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Entrepreneurial Ventures and the Developmental State: Lessons from the Advanced Economies

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  • Lazonick, William
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    Abstract

    A basic intellectual challenge for those concerned with the poverty of nations is to come to grips with the nature and causes of the wealth of the world?s wealthier nations. One might then be in a position to inform the poorer nations how they might achieve similar outcomes. This paper is organized around what I call ?the theory of innovative enterprise?, a perspective derived from the historical and comparative study of the development of the advanced economies. The theory of innovative enterprise provides the essential analytical link between entrepreneurship and development. Section 2 offers, as a point of departure, a contrast between entrepreneurship in rich and poor nations. Section 3 outlines the theory of the innovating firm in which entrepreneurship has a role to play. Section 4 identifies the roles of entrepreneurship in new firm formation in terms of the types of strategy, organization, and finance that innovation requires, and emphasizes the ?disappearance? of entrepreneurship with the growth of the firm. In Section 5 I argue that, in the advanced economies, successful entrepreneurship in knowledge intensive industries has depended heavily upon a combination of business allocation of resources to innovative investment strategies, and government investment in the knowledge base, state sponsored protection of markets and intellectual property rights, and state subsidies to support these business strategies. One cannot understand national economic development without understanding the role of the developmental state. At the same time, the specific agenda and ultimate success of the developmental state cannot be understood in abstraction from the dynamics of innovative enterprise. It is through the interaction of the innovative enterprise and the developmental state that entrepreneurial activity inserts itself into the economic system to contribute to the process of economic development.

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    Bibliographic Info

    Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number DP2008/01.

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    Length: 46 pages
    Date of creation: 2008
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    Handle: RePEc:unu:wpaper:dp2008-01

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    Keywords: entrepreneurship; innovative enterprise; developmental state;

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    1. Malerba, Franco, et al, 1999. "'History-Friendly' Models of Industry Evolution: The Computer Industry," Industrial and Corporate Change, Oxford University Press, vol. 8(1), pages 3-40, March.
    2. Marie Carpenter & William Lazonick & Mary O'Sullivan, 2003. "The stock market and innovative capability in the New Economy: the optical networking industry," Industrial and Corporate Change, Oxford University Press, vol. 12(5), pages 963-1034, October.
    3. Dore, Ronald & Lazonick, William & O'Sullivan, Mary, 1999. "Varieties of Capitalism in the Twentieth Century," Oxford Review of Economic Policy, Oxford University Press, vol. 15(4), pages 102-20, Winter.
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    5. Franco Malerba, 2005. "Innovation and the evolution of industries," KITeS Working Papers 172, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Jul 2005.
    6. Brusco, Sebastiano, 1982. "The Emilian Model: Productive Decentralisation and Social Integration," Cambridge Journal of Economics, Oxford University Press, vol. 6(2), pages 167-84, June.
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    8. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
    9. Alfred D. Chandler, 1969. "Strategy and Structure: Chapters in the History of the American Industrial Enterprise," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262530090, December.
    10. Klepper, Steven, 2001. "Employee Startups in High-Tech Industries," Industrial and Corporate Change, Oxford University Press, vol. 10(3), pages 639-74, September.
    11. Caves, Richard E, 1980. "Industrial Organization, Corporate Strategy and Structure," Journal of Economic Literature, American Economic Association, vol. 18(1), pages 64-92, March.
    12. Robert J. Barro & Jong-Wha Lee, 2000. "International Data on Educational Attainment Updates and Implications," NBER Working Papers 7911, National Bureau of Economic Research, Inc.
    13. Malerba, Franco & Orsenigo, Luigi, 1997. "Technological Regimes and Sectoral Patterns of Innovative Activities," Industrial and Corporate Change, Oxford University Press, vol. 6(1), pages 83-117.
    14. Franco Malerba & Luigi Orsenigo, 2002. "Innovation and market structure in the dynamics of the pharmaceutical industry and biotechnology: towards a history-friendly model," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 667-703, August.
    15. Israel M. Kirzner, 1997. "Entrepreneurial Discovery and the Competitive Market Process: An Austrian Approach," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 60-85, March.
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    Cited by:
    1. Naude, Wim, 2009. "Out with the sleaze, in with the ease: Insufficient for entrepreneurial development?," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
    2. Naudé, Wim, 2011. "Entrepreneurship is Not a Binding Constraint on Growth and Development in the Poorest Countries," World Development, Elsevier, vol. 39(1), pages 33-44, January.

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