Knowledge Intensive Entrepreneurship and Innovation Systems

Evidence from Europe

Franco Malerba

• Publisher: Routledge
• Year: 2010
• Print ISBN: 9780415745246
• eBook ISBN: 9781135156916
• Topic: Business
• Subtopic: Business General
• Index: Business

This book examines entrepreneurship from three interrelated perspectives. Firstly, it links entrepreneurship to innovation and to the generation, transformation and use of knowledge. Secondly, it inserts entrepreneurship in innovation systems of various types- national, sectoral and local. Thirdly, it views entrepreneurship not as a single event but as a process that evolves in time, from the pre-entry experience, to the entrepreneurial act, to the evolution of the entrepreneur and the new company.

With chapters from a range of international contributors, the book answers questions such as; what are the main dimensions of knowledge intensive entrepreneurship? What are the factors affecting its emergence, evolution and performance? How important is knowledge intensive entrepreneurship for European growth and competitiveness? Is the situation of Central and Eastern Europe, engaged in a process of major economic and institutional transformation, similar or different from the one of Western Europe?

Part I
Introduction

1
Knowledge-intensive entrepreneurship and innovation systems in Europe

Franco Malerba

1 Introduction

Knowledge-intensive entrepreneurship plays a major role in innovation, transformation of the industrial system and economic growth. New ventures that use, absorb and generate new knowledge and introduce new products and processes into the economy are a vital part of the economic progress and one of the back-bones of the international competitiveness of countries. In addition, knowledge-intensive entrepreneurship rejuvenates technologies and industrial structure and contributes to the creation of new jobs. Increasingly, policy-makers are targeting these types of ventures in the belief that they are essential elements for innovation and prosperity.

This book examines knowledge-intensive entrepreneurship according to three related perspectives.

• First, the book links entrepreneurship to innovation and knowledge. Therefore the generation and use of knowledge become an essential part of entrepreneurship. In this way entrepreneurship becomes a major element of the dynamics of the economic systems and of the change of knowledge. It represents a major engine of growth and transformation of technologies and industries.

• Second, the book moves away from a person-centric view of entrepreneurship and links entrepreneurship to innovation systems. In this perspective entrepreneurship is dependent on, and related to, the presence and working of various types of actors (such as financial organizations, suppliers, users, public agencies, the local and the central government), networks of collaborations of various types and the institutional setting (in terms of regulation, standards, public policies and so on). In a sense knowledge-intensive entrepreneurship is examined as context dependent, specific to the systems in which it operates—national, sectoral or local.

• Third, the book adopts a process view of entrepreneurship. Entrepreneurship becomes characterized by various stages—from the pre-entry experience of the entrepreneur, to the start-up phase, to survival and to growth. Therefore knowledge-intensive entrepreneurship is intrinsically dynamic. However, because it is inserted into innovation systems and has transformational properties, knowledge-intensive entrepreneurship is not just affected by innovation systems, but also contributes to change them.

Along these three perspectives, this book tries to answer the following questions. What are the conceptual building blocks of knowledge-intensive entrepreneurship? What are the factors affecting it? How relevant is it across technologies? What are its main characteristics in advanced European countries? And in transition economies? What are its main features across industries and sectoral systems?

This chapter aims to set the broad framework that has shaped this book and at the same time intends to start answering these questions. It refers to the various chapters of this book that represent extensive revisions of the contributions developed and written for the European research project KEINS supported by EU DG Research (Knowledge base entrepreneurship: institutions, networks and systems, EU project no. CT2-CT-2004–506022). However this chapter refers also to other contributions that have been part of the KEINS project and that touch relevant issues related to knowledge-intensive entrepreneurship but that are not in this book for reasons of space. In the pages that follow there are papers that are referred to as ‘KEINS’. These other contributions can be found at www.kites.unibocconi.it (then go to ‘Research networks’ and then to ‘KEINS’ and to ‘Deliverables’ in order to download these papers).

This chapter is organized in the following way. In Section 2 the means and measures of knowledge-intensive entrepreneurship are discussed. Then in Sections 3, 4 and 5 the main building blocks are examined: innovation (Section 3), knowledge (Section 4) and innovation systems (Section 5). Section 6 focuses on the European case and provides a quantitative view of new innovators and of academic inventors. In Section 7 the analysis then shifts to two surveys on knowledge-intensive entrepreneurship, one done in Western Europe and the other in Central and Eastern Europe. Finally, in Section 8, the main features of knowledge-intensive entrepreneurship in specific industries and sectoral systems are presented. Some policy implications close the chapter.

