Institutions and the Entrepreneurial Discovery Process Andrés Rodríguez-Pose London School of Economics Workshop on S3 Governance: The ‘What’, ‘Who’ and

Institutions and the Entrepreneurial Institutions and the Entrepreneurial Discovery ProcessDiscovery Process

Andrés Rodríguez-Pose London School of Economics

Workshop on S3 Governance: The ‘What’, ‘Who’ and ‘How’ of the EDPPisa, Italy

September 24, 2014

Institutions and EDP Rodríguez-Pose

Who should be involved in the EDP? Institutions and the EDP What happens in ‘weak’ institutional contexts?

OverviewOverview


“Entrepreneurial knowledge involves much more than knowledge about science, technology and techniques. Rather, it combines and relates such knowledge about science, technology and engineering with knowledge of market growth potential, potential competitors as well as the whole set of inputs and services required for launching a new activity.”

(Foray, David & Hall, 2011, p. 7)

Conceptualising entrepreneurial knowledgeConceptualising entrepreneurial knowledge


Openness to ‘entrepreneurial knowledge’ from a diverse set of actors

The importance of market knowledge and the engagement of actors directly involved in the market

Who should be involved?Who should be involved?


The EDPThe EDP


Institutions influence:1. The entrepreneurial actors who are capable of providing ‘entrepreneurial

knowledge’

2. The generation of ‘entrepreneurial knowledge’

3. The relationship between policy makers and entrepreneurial actors and the communication of ‘entrepreneurial knowledge’

Institutions and the EDPInstitutions and the EDP


Entrepreneurial actors are the source of ‘entrepreneurial knowledge’

Two-pronged strategy: 1. Environments must support both the survival and success of existing

actors and entrepreneurship

2. Promote the formation of new firms and the emergence of new actors more broadly

3. Build on the existing environment to transform it

Need of a crucial mass of entrepreneurial actors Institutions and the institutional context are crucial:

1. They shape the extent to which an environment is suitable for, and conducive to the survival of existing actors (namely in the private sector)

2. And the emergence of new ones

Entrepreneurial actorsEntrepreneurial actors


‘Entrepreneurial knowledge’ is generated through experimentation and the pursuit of new opportunities and activities1. Smart specialization strategies are crucial in this process

Entrepreneurial actors must experiment1. Suitable contexts and a low degree market failures favours this process

2. But experimentation and renewal is also crucial in less auspicious institutional environments

Well-functioning institutions can work synergistically with specific policies designed to mitigate market failures and promote experimentation and discovery

Conversely, weak institutions may act as a barrier to the EDP

Experimentation and discoveryExperimentation and discovery


‘Entrepreneurial knowledge’ generated through EDP must be processed by policy-makers1. The internalisation process of the knowledge shapes subsequent

decisions, priority-setting and strategy design2. Channels of communication between all actors should be open and

flexible Valuable information is most effectively communicated if

policy makers and entrepreneurial actors are engaged in an “ongoing relationship” (Rodrik, 2004)

Well-functioning institutions encourage trust, interaction, cooperation and dialogue1. They permit the formation of stable relationships between policy makers

and entrepreneurial actors (as well as between entrepreneurial actors) 2. They facilitate the transmission of ‘entrepreneurial knowledge’

InteractionInteraction


Entrepreneurial Actors

Create and condition a context that is conducive to both the survival and

success of entrepreneurial actors and the emergence

of new ones

Enhance the effectiveness of policies implemented to

mitigate market failures inhibiting processes of

exploration and discovery

Promote trust, cooperation, interaction and dialogue permitting

the formation of relationships enabling the effective communication

of entrepreneurial knowledge

Experimentation and Discovery

Interaction

Institutions

The Entrepreneurial Discovery Process

Institutions and the EDPInstitutions and the EDP


Does this mean that the EDP is only viable in ‘good’ institutional contexts?1. In ‘good’ institutional contexts EDP is likely to happen more or less

automatic2. Good institutions facilitate the experimentation, discovery, and

internalisation processes3. Embedding EDP in the economic transformation and policy-making

process (Rodríguez-Pose and Storper, 2006) What about ‘weak’ institutional contexts?

1. EDP is crucial in ‘weaker’ institutional contexts2. But it will not happen automatically3. Need for external intervention

- S3 strategies are fundamental in this respect (technical support)- Financial support through external intervention (Cohesion and Structural and

Investment funds)- But ownership of EDP must remain local

- Empowerment- Engagement

Which environments for EDP?Which environments for EDP?


The institutional dimension of the EDP cannot be overlooked Institutions and the institutional context exercise

considerable influence – directly and indirectly – on the effectiveness and outcomes of the EDP

Awareness of and, where necessary, enhancement of the institutional context will yield benefits that extend well beyond the EDP

This implies a greater effort in areas with ‘weak’ institutional contexts1. Technical support, financial aid

2. But ownership, responsibility and empowerment

Concluding thoughtsConcluding thoughts

Andrés Rodríguez-Pose

More information at

http://personal.lse.ac.uk/rodrigu1/

Institutions and the Entrepreneurial Institutions and the Entrepreneurial Discovery ProcessDiscovery Process

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Institutions and the Entrepreneurial Discovery Process Andrés Rodríguez-Pose London School of Economics Workshop on S3 Governance: The ‘What’, ‘Who’ and