More power for international entrepreneurs: the effect of digital readiness of economies on channeling national R&D resources to entrepreneurship

In the economic paradigm of the twenty-first century, the increasing importance of innovation for SMEs and their global expansion motivates research on determinants of innovative entrepreneurship. While the literature suggests that R&D intensity improves innovative entrepreneurship, few studies explore why countries are different in directing R&D projects. Drawing on insights from the resource-based view and information economics perspective, this paper examines the effect of the digital readiness of an economy, as an emerging field in institutional literature, on channeling national R&D resources to entrepreneurs and SMEs. As R&D is an important source of innovativeness for SMEs, effective access to R&D resources enables new ventures to better compete in this challenging era of globalization and successfully expand across borders. We argue that having a more digitally advanced economy positively influences the transfer of national R&D to entrepreneurs and SMEs. We also argue that government entrepreneurship programs and lack of internal market dynamics highlight the positive role of digital readiness. Using a sample of more than 400 international observations across 7 years (2010–2016), we find strong support for our arguments. We empirically test the rarely acknowledged link between home country institutions and R&D transfer and shed light on country-level determinants of innovative entrepreneurship as a key source of competitive advantage in global markets. This study contributes to international entrepreneurship literature and augments our knowledge of comparative research on R&D transfer for a global investigation of entrepreneurship development.