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.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Acemoglu, D., 2006, ‚Equilibrium Bias of Technology’, NBER Working Papers, No. 11845, NBER, Cambridge MA.
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.
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.
Acs Z., D. Audretsch (2001), The Emergence of the Entrepreneurial Society, Swedisch Foundation for Small Business Research, Stockholm.
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.
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.
Aghion P., P. Howitt, 1992, A Model of Growth through Creative Destruction, Econometrica 60, 323–351.
Aghion P., P. Howitt (1998), Endogenous Growth Theory, MIT Press, Cambridge MA.
Arrow K., 1962, The Economic Implications of Learning by Doing, Review of Economic Studies 29, 155–173.
Audretsch, D. and M. Keilbach, 2005, ‚Entrepreneurship, Growth and Restructuring’, Max Planck Institute of Economics Discussion Paper Series, No. 1306, Max Planck Institute, Jena.
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.
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.
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.
Audretsch, D. and R. Thurik, 2001c, `Linking Entrepreneurship to Growth', OECD STI Working Paper Series, 2001/2, Paris
Audretsch, D. and R. Thurik, 2002, ‚Linking Entrepreneurship to Growth’, OECD STI Working Papers, OECD, Paris.
Audretsch D. , M. Carree, A. van Stel, R. Thurik, 2002, Impeded Industrial Restructuring: The Growth Penalty, Kyklos 55, 81–97.
Barro R., X. Sala-I-Martin (2004), Economic Growth, 2nd ed., MIT-Press, Cambridge MA.
Bijker W. (1995) Of Bicycles, Bakelites and Bulbs; Towards a Theory of Sociotechnical Change, MIT Press, Cambridge MA.
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.
Bresnahan T., M. Trajtenberg, 1995, General Purpose technologies- Engines of Growth?, Journal of Econometrics 65, 83–108.
Cantillion, R., 1755, ‚The Circulation And Exchange Of Good And Merchandise’, in M. Casson (ed.), (1990) Entrepreneurship, Cheltenham: Edward Elgar Publishers, 5–10.
Carree M., R. Thurik, 1998, Small Firms and Economic Growth in Europe, Atlantic Economic Journal 26, 137–146.
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.
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.
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, 377–390
Cole, J. R. and S. Cole, (1973), Social Stratification in Science, Chicago: Chicago University Press
Cole, S., 1978, `Scientific Reward Systems: A Comparative Analysis', Research in Sociology of Knowledge, Sciences and Art, 1, 167–190
Dasgupta P., P. David, 1994, Towards an New Economics of Science, Research Policy 23, 487–521.
Diamond A., 1986, What is a Citation Worth?, The Journal of Human Resources 21, 200–215.
Diamond A. (2006), Economics of Science, in: S. Durlauf, L. Blume (Eds.) The New Palgrave Dictionary of Economics, 2nd Ed., Pagrave Publishers, London.
Dickinson A., D. Shanks (1995), Instrumental Action and Causal Representation, in: D. Sperber, D. Premack, A. Premack (eds.), Causal Cognition, Clarendon Press, Oxford. .
Dosi G., 1982, Technological Paradigms and Technological Trajectories: A Suggested Interpretation of the Determinants and Directions of Technical Change, Research Policy 11, 147–162.
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.
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.
Gaston, J., 1970, `The Reward System in British Science', American Sociological Review, 35, 718–730
Griliches Z., 1979, Issues in Assessing the Contribution of Research and development to Productivity Growth, Bell Journal of Economics 10, 92–116.
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.
Griliches Z., 1992, The Search for R&D Spillovers, Scandinavian Journal of Economics 94, S29–47.
Grossman G., E. Helpman (1991), Innovation and Growth in the Global Economy, MIT Press, Cambridge, Massachusetts. .
Hébert R., A. Link, 1989, In Search of the Meaning of Entrepreneurship, Small Business Economics 1, 39–49.
Jaffe A., 1986‚ Technological Opportunity and Spillover of R&D: Evidence from Firms’Patents, Profits and Market Value, American Economic Review 76, 984–1001.
Jaffe A. 1989, Real Effects of Academic Research, American Economic Review 79, 957–970.
Jaffe A., M. Trajtenberg (2002), Patents, Citations and Innovations; A Window on the Knowledge Economy, MIT Press, Cambridge, Massachusetts. .
Jantsch E. (1967), Technological Forecasting in Perspective, OECD, Paris.
Jones, C., 2006, Growth and Ideas, in: P. Aghion (Ed.), Handbook of Economic Growth, Forthcoming Elsevier Publishers.