2 A broad view of knowledge-intensive entrepreneurship

This book adopts a broad definition of knowledge-intensive entrepreneurship: knowledge-intensive entrepreneurship concerns new ventures that introduce innovations in the economic systems and that intensively use knowledge.

From this broad definition, it follows that knowledge-intensive entrepreneurship may take place in various ways: through the foundation of new firms or through the display of entrepreneurial spirit within existing firms or through the action of single individuals within non-profit organizations such as universities or public laboratories. Some of these are start-ups in terms of new and small firms, involved in the commercialization of new knowledge. Other times knowledge-based entrepreneurship involves the generation of new activities within large corporations (corporate entrepreneurship). Here technological diversification is relevant. In other instances actors such as researchers and scientists within universities play a major role.

The main part of the book presents a variety of quantitative analyses, which are highly complementary. These analyses range from those based on existing micro data—such as new firms formation, spin-offs, companies that patent for the first time, inventors, academic entrepreneurs, firms with high skill intensity to ad hoc surveys explicitly carried out in order to shed new light on knowledge-intensive entrepreneurship. Finally, the book contains detailed case studies of knowledge-intensive entrepreneurship.

In this book the quantitative analyses have started from the consideration that knowledge-intensive entrepreneurship may concern those companies that have a high level of skills or high expenditures in R&D. As a consequence, knowledge-intensive entrepreneurship does not characterize only high-tech sectors, but can also be present in traditional and medium- or low-tech sectors. More specifically, in this book three complementary definitions of knowledge-intensive entrepreneurship have been used for quantitative analyses using large sets of micro data.

1 The first one defines knowledge-intensive entrepreneurship as those new firms in sectors that are highly knowledge-intensive. This means that knowledge-intensive entrepreneurship is represented by new firms in high technology sectors, in ICT or in all those sectors with a high content of human capital and skills.

2 The second definition considers knowledge-intensive entrepreneurship the new innovators in a technology/sector. New innovators in a technology or sector can be either de novo entrants or established firms active in a process of technological diversification. In this book new innovators in terms of de novo entry or technological diversification are measured in terms of those firms that patent for the first time in a technology/sector.

3 The third definition considers academic inventors, and refers to academic start-ups as well as to academic patenting in various technological classes.

3 The first building block of knowledge-intensive entrepreneurship: innovation

Entrepreneurship is a multidimensional and multidisciplinary concept. Analyses of entrepreneurship have focused on various dimensions and elements: the individual, the group, organizations (firms, universities etc.), industries and countries. The disciplines that have studied it have ranged from economics, to management, organization, sociology, cultural studies and so on. So different fields of studies have tackled the issue. Surveys of entrepreneurship have been done by, amongst others, Busenitz et al. 2003; Gartner 1990; Acs and Audretsch 2003; Casson 1982 and 2003; Glancey and McQuaid 2000; Shane 2000; Storey 2000; Swedberg 2000; Westhead and Wright 2000. Only in economics we have at least three traditions dealing with entrepreneurship (Audretsch and Keilbach, KEINS,¹ 2006; and Garavaglia and Grieco, KEINS, 2005): the Schumpeterian one focused on innovation, the Chicago one related to Knight’s approach and the Austrian one related to Von Mises, Kirzner and Shackle.

In this book entrepreneurship is examined along three well-defined perspectives. Innovation is the first one. This follows a Schumpeterian approach, as Schumpeter’s 1934 statement claims: ‘The carrying out of new combination we call “enterprise”…the individuals whose function is to carry them out we call “entrepreneurs”.’ In this perspective one we may want to define entrepreneurship as the setting up and the owning of a new business. However it often happens that, even if a new firm is per se ‘something new’, it has no characteristics of novelty or change (just think about the simple break-up of a firm in two subsidiaries). And also some studies emphasize the ‘opportunistic and innovative behaviour and therefore include as entrepreneurs those who transform an existing company or organization rather than setting it up [of a new business]’ (Schumpeter 1934). As a consequence, in this book entrepreneurship is considered an activity that faces uncertainty and has the goals of creating something new: a technology, a product, an organization, a market. In this respect one may advance the point that the field of entrepreneurship is ‘the study of sources of opportunities, the processes of discovery, evaluation, and exploitation of opportunities; and the set of individuals who discover, evaluate and exploit them’ (Shane and Venkataraman 2000:218). In this perspective, Audretsch et al. (2002) propose to distinguish between demand factors (in terms of market opportunities) and supply factors (in terms of resources and talent/abilities/traits) and to examine how they shape the risk and reward profiles, the generation of new knowledge, the development of innovation, and the entry and exit in an industry.

