Geography Reference
In-Depth Information
a sequence of processes like creating a legal entity, product development, and i nanc-
ing (Carter et al., 1996). Given that prospects of employment, education, and other
circumstances dif er across individuals, the population is heterogeneous with dif erent
individuals facing dif erent opportunity costs when acting to exploit an opportunity they
have recognized. Entrepreneurship is the result of the interaction between individual
attributes and the surrounding environment. This means that entrepreneurs are neither
the lonely heroes that change the economy on their own, nor are they determined by their
environment: just like any other individual they most often reproduce their structural
conditions, but they are entrepreneurial because they also transform these structures.
The latter echoes the Schumpeterian view of entrepreneurs as the executors of trans-
formative new combinations, and involves the pursuit of entrepreneurial opportunities,
dei ned as 'ideas, beliefs and actions that enable the creation of future goods and services
in the absence of current markets for them' (Sarasvathy et al., 2003, p. 142).
2
A working
dei nition of entrepreneurship in line with this view is 'the introduction of new economic
activity by an individual that leads to change in the marketplace' (see Stam, 2008). This
new activity can be perceived in reality as a new good or service that is produced by or
for the entrepreneur, and that is valued by consumers who pay a price for its property
rights. This excludes non-market activities (i.e. no price mechanism and property rights
involved) and mere changes of contract (i.e. no new economic activities involved). Let
us give three examples of what entrepreneurship is not according to this dei nition (and
separating it from much everyday usage of the term). First, the shift from employment
into self-employment by an individual does involve a change in the marketplace, but
not an introduction of new economic activity. Second, the creation and introduction of
a new product in a concerted ef ort by a large corporation that involves exchangeable
individuals also does not count as entrepreneurship. Third, the creation and execution
of a new terrorist strategy in which airplanes are used as missiles (the 11 September 2001
attack), involves new economic activities by a distinct group of individuals who might
not be interchangeable, but does not lead to an exchange of property rights.
From a theoretical perspective, an inquiry into the role of entrepreneurship in evolu-
tionary economic geography builds on insights from evolutionary economics, cognitive
theories of innovation, social network approaches, and organizational ecology. These
i elds reveal large overlaps in the processes they study.
3
Within evolutionary economics (individual and collective) learning processes, inherit-
ance of routines and feedback ef ects play an important role. In evolutionary econom-
ics the variance in the performance of i rms is explained by heterogeneity in routines
(Hodgson and Knudsen, 2004; Nelson and Winter, 1982).
4
Routines can be understood
as organizational skills, which cannot be reduced to the sum of individual skills, that is,
they are a collective property.
5
However, it is still unclear what the role of individual-level
skills and knowledge (an individual property) is in relation to organizational routines (a
collective property). We will get back to this issue in the i nal section of this chapter.
The replication of routines takes place between i rms (as carriers of routines) through
various mechanisms, of which one is the creation of a i rm by an employee (Klepper,
2002, 2007; Klepper and Sleeper, 2005) through which routines (and the knowledge
embedded in them) are transferred from the parent to the newly created i rm. Next to the
emphasis on the replication of routines, evolutionary economics' conceptualization of
economic evolution as the emergence and dissemination of novelty (Witt, 2003) moves
