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on Entrepreneurship |
| By: | Patrick Legros (ECARES, Université Libre de Bruxelles; and CEPR); Andrew F. Newman (Boston University and CEPR); Eugenio Proto (University of Warwick) |
| Abstract: | We consider an endogenous growth model in which appropriate organization fosters innovation, but because of contractibility problems, this benefit cannot be internalized. The organizational design element we focus on is the division of labor, which as Adam Smith argued, facilitates invention by observers of the production process. However, entrepreneurs choose its level only to facilitate monitoring their workers. Whether there is innovation and growth depends on the interaction of the markets for labor and for inventions. Because of a credit market imperfection, the relative scarcity of entrepreneurs and workers depends on the wealth distribution. A high level of specialization is chosen when the wage share is low, i.e. when there are few wealthy. But in this case there are also few entrepreneurs and a consequent small market for innovations, which discourages inventive activity. When there are many wealthy, the innovation market is large, but the rate of invention is low because there is little specialization. Sustained technological progress and economic growth therefore require only moderate levels of inequality. The model also suggests that the growth rate need not be monotonic in the "quality of institutions," such as the degree of credit market imperfection. |
| Date: | 2007–01 |
| URL: | http://d.repec.org/n?u=RePEc:bos:wpaper:wp2007-002&r=ent |
| By: | Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Stefano Micelli (Department of Business, University Of Venice Cà Foscari) |
| Abstract: | This essay examines the situation and the lines of development of industrial districts from the point of view of local systems of innovation. First of all, this article points out to the modernity factors of the district model – which are ascribable to the supply chain economy, to entrepreneurial dynamics and to the importance of geography as a competitive resource – through the analysis of recent contributions of economic literature that examined the emerging organizational models in knowledge economy. Secondly, the outcomes of recent research on leading companies of Italian industrial districts will be presented, looking at three particularly topics of ongoing changes: the process of international opening of the value chain, the technological conditions of competitive advantage, the relationship between strategies and economic performance. Finally, some considerations on the issue of policies will be developed. Such considerations underline the need to re-think the traditional models of local governance of development and suggest to look at the new external district economies, based on service economies, on much more considerable investments in training, technological and cultural activities and, finally, on more aware institutional actions with reference to the association of companies in innovation projects. |
| Keywords: | Industrial districts, Innovation Systems, Entrepreneurship, Global Value Chain |
| JEL: | L26 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:ven:wpaper:04_07&r=ent |