4 The second building block of knowledge-intensive entrepreneurship: knowledge

A second building block of knowledge-intensive entrepreneurship is knowledge. Scientific and technological knowledge have become of paramount importance for innovation (Foray 2002). As a consequence, the share of the scientifically educated workforce has risen continuously over the past three decades in almost all the European countries, generating an additional supply of highly qualified human capital. So, in addition to the classical qualifications in applied sciences in the various engineering disciplines, the last decades have also witnessed rapidly expanding opportunities for applied scientific research in new sub-disciplines in physics and chemistry (e.g. material sciences), biology (e.g. gene technology), pharmacology, medicine and, last but not least, information sciences. Thus many highly specialized applications firms need to be capable of absorbing new technological opportunities into their commercial R&D outcomes and to integrate it with the complementary knowledge about markets and applications.

More generally, this second perspective considers entrepreneurs as knowledge operators, dedicated to the utilization of existing knowledge, the integration and coordination of different knowledge assets, the creation of new knowledge, and engaged in the development of new products and technologies. In their activities, knowledge-intensive entrepreneurship has to create, use and manage scientific and technological knowledge in various ways, and has to match it with knowledge of markets and applications. This leads to learning and the accumulation of competences in specific scientific, technological and market domains. In the realm of knowledge usually a division of knowledge precedes a division of labour (see Chapter 2, this volume). In a sense firms first decide the domain of knowledge in which they will be active and then choose the activities in which they will be involved (Pavitt 1998; Brusoni et al. 2002). As Pavitt (1998) claims, technological opportunities generated by new knowledge create room for diversity and experimentation. The entrepreneur is a key player in connecting the generation of new knowledge or the use of existing knowledge with the generation of activities and products. In a sense, knowledge-intensive entrepreneurship represents a capability of integrating the developments in knowledge with the reconfiguration of resources, organizational skills and external links (see Chapter 2, this volume). However, in a company, there is a complex interaction between the domains of knowledge (which could be more or less broad or more or less specialized), the organizational domain and the artefact domain. Knowledge-intensive entrepreneurship has to coordinate these three aspects (Brusoni and Prencipe 2006) and decide about internalization and externalization. In this respect, knowledge operates as both an enabling force and an obstacle to entrepreneurship. What kind of knowledge needs to be generated and transferred explains to a large extent what kind of social context embodies the entrepreneurial action. One of the key functions played by entrepreneurs is what Witt and Zellner (KEINS, 2005) call the ‘self-sorting process’, i.e. the process which precedes the funding of a new firm or division. This process involves several steps: to identify a business opportunity generated by new scientific or technological knowledge; to attract and coordinate resources; and to integrate new knowledge into the established organization. The outcome of such a process is the decision about the organization within which to transfer newly generated scientific or technological knowledge: a new firm or an established organization?

The types of knowledge at the base of knowledge-intensive entrepreneurship may drastically differ. On one extreme there is scientific knowledge. As Witt and Zellner (KEINS, 2005) claim, scientific knowledge may take the form of propositional knowledge (which can be encoded and stored by some information medium, and then transmitted and used widely), and procedural knowledge (which encompasses substantial tacitness and command on methodology and procedures). The acquisition of this knowledge is based on practice and interaction. Thus for knowledge-intensive entrepreneurship based on scientific knowledge, the type of scie...

Table of contents

• Routledge studies in global competition
• Contents
• Figures
• Tables
• Contributors
• Preface
• Part I Introduction
• Part II Perspectives on knowledge-intensive entrepreneurship and innovation systems
• Part III Knowledge-intensive entrepreneurship and innovation systems
• Part IV Policy conclusions
• Index