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Knowledge-based service economy and firm entry: an alternative to the knowledge spillover theory of entrepreneurship

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  • Alexandra Tsvetkova

    (The OECD Trento Centre for Local Development
    The Ohio State University)

  • Mark Partridge

    (The Ohio State University
    Jinan University
    Gran Sasso Science Institute)

Abstract

Recent research on the determinants of high-tech business entry increasingly relies on the knowledge spillover theory of entrepreneurship (KTSE), which contends that employees-turned-entrepreneurs start new companies in order to commercialize unused local knowledge generated by incumbent firms and universities. Existing literature in the USA context finds a positive relationship between regional knowledge production and (total) high-tech start-up rates, which is interpreted as lending empirical support to the theory. In this paper, we perform a systematic test of the KSTE and show that KSTE-based explanation of business entry is not always consistent with the US firm formation patterns when the analysis gradually shifts from less to more knowledge-intensive environments. We then discuss alternative business entry mechanisms that are more in line with the geographical and sectoral variation in the US high-tech start-up rates.

Suggested Citation

  • Alexandra Tsvetkova & Mark Partridge, 2021. "Knowledge-based service economy and firm entry: an alternative to the knowledge spillover theory of entrepreneurship," Small Business Economics, Springer, vol. 56(2), pages 637-657, February.
    • Handle: RePEc:kap:sbusec:v:56:y:2021:i:2:d:10.1007_s11187-019-00193-2
    DOI: 10.1007/s11187-019-00193-2
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