Advertisement

Small Business Economics

, Volume 28, Issue 4, pp 339–354 | Cite as

Scientific Paradigms, Entrepreneurial Opportunities and Cycles in Economic Growth

  • Mark SandersEmail author
Open Access
Article
First Online:

Abstract

In this paper I present a model of economic growth that combines insights from endogenous growth theory, the field of entrepreneurship research and the philosophy and economics of science. The model is built on three relatively standard assumptions and a Kuhnian approach to scientific knowledge accumulation. I assume that innovation generates economic growth, that opportunity driven entrepreneurship is an important source of innovation, that entrepreneurial opportunities increasingly arise out of scientific knowledge creation and that science follows Kuhnian paradigm shifting dynamics. The model then generates opportunity driven cycles in entrepreneurial activity that in turn cause waves of innovation and cycles in economic growth. This result is highly relevant and fills a gap in all three literatures as ‚traditional’ endogenous growth models typically generate constant growth rates in the steady state, entrepreneurship research keeps the origin of entrepreneurial opportunity exogenous and the literatures on the philosophy and economics of science ignore the important downstream economic implications of the non-profit driven institutional framework that governs scientific knowledge accumulation. This paper contributes by identifying scientific institutions and entrepreneurial activity as prerequisites for economic growth and it offers a tentative explanation for the rise and fall in the levels of scientific, entrepreneurial and economic activity over the Kondratieff-cycle.

