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Fostering innovative entrepreneurship

Challenges and policy options

image of Fostering innovative entrepreneurship
This publication sheds light on innovative entrepreneurship and difficulties that entrepreneurs face when creating businesses based on research and development results. The legal and regulatory conditions for enterprise development and the existing infrastructure for applied research are explored. Sources of financing for innovative entrepreneurs and roles of specialized financial providers are explored. Highlighted is the need to strengthen linkages between institutions that generate knowledge and the firms that strive to use it commercially. The publication discusses government policies facilitating the emergence of new innovation-based enterprises, its initial growth, identifying bottlenecks and suggesting corrective action for governments and other stakeholders.

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Different types of industry-science linkages

In the early 1960s, Nelson and Arrow emphasized the importance of "new scientific knowledge" as a driving force behind innovation, technological and economic progress. Ever since, its role in developing new and improved products has continuously grown. This is related to the rapidity of the technological progress as well as the increasing complexity of the innovation process. "What university research most often does today is to stimulate and enhance the power of the R&D done in industry ...". As a result, "... as scientific knowledge grows, the cost of successfully undertaking any given, science-based invention declines." This leads, ceteris paribus, to a rise in the efficiency of the research process and effectiveness of the firms’ innovation activities, because fewer trial-and-error and fewer approaches need to be evaluated and pursued to achieve a given technological end. From this perspective, science provides a powerful heuristic guidance to the search process associated with technological change.

English

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