Exploration and Exploitation - The Role of Entrepreneurship and R+D in the Process of Innovation
AbstractWe formulate a model that explicitly separates two functions in the innovation process: The introduction of new goods and the quality improvement of existing goods. While the latter is performed by the corporate R+D sector, the first is performed by entrepreneurs. We show that in a three sector economy, which also includes a producing sector, there exists a stable non trivial allocation of labor to production, innovation and entrepreneurship. We compute the steady state allocation of labor to production, R+D and Entrepreneurship. We show that the innovation rate decreases if one of the innovative sectors does not exist.
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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2007-108.
Date of creation: 20 Dec 2007
Date of revision:
Innovation; Variety Expansion; Quality Ladders; Entrepreneurship; R+D Sector.;
Find related papers by JEL classification:
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-01-19 (All new papers)
- NEP-ENT-2008-01-19 (Entrepreneurship)
- NEP-INO-2008-01-19 (Innovation)
- NEP-IPR-2008-01-19 (Intellectual Property Rights)
- NEP-MIC-2008-01-19 (Microeconomics)
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