Keywords

endogenous growth theory entrepreneurship paradigms scientific institutions 

JEL-Classifications

E32 L26 M13 O11 O31 O41 
Download to read the full article text

References

  1. Acemoglu, D., 2006, ‚Equilibrium Bias of Technology’, NBER Working Papers, No. 11845, NBER, Cambridge MA.Google Scholar
  2. Acs Z. (1996), Small Firms in Economic Growth, in: Acs Z., B. Carlsson, R. Thurik (eds.), Small Business in the Modern Economy, Blackwell Publishers, Oxford, pp. 1–62.Google Scholar
  3. Acs Z. (1999), The New American Evolution, in: Acs Z. (ed.) Are Small Firms Important? Their Role and Impact, Kluwer Academic Publishers, Dortrecht, pp. 1–20.Google Scholar
  4. Acs Z., D. Audretsch (2001), The Emergence of the Entrepreneurial Society, Swedisch Foundation for Small Business Research, Stockholm.Google Scholar
  5. Acs, Z., D. Audretsch, P. Braunerhjelm and B. Carlsson, 2004, ‚The Missing Link: the Knowledge Filter and Entrepreneurship in Economic Growth’, CEPR-discussion papers, No. 4783 Stockholm, www.cepr.org/pubs/dps/DP4783.asp.Google Scholar
  6. Acs, Z., D. Audretsch, P. Braunerhjelm and B. Carlsson, 2006, ‚Growth and Entrepreneurship: an Empirical Assesment’, CEPR-discussion papers, No. 5409 Stockholm, www.cepr.org/pubs/dps/DP5409.asp.Google Scholar
  7. Aghion P., P. Howitt, 1992, A Model of Growth through Creative Destruction, Econometrica 60, 323–351.CrossRefGoogle Scholar
  8. Aghion P., P. Howitt (1998), Endogenous Growth Theory, MIT Press, Cambridge MA.Google Scholar
  9. Arrow K., 1962, The Economic Implications of Learning by Doing, Review of Economic Studies 29, 155–173.CrossRefGoogle Scholar
  10. Audretsch, D. and M. Keilbach, 2005, ‚Entrepreneurship, Growth and Restructuring’, Max Planck Institute of Economics Discussion Paper Series, No. 1306, Max Planck Institute, Jena.Google Scholar
  11. Audretsch, D. and R. Thurik, 1997, ‚Sources of Growth: The Entrepreneurial vs the Managed Economy’, in: Tinbergen Institute Discussion Papers, No. 97–109/3, Tinbergen Institute, Amsterdam.Google Scholar
  12. Audretsch D., R. Thurik, 2001a, What is New about the New Economy: Sources of Growth in the Managed and Entrepreneurial Economy, Industrial and Corporate Change 10, 267–315.CrossRefGoogle Scholar
  13. Audretsch D., R. Thurik (2001b), Capitalism and Democracy in the 21st Century: from the Managed to the Entrepreneurial Economy, in: Mueller D, U. Cantner (Eds.), Capitalism and Democracy in the 21st Century, Physica-Verlag, Heidelberg.Google Scholar
  14. Audretsch, D. and R. Thurik, 2001c, `Linking Entrepreneurship to Growth', OECD STI Working Paper Series, 2001/2, ParisGoogle Scholar
  15. Audretsch, D. and R. Thurik, 2002, ‚Linking Entrepreneurship to Growth’, OECD STI Working Papers, OECD, Paris.Google Scholar
  16. Audretsch D. , M. Carree, A. van Stel, R. Thurik, 2002, Impeded Industrial Restructuring: The Growth Penalty, Kyklos 55, 81–97.CrossRefGoogle Scholar
  17. Barro R., X. Sala-I-Martin (2004), Economic Growth, 2nd ed., MIT-Press, Cambridge MA.Google Scholar
  18. Bijker W. (1995) Of Bicycles, Bakelites and Bulbs; Towards a Theory of Sociotechnical Change, MIT Press, Cambridge MA.Google Scholar
  19. Brandstetter, L. and Y. Ogura, 2005, ‚Is Academic research driving a Surge in Industrial Innovation? Evidence form Patent Citations’, NBER Working Papers, No. 11561, NBER, Cambridge Massachussets.Google Scholar
  20. Bresnahan T., M. Trajtenberg, 1995, General Purpose technologies- Engines of Growth?, Journal of Econometrics 65, 83–108.CrossRefGoogle Scholar
  21. Cantillion, R., 1755, ‚The Circulation And Exchange Of Good And Merchandise’, in M. Casson (ed.), (1990) Entrepreneurship, Cheltenham: Edward Elgar Publishers, 5–10.Google Scholar
  22. Carree M., R. Thurik, 1998, Small Firms and Economic Growth in Europe, Atlantic Economic Journal 26, 137–146.CrossRefGoogle Scholar
  23. Carree, M., A. van Stel, R. Thurik and S. Wennekers, 1999, ‚Business Ownership and economic Growth: An Empirical Investigation’, EIM Research Report, No. 9809, EIM, Zoetermeer.Google Scholar
  24. Carree M., A. van Stel R. Thurik S. Wennekers, 2002, Economic Development and Business Ownership: An Analysis using Data of 23 OECD Countries in the Period 1976–1996, Small Business Economics 19, 271–290.CrossRefGoogle Scholar
