function

6
Q

What is the Entrepreneurial Theory of Knowledge?

A

• Economic agents possess exogenous knowledge
• Agents attempt to appropriate the returns from that knowledge
• Process may involve the endogenous creation of a new firm
–> Knowledge Spillover Theory of Entrepreneurship

7
Q

What are the types of entrepreneurial opportunities?

A

– Opportunity recognition
– Opportunity discovery
– Opportunity creation

8
Q

What is the actual source of entrepreneurial opportunities?

A

One Source: Knowledge and ideas that have not been adequately commercialized by incumbent firms.

9
Q

How does knowledge differ from the traditional factors of production?

A

– Non-excludable
– Non-exhaustive
– Greater degree of uncertainty
– Higher extent of asymmetries

10
Q

What does it mean that knowledge is non-excludable?

A

New knowledge automatically spills over.

11
Q

Why does knowledge have a Greater degree of uncertainty?

A

– Expected value of any new idea is highly uncertain
– Variance is much greater than would be if associated with the deployment of traditional factors of production
– E.g. relative certainty about what a worker can contribute
– Innovation: uncertainty whether the new product can be produced, how it can be produced, whether sufficient demand might materialize

12
Q

Why does knowledge have higher asymmetries?

A

– To correctly evaluate a proposed new idea, the decision maker may need a very special background
– Divergences in background, education or experience lead to divergences in the expected value of a new project or the variance in outcomes anticipated from pursuing that new idea
– Result: divergences in the recognition and evaluation of opportunities across economic agents and decision-making hierarchies
–> Decision-making hierarchies may decide not to pursue and try to commercialize new ideas that individual agents think are valuable and should be pursued

13
Q

What are the two kinds of knowledge?

A
  1. New knowledge

2. Economic or commercialized knowledge

14
Q

What is the gap between new and economic knowledge?

A

Knowledge filter, which via entrepreneurial activity is bridged.

15
Q

What is the Theory of Endogenous Entrepreneurship, and what leads to increased entrepreneurial opportunities?

A

Entrepreneurship is an endogenous response to opportunities created by investments in new knowledge that are not commercialized due to the knowledge filter.

Increased investments in new knowledge → increase divergence in evaluation across economic agents → increased entrepreneurial opportunities

16
Q

What is the geographical scope of knowledge spillovers?

A

It is restricted to a limited number of neighboring regions or to regions within a given maximum distance from the region of interest.

17
Q

What is the Knowledge Spillover Theory of Entrepreneurship?

A
  • Entrepreneurial activity will result from investments in new knowledge
  • Entrepreneurial activity will be spatially localized within close geographic proximity to the knowledge source
18
Q

What is the study by Audretsch and Lehmann (2005),

„Does the Knowledge Spillover Theory of Entrepreneurship hold for Regions?”, about?

A

Study of 281 firms and 73 universities.

Number of articles published by universities and the number of firms located closest to the Universities.

19
Q

What were the control variables in the study of Audretsch and Lehmann (2005)?

A

• Control variables which may influence the degree of technology Entrepreneurship located around a university
– Dummy variable indicating a technical university: More funds compared to other universities to foster and promote spillovers from new technologies to firms
– Age of university: control for reputation effects
– Number of inhabitants
– Number of universities of applied sciences: not engaged in academic research
– Dummy variable for western or eastern part of Germany: Control for re-unification effects

20
Q

What is the methodology of Audretsch and Lehmann (2005)?

A
  • Estimation of the impact of the technology index and university research output on the role of geographic proximity
  • Assumption: number of knowledge spillover startups located within geographic proximity to a university can be interpreted as count data
  • Negative binomial regression model
21
Q

What are the results of Audretsch and Lehmann (2005)?

A
  • Higher technological capacity of the region leads to greater number of firms locating in that region
  • Higher number of universities of applied sciences leads to higher number of firms
  • University output influences location decisions of firms
  • Research intense universities especially in natural sciences are more attractive for high-tech firms
  • Research activities in social sciences seem to have no impact on the number of firms
22
Q

What is the general conclusion on The Knowledge Spillover View of Entrepreneurship?

A
  • Investment in the creation of new knowledge will generate opportunities for Entrepreneurship as a mechanism for knowledge spillovers
  • Empirical examination shows that in regions with a higher knowledge capacity and greater knowledge output a higher number of technology startups is generated