The Emergence of Entrepreneurship Policy

David B. Audretsch
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David B. Audretsch: Max Planck Institute for Research into Economic Systems

Chapter Chapter 2: in Local Heroes in the Global Village, 2005, pp 21-43 from Springer

Abstract: 5. Conclusions Globalization has shifted the comparative advantage in the OECD countries away from being based on traditional inputs of production, such as land, labor and capital, towards knowledge. This has triggered a divergence between the competitiveness of firms and the competitiveness of locations. As the strategic management of firms dictated a response to globalization of outward foreign direct investment combined with employment downsizing at high cost locations, public policy has responded by developing the strategic management of places. Policy to promote entrepreneurship has emerged as playing a central role in the strategic management of places, because entrepreneurial activity is the conduit between investments in knowledge and economic growth at the particular location. However, due to the two sources of market failure associated with investments in knowledge and entrepreneurial activity identified in this paper, private agents will tend to under invest in entrepreneurial activity. A major goal of the strategic management of places is to pursue policies that will compensate for this market failure by promoting knowledge-based entrepreneurship as a vehicle for the employment growth and global competitiveness.

Keywords: Small Business; Comparative Advantage; Strategic Management; Entrepreneurial Activity; Market Failure (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/0-387-23475-6_2

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