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The allocation of entrepreneurial effort and its implications on economic growth

Author

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  • Muñoz, Félix

    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Encinar, María Isabel

    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Otamendi, Francisco Javier

    (Departmento de Economía Aplicada I, Universidad Rey Juan Carlos, Madrid.)

Abstract

The problem to allocate effort to innovation activities is defined and modelled for any single entrepreneur according to its propensity to innovate, which combines pure innovation and rent-seeking strategies. The allocation problem is solved both analytically and via simulation. The individual decisions measured in units of innovation are then aggregated to calculate the innovation quantity for a given population based on the distribution of heterogeneous entrepreneurs. The entrepreneurship rate and the implications for economic growth are also quantified. Consequently, policy makers should focus on reducing the entry barriers and the costs of production in order to stimulate the entrepreneurial activity and maximize the innovation quantity. They should also foster the attitude and propensity towards innovation.

Suggested Citation

  • Muñoz, Félix & Encinar, María Isabel & Otamendi, Francisco Javier, 2013. "The allocation of entrepreneurial effort and its implications on economic growth," Working Papers in Economic Theory 2013/06, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History).
    • Handle: RePEc:uam:wpaper:201306
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    References listed on IDEAS

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    Cited by:

    1. Mihai CIOC & Minodora URSACESCU, 2015. "The Impact Of Eu Grant Support On Innovative Entrepreneurship:Characteristics Of Innovative Start-Ups And Spin-Offs At National Level," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 9(1), pages 209-215, November.
    2. Mihai CIOC & Minodora URSACESCU, 2017. "Innovative Entrepreneurship In A Regional Perspective: An Empirical Research On Romanian Start-Ups," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 11(1), pages 871-877, November.

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    More about this item

    Keywords

    entrepreneurial heterogeneity; propensity to innovate; endogenous growth;
    All these keywords.

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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