Entrepreneurship and Uncertainty: Innovation and Competition among the Many

Entrepreneurship and Uncertainty: Innovation and Competition among the Many Schumpeter stressed innovation and Knight uncertainty as preconditions for entrepreneurship and productivity growth. Schumpeter emphasized entry in his early work but came to consider incumbent innovation the dominant mode in his later work. Modern growth theory emphasizes dissemination of knowledge to explain progress in the steady state. The paper analyzes the effects of entry, market structures and uncertainty on the incidence and diffusion of innovation. The insertion of Knightian uncertainty in Schumpeter's model can explain why innovators are numerous and arrive unexpectedly. Uncertainty spurs diffusion and improves the utilization of human capital. Combining the ideas of Schumpeter and Knight also elucidates several stylized facts of entrepreneurship, such as small entry size; low chances of survival and high growth rates. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Entrepreneurship and Uncertainty: Innovation and Competition among the Many

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2000 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1008147829791
Publisher site
See Article on Publisher Site

Abstract

Schumpeter stressed innovation and Knight uncertainty as preconditions for entrepreneurship and productivity growth. Schumpeter emphasized entry in his early work but came to consider incumbent innovation the dominant mode in his later work. Modern growth theory emphasizes dissemination of knowledge to explain progress in the steady state. The paper analyzes the effects of entry, market structures and uncertainty on the incidence and diffusion of innovation. The insertion of Knightian uncertainty in Schumpeter's model can explain why innovators are numerous and arrive unexpectedly. Uncertainty spurs diffusion and improves the utilization of human capital. Combining the ideas of Schumpeter and Knight also elucidates several stylized facts of entrepreneurship, such as small entry size; low chances of survival and high growth rates.

Journal

Small Business EconomicsSpringer Journals

Published: Oct 8, 2004

References

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