Essays on productive entrepreneurship : theory and evidence
This thesis studies productive entrepreneurship from a Schumpeterian perspective, that
is, based on innovation. The thesis consists of three interrelated essays. Whilst the first
essay is theoretical, the other two are empirical.
The thesis attempts to enhance understanding of entrepreneurship and the innovative
process behind it. In particular, the following questions are analysed: How can we measure
productive entrepreneurship? What factors determine productive entrepreneurship?
What is the relationship between different measures of productive entrepreneurship and
economic growth? Moreover, the thesis studies and formalises under what specific circumstances
productive entrepreneurs collude; in contrast to other studies, it is shown that
collusion may accelerate competition. The thesis consists of five chapters.
Chapter 1 briefly revises the relevant literature and motivates the research.
Chapter 2 analyses collusion by productive entrepreneurs and the impact of patents
and licensing in a continuous-time real options framework. Generalising earlier research
by Smets and Dixit and Pindyck, a patent-investment race model is formulated in which
firms bargain and reach collusive agreements. It is shown that whilst collusion always
delays innovation, it does not necessarily delay competition. Depending on a number of
factors, such as high elasticity of demand and/or low ratio of the investment cost to the
licensing fee, collusion can actually accelerate competition.
Chapter 3 mainly deals with two issues. First, it proposes a new variable based on
data on patent applications to measure productive entrepreneurship. Second, it analyses
a set of potential determinants of entrepreneurship. Data on self-employment is used as
an alternative proxy for productive entrepreneurship. Given these two alternative proxies,
it empirically analyses how a set of possible determinants affects entrepreneurship in 25
OECD countries for three study periods that cover 1980-1997. A legal origin perspective, a
wide set of indicators that consider the overall quality of the institutional framework, and
diverse measures that take into account the strength and development of financial systems
and capital markets are introduced as factors that may affect innovative entrepreneurship.
The findings differ considerably between the two measures of productive entrepreneurship.
Those countries with a non-French legal origin, better institutional stance, and efficient
and developed financial systems and markets, do not tend to promote high levels of selfemployment.
Instead, these raise the level of entrepreneurship when measured by the
variable based on patent applications.
Chapter 4 studies the impact of entrepreneurship on economic growth by using the
two measures considered in Chapter 3. A multiple of econometric methods is applied to
uncover the relationship between these two potential measures of productive entrepreneurship
and economic growth. The study period is 1975 to 1998 for 22 OECD countries. The
results clearly show that productive entrepreneurship measured by patent applications
has a strong positive association with economic growth, whilst the alternative measure
based on self-employment appears to be negatively correlated with economic growth. The
findings are backed by a battery of econometric specifications and techniques.
Chapter 5 concludes and draws some perspectives for future research