Volume 1, Issue 4 - Advancing Research on Innovation and Entrepreneurship

In this Inaugural Year of Entrepreneurship Research Journal (ERJ), and with this new Issue 4 titled, „Advancing Research on Innovation and Entrepreneurship“, editors Chandra S. Mishra, Office Depot Eminent Scholar Chair at Florida Atlantic University, and Ramona K. Zachary, Academic Director of the Lawrence N. Field Programs and the Peter S. Jonas Distinguished Professor of Entrepreneurship at Baruch College, offer a dedication to Steve Jobs who was an innovator and entrepreneur extraordinaire. He transformed a sleepy Silicon Valley into the leading innovation center in the world. His technological creations, during his shortened but dynamic life, have not only revolutionized how consumers interact with technology but how we experience human interactions throughout the world. Researchers from all disciplines have been intrigued and inspired by his entrepreneurial vision and creative genius. The lead article, by William J. Baumol, urges researchers to further investigate the innovation process, the incentives for innovators given their low returns and low odds of success, and the role of the public sector in encouraging innovation given the enormous social gains. The three competitive research articles contribute to our understanding of innovation and entrepreneurship literature by: 1) examining the types of entrepreneurial knowledge and their impact on innovation; 2) examining the linkage between a country‘s investment on R&D and number of startups; and 3) explaining the inability of an entrepreneur to move away from a struggling venture. As ERJ‘s first Commentary, Stuart A. Schulman and Edward G. Rogoff ask us to rethink the technology enabled entrepreneur and begin to build a bridge between economic theory about innovation and the funding and production challenges facing entrepreneurs as they bring their technologies to the market.

There is strong evidence that invention is an activity that is very risky for the inventor and that those who participate in the invention process, taken as a group, obtain a minuscule share of the benefits. Nevertheless, the evidence also indicates that the social benefits of invention in recent centuries have been enormous. Yet, the relatively few examples of enormous payoffs to the inventors and their investors may serve, like the multimillion dollar prizes offered by some lotteries, to stimulate a level of inventive activity that may even be close to the social optimum.

This article is premised on the underlying notion that knowledge is crucial to the opportunity recognition and development process. Springboarding from the insights of Atkinson and Stiglitz (1969) on the localized nature of knowledge accumulation, we define a feasible solution space and examine the implications of entrepreneurial knowledge in the recognition and development of opportunity within this space. Distinguishing between two forms of entrepreneurial knowledge, namely context dependent idiosyncratic knowledge or tacit knowledge, and codified knowledge, the primary aim of this article is to propose a knowledge-based model of opportunity within a bounded solution space. Our discussion of this model includes elaboration on how the composition of entrepreneurial knowledge predicts major path differences for the expansion and development of opportunities.

Increasingly, entrepreneurship is being discussed and considered as a source of high economic growth and competitiveness. Agarwal, Audretsch and Sarkar (2010), questioning the underlying assumptions in the traditional framework of the process of creative destruction, provide an alternative conceptual process of creative construction that characterizes the dynamics between entrants and incumbents. Conceptually, this new framework of creative construction can prove quite useful to analyze the impact of countries’ entrepreneurship capital on economic performance and can be a guide for economic policy. Audretsch and Keilbach (2003), argue that entrepreneurship capital promotes economic performance by serving as a conduit of knowledge spillovers. A Stochastic Frontier Analysis (SFA) approach is applied here to test this hypothesis. In addition, kernel density functions are employed to analyze convergence (or divergence) in the efficiency estimated for individual countries. The empirical evidence and results here tend to support the Audretsch and Keilbach hypothesis. Specifically, the empirical analysis shows that the rate of expenses on R&D in relation to New Businesses Registered (NBR) has a positive and significant effect in increasing technical efficiency. These factors facilitate the dissemination of existing knowledge, develop entrepreneurship capital, and thus provide the missing link to economic performance—entrepreneurship capital. We also show the trends and dynamics of changes in countries technical efficiency. Policy implications from these findings are presented.

One unintended consequence of entrepreneurial action may be that the entrepreneur becomes intertwined with the business. This phenomenon is called entrapment and we draw on Becker’s Side-Bet Theory to explore the relationship between entrepreneurial success, individual differences, and feelings of entrapment. The general logic is that as venture success increases entrepreneurs are better able to satisfy commitments and have a greater sense of alternatives that reduce feelings of entrapment. We surveyed 122 active entrepreneurs and found support for the venture success — feelings of entrapment relationship. We also found significant direct relationships between feelings of entrapment and attitude towards risk and fear of failure, however, these variables did not moderate the venture success — entrapment relationship. One implication of our findings is that entrepreneurs running marginally performing businesses are likely to experience greater feelings of entrapment.