  25. Cole, S. and J. R. Cole, 1967, `Scientific Output and Recognition: A Study in the Operation of the Reward System in Science', American Sociological Review, 32, 377–390Google Scholar
  26. Cole, J. R. and S. Cole, (1973), Social Stratification in Science, Chicago: Chicago University PressGoogle Scholar
  27. Cole, S., 1978, `Scientific Reward Systems: A Comparative Analysis', Research in Sociology of Knowledge, Sciences and Art, 1, 167–190Google Scholar
  28. Dasgupta P., P. David, 1994, Towards an New Economics of Science, Research Policy 23, 487–521.CrossRefGoogle Scholar
  29. Diamond A., 1986, What is a Citation Worth?, The Journal of Human Resources 21, 200–215.CrossRefGoogle Scholar
  30. Diamond A. (2006), Economics of Science, in: S. Durlauf, L. Blume (Eds.) The New Palgrave Dictionary of Economics, 2nd Ed., Pagrave Publishers, London.Google Scholar
  31. Dickinson A., D. Shanks (1995), Instrumental Action and Causal Representation, in: D. Sperber, D. Premack, A. Premack (eds.), Causal Cognition, Clarendon Press, Oxford. .Google Scholar
  32. Dosi G., 1982, Technological Paradigms and Technological Trajectories: A Suggested Interpretation of the Determinants and Directions of Technical Change, Research Policy 11, 147–162.CrossRefGoogle Scholar
  33. EU, 2003, Green Paper on Entrepreneurship in Europe, Commission of the European Communities, Brussels, downloadable at http://ec.europa.eu/enterprise/entrepreneurship/green_paper/green_paper_final_en.pdf.Google Scholar
  34. EU, 2004, Action Plan; The European Agenda for Entrepreneurship, Commission of the European Communities, Brussels, downloadable at: http://ec.europa.eu/enterprise/entrepreneurship/promoting_entrepreneurship/doc/com_70_en.pdf.Google Scholar
  35. Gaston, J., 1970, `The Reward System in British Science', American Sociological Review, 35, 718–730Google Scholar
  36. Griliches Z., 1979, Issues in Assessing the Contribution of Research and development to Productivity Growth, Bell Journal of Economics 10, 92–116.CrossRefGoogle Scholar
  37. Griliches Z. (1984), R&D and Innovation: Some Empirical Findings; Comments, in: Z. Griliches (ed.), R&D, Patents and Productivity, University of Chicago Press, Chicago.Google Scholar
  38. Griliches Z., 1992, The Search for R&D Spillovers, Scandinavian Journal of Economics 94, S29–47.CrossRefGoogle Scholar
  39. Grossman G., E. Helpman (1991), Innovation and Growth in the Global Economy, MIT Press, Cambridge, Massachusetts. .Google Scholar
  40. Hébert R., A. Link, 1989, In Search of the Meaning of Entrepreneurship, Small Business Economics 1, 39–49.CrossRefGoogle Scholar
  41. Jaffe A., 1986‚ Technological Opportunity and Spillover of R&D: Evidence from Firms’Patents, Profits and Market Value, American Economic Review 76, 984–1001.Google Scholar
  42. Jaffe A. 1989, Real Effects of Academic Research, American Economic Review 79, 957–970.Google Scholar
  43. Jaffe A., M. Trajtenberg (2002), Patents, Citations and Innovations; A Window on the Knowledge Economy, MIT Press, Cambridge, Massachusetts. .Google Scholar
  44. Jantsch E. (1967), Technological Forecasting in Perspective, OECD, Paris.Google Scholar
  45. Jones, C., 2006, Growth and Ideas, in: P. Aghion (Ed.), Handbook of Economic Growth, Forthcoming Elsevier Publishers.Google Scholar
  46. Karlsson, C., C. Friis and T. Paulsson, 2004, ‚Relating Entrepreneurship to Economic Growth’, CESIS Electronic Working Paper Series, No. 13.Google Scholar
  47. Keilbach, M. and M. Sanders, 2006, ‚Entrepreneurship in a Model of Economic Growth’, Max Planck Institute of Economics Working Paper Series, forthcoming.Google Scholar
  48. Kirzner I. (1973), Competition and Entrepreneurship, University of Chicago Press, Chicago.Google Scholar
  49. Knight F. (1921) Risk, Uncertainty and Profit, Houghton Mifflin, New York.Google Scholar
  50. Krugman P., 1979, A Model of Innovation, Technology Transfer and the World Distribution of Income, Journal of Political Economy 87, 253–266.CrossRefGoogle Scholar
  51. Kuhn T. (1971), The Structure of Scientific Revolutions, 3rd Ed. 1996, The University of Chicago Press, Chicago.Google Scholar
