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Exploration and Exploitation - The Role of Entrepreneurship and R+D in the Process of Innovation

Author

Listed:
  • Max Keilbach

    (Max Planck Institute of Economics, Jena)

  • Mark Sanders

    (Utrecht School of Economics)

Abstract

We 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.

Suggested Citation

  • Max Keilbach & Mark Sanders, 2007. "Exploration and Exploitation - The Role of Entrepreneurship and R+D in the Process of Innovation," Jena Economics Research Papers 2007-108, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2007-108
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    File URL: https://oweb.b67.uni-jena.de/Papers/jerp2007/wp_2007_108.pdf
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    Cited by:

    1. B. Robert, 2008. "Innovation and entrepreneurship: structural determinants of competitiveness," Economic Review, National Bank of Belgium, issue iv, pages 61-83, December.

    More about this item

    Keywords

    Innovation; Variety Expansion; Quality Ladders; Entrepreneurship; R+D Sector.;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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