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The missing link: knowledge diffusion and entrepreneurship in endogenous growth

Braunerhjelm, Pontus, Acs, Zoltan J., Audretsch, David B. and Carlsson, Bo (2010) The missing link: knowledge diffusion and entrepreneurship in endogenous growth. Small Business Economics, 34 (2). pp. 105-125. ISSN 0921-898X

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Identification Number: 10.1007/s11187-009-9235-1


The intellectual breakthrough contributed by the new growth theory was the recognition that investments in knowledge and human capital endogenously generate economic growth through the spillover of knowledge. However, endogenous growth theory does not explain how or why spillovers occur. This paper presents a model that shows how growth depends on knowledge accumulation and its diffusion through both incumbents and entrepreneurial activities. We claim that entrepreneurs are one missing link in converting knowledge into economically relevant knowledge. Implementing different regression techniques for the Organisation for Economic Co-operation and Development (OECD) countries during 1981 to 2002 provides surprisingly robust evidence that primarily entrepreneurs contributed to growth and that the importance of entrepreneurs increased in the 1990s. A Granger test confirms that causality goes in the direction from entrepreneurs to growth. The results indicate that policies facilitating entrepreneurship are an important tool to enhance knowledge diffusion and promote economic growth.

Item Type: Article
Official URL:
Additional Information: © 2010 The Authors
Divisions: Management
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: O - Economic Development, Technological Change, and Growth > O1 - Economic Development
Date Deposited: 10 Apr 2014 11:18
Last Modified: 02 Jul 2024 05:27

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