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Conditions that make ventures thrive: from individual entrepreneur to innovation impact

Author

Listed:
  • Brian Chung

    (Erasmus School of Economics)

  • Philip Hans Franses

    (Erasmus University Rotterdam)

  • Enrico Pennings

    (Erasmus University Rotterdam)

Abstract

Entrepreneurship and innovation create a positive impact on the economy and society. Globally, governments invest resources to support new ventures and facilitate innovation. In this study, we examine this phenomenon by studying the pathway that goes from individual entrepreneur to innovation impact. We measure the effect of entrepreneurial motives on different types of innovations, with a particular focus on its amplification by formal and informal institutional conditions. Specifically, we use multi-level models to analyze annual data of 29 countries for 2006 to 2018. We find that opportunity-driven entrepreneurs are associated with higher levels of radical innovation, breakthrough innovation, and disruptive innovation. Better tax policies and less bureaucracy amplify this positive effect on radical innovation and breakthrough innovation. For necessity-driven entrepreneurs, the regulatory quality amplifies the positive effect on radical innovation and disruptive innovation, while monetary resources dampen this effect. Our findings show that the differences in innovation impact can be explained by differences in entrepreneurial motives and their specific interactions with formal and informal institutional conditions.

Suggested Citation

  • Brian Chung & Philip Hans Franses & Enrico Pennings, 2024. "Conditions that make ventures thrive: from individual entrepreneur to innovation impact," Small Business Economics, Springer, vol. 62(3), pages 1177-1200, March.
    • Handle: RePEc:kap:sbusec:v:62:y:2024:i:3:d:10.1007_s11187-023-00800-3
    DOI: 10.1007/s11187-023-00800-3
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    More about this item

    Keywords

    Opportunity motive; Necessity motive; Institutional conditions; Radical innovation; Multi-level modeling;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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