  52. Kuznets, S., 1971, Modern Economic Growth: Findings and Reflections, Lecture to the memory of Alfred Nobel, delivered December 11th 1971, Stockholm, Sweden, downloaded from http://nobelprize.org/economics/laureates/1971/kuznets-lecture.htm.Google Scholar
  53. Lakatos I., 1971, History of Science and Its Rational reconstruction, Boston Studies in the Philosophy of Science 8, 91–136.Google Scholar
  54. Latour, B., 1987, Science in Action, translated in Dutch by de Lange and Maters [1988], Wetenschap in Actie, Amsterdam: Bert Bakker Uitgeverij.Google Scholar
  55. Landes D. (1969), The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, Cambridge University Press, Cambridge.Google Scholar
  56. Lanström, H., 1999, ‚Entreprenörskapets Rötter’, Studentlitteratur, Lund.Google Scholar
  57. Lucas R., 1988, On the Mechanics of Economic Development, Journal of Monetary Economics 22, 3–42.CrossRefGoogle Scholar
  58. Lyotard, J., 1979, The Post-Modern Condition, Manchester University Press.Google Scholar
  59. Merton R. 1957, Priorities in Scientific Discovery: A Chapter in the Sociology of Science, American Sociological Review 22, 653–659.CrossRefGoogle Scholar
  60. Merton R., 1968, The Matthew Effect in Science, Science 159, 56–63.CrossRefGoogle Scholar
  61. Merton R., 1969, Behavior Patterns of Scientists, American Scientist 57, 1–23.Google Scholar
  62. Nelson R., S. Winter, 1977, In Search of a Useful Theory of Innovation, Research Policy 6, 35–76.CrossRefGoogle Scholar
  63. Olsson O., 2000, Knowledge as a Set in Idea Space: An Epistemological View on Growth, Journal of Economic Growth 5, 253–275.CrossRefGoogle Scholar
  64. Olsson O., 2005, Technological Opportunity and Growth, Journal of Economic Growth 10, 35–57.CrossRefGoogle Scholar
  65. Olsson O., B. Frey, 2002, Entrepreneurship as Recombinant Growth, Small Business Economics 19, 69–80.CrossRefGoogle Scholar
  66. Popper K. (1968), The Logic of Scientific Discovery, Hutchinson Publishers, London.Google Scholar
  67. Romer P., 1990, Endogenous Technical Change, Journal of Political Economy 98, S71–S102. .CrossRefGoogle Scholar
  68. Sanders M. (2005), Technology and the Decline of Unskilled Labour Demand: A Theoretical Analysis of the US and European Labour Markets, Edward Elgar, Cheltenham.Google Scholar
  69. Schumpeter, J., 1934, ‚The Theory of Economic Development’, in: M. Casson (ed.) (1990) Entrepreneurship, Cheltenham: Edward Elgar Publishers, 105–134.Google Scholar
  70. Segerstrom P., T. Anant E. Dinopoulos, 1990, A Schumpeterian Model of the Product Life Cycle, The American Economic Review, 80, 1077–1091.Google Scholar
  71. Shane S., S. Venkataraman, 2000, The Promise of Entrepreneurship as a Field of Research, Academy of Management Review 25, 217–221.CrossRefGoogle Scholar
  72. Solow R., 1957, Technical Change and the Aggregate Production Function, Review of Economics and Statistics 39, 312–320.CrossRefGoogle Scholar
  73. Stephan P. 1996, The Economics of Science, Journal of Economic Literature 34, 1199–1235.Google Scholar
  74. Sterman, J., 1982, The Growth of Knowledge: Testing a Theory of Scientific Revolutions with a Formal Model, in MIT Working Paper, No. 1326–82, available online at: https://hpds1.mit.edu/retrieve/1636/SWP-1326–09065900.pdf .Google Scholar
  75. Sterman, J. and J. Wittenberg, 1999, ‚Path Dependence, Competition and Succession in the Dynamics of Scientific Revolution’, Organization Science 10, 322–341.Google Scholar
  76. Stigler, G. J. and G. S. Becker, 1977, `De Gustibus Non Est Disputandum', American Economic Review, 67, 76–90Google Scholar
  77. Thurik R. (1996), Small Firms, Entrepreneurship and Economic Growth, in: Acs Z., B. Carlsson, R. Thurik (eds.), Small Business in the Modern Economy, Basil Blackwell, Oxford, 126–152.Google Scholar
  78. Verheul I, S. Wennekers, D. Audretsch, R. Thurik (2003), An Eclectic Theory of Entrepreneurship, in: Audretsch D. (ed.), The Globalisation of the World Economy, Edward Elgar Publishers, Cheltenham.Google Scholar
  79. Wennekers, S. and R. Thurik, 1999, ‚Linking Entrepreneurship and Economic Growth, Small Business Economics 13, 27–55.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  1. 1.Tjalling Koopmans InstituteUtrecht UniversityUtrechtNetherlands
  2. 2.Evolutionary Economics GroupMax Planck Institute of EconomicsJenaGermany

Personalised recommendations