Karlsson, C., C. Friis and T. Paulsson, 2004, ‚Relating Entrepreneurship to Economic Growth’, CESIS Electronic Working Paper Series, No. 13.
Keilbach, M. and M. Sanders, 2006, ‚Entrepreneurship in a Model of Economic Growth’, Max Planck Institute of Economics Working Paper Series, forthcoming.
Kirzner I. (1973), Competition and Entrepreneurship, University of Chicago Press, Chicago.
Knight F. (1921) Risk, Uncertainty and Profit, Houghton Mifflin, New York.
Krugman P., 1979, A Model of Innovation, Technology Transfer and the World Distribution of Income, Journal of Political Economy 87, 253–266.
Kuhn T. (1971), The Structure of Scientific Revolutions, 3rd Ed. 1996, The University of Chicago Press, Chicago.
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.
Lakatos I., 1971, History of Science and Its Rational reconstruction, Boston Studies in the Philosophy of Science 8, 91–136.
Latour, B., 1987, Science in Action, translated in Dutch by de Lange and Maters [1988], Wetenschap in Actie, Amsterdam: Bert Bakker Uitgeverij.
Landes D. (1969), The Unbound Prometheus: Technological Change and Industrial Development in Western Europe from 1750 to the Present, Cambridge University Press, Cambridge.
Lanström, H., 1999, ‚Entreprenörskapets Rötter’, Studentlitteratur, Lund.
Lucas R., 1988, On the Mechanics of Economic Development, Journal of Monetary Economics 22, 3–42.
Lyotard, J., 1979, The Post-Modern Condition, Manchester University Press.
Merton R. 1957, Priorities in Scientific Discovery: A Chapter in the Sociology of Science, American Sociological Review 22, 653–659.
Merton R., 1968, The Matthew Effect in Science, Science 159, 56–63.
Merton R., 1969, Behavior Patterns of Scientists, American Scientist 57, 1–23.
Nelson R., S. Winter, 1977, In Search of a Useful Theory of Innovation, Research Policy 6, 35–76.
Olsson O., 2000, Knowledge as a Set in Idea Space: An Epistemological View on Growth, Journal of Economic Growth 5, 253–275.
Olsson O., 2005, Technological Opportunity and Growth, Journal of Economic Growth 10, 35–57.
Olsson O., B. Frey, 2002, Entrepreneurship as Recombinant Growth, Small Business Economics 19, 69–80.
Popper K. (1968), The Logic of Scientific Discovery, Hutchinson Publishers, London.
Romer P., 1990, Endogenous Technical Change, Journal of Political Economy 98, S71–S102. .
Sanders M. (2005), Technology and the Decline of Unskilled Labour Demand: A Theoretical Analysis of the US and European Labour Markets, Edward Elgar, Cheltenham.
Schumpeter, J., 1934, ‚The Theory of Economic Development’, in: M. Casson (ed.) (1990) Entrepreneurship, Cheltenham: Edward Elgar Publishers, 105–134.
Segerstrom P., T. Anant E. Dinopoulos, 1990, A Schumpeterian Model of the Product Life Cycle, The American Economic Review, 80, 1077–1091.
Shane S., S. Venkataraman, 2000, The Promise of Entrepreneurship as a Field of Research, Academy of Management Review 25, 217–221.
Solow R., 1957, Technical Change and the Aggregate Production Function, Review of Economics and Statistics 39, 312–320.
Stephan P. 1996, The Economics of Science, Journal of Economic Literature 34, 1199–1235.
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 .
Sterman, J. and J. Wittenberg, 1999, ‚Path Dependence, Competition and Succession in the Dynamics of Scientific Revolution’, Organization Science 10, 322–341.
Stigler, G. J. and G. S. Becker, 1977, `De Gustibus Non Est Disputandum', American Economic Review, 67, 76–90
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.
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.
Wennekers, S. and R. Thurik, 1999, ‚Linking Entrepreneurship and Economic Growth, Small Business Economics 13, 27–55.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Open Access This is an open access article distributed under the terms of the Creative Commons Attribution Noncommercial License ( https://creativecommons.org/licenses/by-nc/2.0 ), which permits any noncommercial use, distribution, and reproduction in any medium, provided the original author(s) and source are credited.
About this article
Cite this article
Sanders, M. Scientific Paradigms, Entrepreneurial Opportunities and Cycles in Economic Growth. Small Bus Econ 28, 339–354 (2007). https://doi.org/10.1007/s11187-006-9038-6
Received:
Revised:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s11187-006-9038-6