E3 Journal of Business Management and Economics

E3 Journal of Business Management and Economics Vol. 10 (1) pp. 017-030, August 2019; © E3 Journals; ISSN 2141-7482

Impact of entrepreneurial activity on technological innovation in emerging and developing countries

Abstract

The present study examines the impact of entrepreneurial activity on technological innovation in emerging and developing countries. For this purpose, we use the Global Entrepreneurship Monitor data for the entrepreneurial activity, while technological innovation is measured by US patent applications. Linear regressions are applied on data for 15 countries during the period 2009-2012. Findings show that total entrepreneurial activity decreases the innovation level. On the other hand, opportunity driven entrepreneurship stimulates international patenting. Furthermore, findings show that entrepreneurship is beneficial only in favourable institutional environment, in particular free trade and control of corruption. The main implication of our study is that policy makers should not only encourage entrepreneurship but also provide high quality institutions in order to enhance the level of technological innvation in emerging and developing countries. To the best of our knowledge, this is the first paper which considers many dimensions of entrepreneurship and examines the implication of these different dimensions for technological innovation. In addition, our study is the first to examine the interaction between entrepreneurship and innovation in the context of emerging and developing countries.

Keywords: Innovation, total entrepreneurial activity, opportunity driven entrepreneurship, institutions, developing and emerging countries