Research Program
Entrepreneurship refers to the process of change. In a rapidly globalizing economy, as the process of change accelerates, entrepreneurship, or its absence, becomes increasingly prominent. Yet, the scholarly traditions focusing on entrepreneurship have been relatively undeveloped and dispersed across a broad spectrum of academic disciplines. The purpose of the Entrepreneurship, Growth and Public Policy Division of the Max Planck Institute of Economics is to provide a locus for systematic scholarly research on entrepreneurship and to develop an intellectual framework and approach to launch entrepreneurship as a bona fide field of scholarship.In particular, three questions are addressed: (1) What are the determinants of entrepreneurial activity? (2) What is the impact of entrepreneurship on performance? And (3) What is the role of public policy? Creating the field of entrepreneurship spans a number of traditional units of analysis. At one level, entrepreneurship involves the decisions and actions of individuals. These individuals may act alone or within the context of a group. At another level, entrepreneurship involves units of analysis at the levels of the firm and industry, but also government and non-profit organizations, as well as at spatial levels, such as cities, regions and countries. Thus, the links between society and entrepreneurship are analyzed from a wide range of scholarly approaches. The anticipated result emerging from the research undertaken by this Division will be a unified and coherent scholarly field of entrepreneurship.
The prevalent model of economic growth over the past fifty years has considered growth as being a mere accumulation of capital and labor, this paradigm was no longer appropriate in later periods where production shifted to increasingly knowledge intensive products. Correspondingly, the macroeconomic model of growth has been adapted in that knowledge has been endogenized. The intellectual breakthrough contributed by this extended growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. However, questions remain as to how or why spillovers occur. The missing link is the mechanism converting knowledge into economically relevant knowledge.
Entrepreneurship typically involves the application of knowledge created in one context to a very different context. Thus, entrepreneurial activity can account for the transformation of inventions to marketable innovations hence new products. It can also represent at least one mechanism constituting the missing link in the spillover process. Thus, entrepreneurship can be considered as one of the engines of economic and social development thought the world. The role of entrepreneurship has changed dramatically between the traditional and contemporary economies.
The purpose of the research unit is to undertake an explicit focus on the economics of entrepreneurship. This research agenda, which examines the process of change, consist of four elements. The first is to identify what the role of entrepreneurship has been and how it is historically evolving. This is a rather descriptive undertaking whose objective is to asses the importance of entrepreneurship.
The second aspect is concerned with factors that shape the amount of entrepreneurial activity. In a number of empirical studies we attempt to show the importance university spillovers have on entrepreneurial location. In particular, we attempt to demonstrate the differences between tacit and codified knowledge. While codified knowledge, such as academic articles in the sciences, could easily be transmitted in a longer distance, information transmission does not hold for tacit knowledge, which is bounded within a small area around the source of knowledge.
The third aspect focuses on the impact of entrepreneurship on economic performance. In a number of studies we show that New Venture with access to both, knowledge spillovers and financial resources show higher economic performance. In particular, we empirically research those firms which have higher survival rates, abnormal returns on the stock market and higher growth rates in employees.
The final aspect is that the research unit provides both a theoretical and empirical framework highlighting those aspects of entrepreneurship that can serve as a guiding light to direct policy makers in understanding the debates. Just as the classical model of economic growth focused the policy debate on the policies facilitating investments in capital and access to labor, the endogenous growth model has shifted the policy focus to investments in knowledge. By contrast, focusing on the role played by entrepreneurship may suggest a very different set of policy instruments to promote economic growth and employment generation that are unique and distinct from the instruments implied by the growth models mentioned above. There therefore intend to empirically demonstrate how important regional policy is to provide "entrepreneurship capital."
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