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Entrepreneurship Sustains Innovation and Boosts Growth
Public policies should seek ways to promote entrepreneurship in order to boost economic growth, according to a review of existing research by David Audretsch of Indiana University. Audretsch seeks to distinguish what is known (supported by existing data and theories) from areas of future exploration related to entrepreneurship and economic development in "Sustaining Innovation and Growth: Public Policy Support for Entrepreneurship," an article from the September 2004 issue of Industry and Innovation.
The article examines academic literature on small enterprises and entrepreneurship since the early 20th century across various disciplines. The review considers three issues in the literature: (1) the role of small and medium sized enterprises (SMEs) in economic growth; (2) theories about the links between entrepreneurs and economic performance; and (3) empirical evidence supporting these linkage theories using different units of analysis, including the firm, region and country.
Audretsch discusses how recent research indicates a shift away from traditional outputs such as labor and capital towards knowledge. SMEs and entrepreneurs appear to have a comparative advantage in this new knowledge-based economy by nurturing innovation and bringing innovative products to the marketplace. Audretsch points to the difficulty in predicting the influence of knowledge on economic growth due to its uncertain asymmetric nature. He also cautions that knowledge will not automatically spill over and create greater commercialization.
In concluding, Audretsch suggests future academic research to clearly identify the instruments that promote entrepreneurial SMEs and define the public policies that best support these instruments. Academic research needs to direct policymakers toward appropriate ways to enhance entrepreneurial innovation and promote the transformation of these innovations into commercially viable products, he says.
Industry and Innovation is available online by subscription at: http://www.tandf.co.uk/journals/titles/13662716.asp
Indiana