Exploring the Relationship of Patented Innovation to Entrepreneurship in Selected Countries: Theoretical and Empirical Perspectives

Darma Mahadea () and Irrshad Kaseeram ()
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Darma Mahadea: University of Kwazulu-Natal
Irrshad Kaseeram: University of Zululand

Chapter Chapter 4 in Government Incentives for Innovation and Entrepreneurship, 2022, pp 61-86 from Springer

Abstract: Abstract Entrepreneurship and innovation are at the heart of doing business in any progressive society. Countries invest considerable resources in R&D to accelerate innovation, technological progress, new firm formations and economic growth. Drawing on Schumpeterian economics, this chapter examines the relationship between innovation and entrepreneurship, from a theoretical and an empirical perspective. It uses data covering the period 2006–2018 from a selected set of countries. Entrepreneurship is proxied by new business registrations and innovation is proxied by registered patents. In examining this relationship, a Pearson correlation analysis and Granger causality tests are performed between the entrepreneurship and innovation. Among the BRICS and Southeast Asian economies, there appears to be a consistently positive and significant correlation between entrepreneurship and innovation. While the relationship is positive and highly significant for India, it is positive for South Africa, but not significant. Surprisingly Japan and Sweden show negative significant correlations; a data-related explanation is posited. The Granger causality test results show that Algeria, Singapore, and Indonesia have generated statistically significant unidirectional causality, indicating that registered patents by domestic residents there cause new business formations. Entrepreneurship in these emerging economies thus tends to be driven by innovation. For the other countries, there is no conclusive evidence of causality running in either direction. However, the results are to be treated with caution, owing to limited data availability.

Keywords: Innovations; Entrepreneurship; Creative destruction; BRICS; Registered patent; New businesses (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:innchp:978-3-031-10119-9_4

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DOI: 10.1007/978-3-031-10119-9_4

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