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Exploring the Relationship of Patented Innovation to Entrepreneurship in Selected Countries: Theoretical and Empirical Perspectives

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Government Incentives for Innovation and Entrepreneurship

Part of the book series: Innovation, Technology, and Knowledge Management ((ITKM))

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Abstract

Entrepreneurship and innovation are at the heart of doing business in any progressive society. Countries invest considerable resources in R&D to accelerate innovation, technological progress, new firm formations and economic growth. Drawing on Schumpeterian economics, this chapter examines the relationship between innovation and entrepreneurship, from a theoretical and an empirical perspective. It uses data covering the period 2006–2018 from a selected set of countries. Entrepreneurship is proxied by new business registrations and innovation is proxied by registered patents. In examining this relationship, a Pearson correlation analysis and Granger causality tests are performed between the entrepreneurship and innovation.

Among the BRICS and Southeast Asian economies, there appears to be a consistently positive and significant correlation between entrepreneurship and innovation. While the relationship is positive and highly significant for India, it is positive for South Africa, but not significant. Surprisingly Japan and Sweden show negative significant correlations; a data-related explanation is posited.

The Granger causality test results show that Algeria, Singapore, and Indonesia have generated statistically significant unidirectional causality, indicating that registered patents by domestic residents there cause new business formations. Entrepreneurship in these emerging economies thus tends to be driven by innovation. For the other countries, there is no conclusive evidence of causality running in either direction. However, the results are to be treated with caution, owing to limited data availability.

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Author information

Authors and Affiliations

  1. School of Economics & Finance, University of Kwazulu-Natal, Durban, South Africa

    Darma Mahadea

  2. Department of Economics and Deputy Dean of Research, University of Zululand, Richards Bay, South Africa

    Irrshad Kaseeram

Authors
  1. Darma Mahadea
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  2. Irrshad Kaseeram
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Corresponding author

Correspondence to Darma Mahadea .

Editor information

Editors and Affiliations

  1. College of Business and Economics, Qatar University, Doha, Qatar

    Mahmoud M. Abdellatif

  2. School of Accounting, Auditing and Taxation, UNSW Sydney, Kensington, NSW, Australia

    Binh Tran-Nam

  3. European Commission - Joint Research Center, Sevilla, Spain

    Marina Ranga

  4. Faculty of Tourism and Hospitality Management, University of Rijeka, Opatija, Croatia

    Sabina Hodžić

Appendix – Raw Granger Causality Results

Appendix – Raw Granger Causality Results

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: SINGAPOREB

Excluded

Chi-sq

df

Prob.

SINGAPOREP

13.14544

2

0.0014

All

13.14544

2

0.0014

Dependent variable: SINGAPOREP

Excluded

Chi-sq

df

Prob

SINGAPOREB

2.489431

2

0.2880

All

2.489431

2

0.2880

India Granger Causality

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: INDIAB

Excluded

Chi-sq

df

Prob.

INDIAP

2.061574

2

0.3567

All

2.061574

2

0.3567

Dependent variable: INDIAP

Excluded

Chi-sq

df

Prob.

INDIAB

1.638837

2

0.4407

All

1.638837

2

0.4407

Algeria: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 7

Dependent variable: ALGERIAB

Excluded

Chi-sq

df

Prob.

ALGERIAP

5.425317

2

0.0664

All

5.425317

2

0.0664

Dependent variable: ALGERIAP

 

Excluded

Chi-sq

df

Prob.

ALGERIAB

4.386653

2

0.1115

All

4.386653

2

0.1115

Tunisia: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: TUNISIAB

Excluded

Chi-sq

df

Prob.

TUNISIAP

0.158958

2

0.9236

All

0.158958

2

0.9236

Dependent variable: TUNISIAP

 

Excluded

Chi-sq

df

Prob.

TUNISIAB

3.346634

2

0.1876

All

3.346634

2

0.1876

Israel: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: ISRAELB

Excluded

Chi-sq

df

Prob.

ISRAELP

0.009843

2

0.9951

All

0.009843

2

0.9951

Dependent variable: ISRAELP

 

Excluded

Chi-sq

df

Prob.

ISRAELB

2.692422

2

0.2602

All

2.692422

2

0.2602

India: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: INDIAB

Excluded

Chi-sq

df

Prob.

INDIAP

2.061574

2

0.3567

All

2.061574

2

0.3567

Dependent variable: INDIAP

 

Excluded

Chi-sq

df

Prob.

INDIAB

1.638837

2

0.4407

All

1.638837

2

0.4407

Singapore: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 11

Dependent variable: SINGAPOREB

Excluded

Chi-sq

df

Prob.

SINGAPOREP

13.14544

2

0.0014

All

13.14544

2

0.0014

Dependent variable: SINGAPOREP

Excluded

Chi-sq

df

Prob.

SINGAPOREB

2.489431

2

0.2880

All

2.489431

2

0.2880

Indonesia: Granger Causality New Businesses vs Innovations

VAR granger causality/Block exogeneity wald tests

Sample: 2006–2018

Included observations: 6

Dependent variable: INDONESIAP

Excluded

Chi-sq

df

Prob.

INDONESIAB

0.680410

2

0.7116

All

0.680410

2

0.7116

Dependent variable: INDONESIAB

Excluded

Chi-sq

df

Prob.

INDONESIAP

55.51612

2

0.0000

All

55.51612

2

0.0000

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Mahadea, D., Kaseeram, I. (2022). Exploring the Relationship of Patented Innovation to Entrepreneurship in Selected Countries: Theoretical and Empirical Perspectives. In: Abdellatif, M.M., Tran-Nam, B., Ranga, M., Hodžić, S. (eds) Government Incentives for Innovation and Entrepreneurship. Innovation, Technology, and Knowledge Management. Springer, Cham. https://doi.org/10.1007/978-3-031-10119-9_4

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