Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 1154: Entrepreneurial Experimentation: A Key Function in Entrepreneurial Systems of Innovation

Åsa Lindholm-Dahlstrand (), Martin Andersson () and Bo Carlsson ()
Additional contact information
Åsa Lindholm-Dahlstrand: CIRCLE, Postal: Lund University, Lund, Sweden
Martin Andersson: Department of Industrial Economics, Postal: Blekinge Institute of Technology (BTH), Karlskona; Research Institute of Industrial Economics (IFN), Stockholm; and CIRCLE, Lund University
Bo Carlsson: Department of Economics, Postal: Weatherhead School of Management, Case Western Reserve University, US and CIRCLE, Lund University

Abstract: There is a need for a conceptual approach that, with reference to explicit micro-level mechanisms and processes of industrial dynamics, articulates the role and function of entrepreneurial experimentation in innovation systems. This paper develops the concept of ‘entrepreneurial systems of innovation’ to address this gap in the literature. We argue that entrepreneurial experimentation comprises both ‘technical’ and ‘market’ experimentation, and that entrepreneurship must be conceptualized in terms of its function in innovation systems rather than as an outcome. At the systems level, the central function of entrepreneurial experimentation is to foster creation, selection and scaling-up of innovations. Spinoffs and acquisitions are proposed as examples of micro-mechanisms that give rise to system-wide entrepreneurial experimentation. Interaction between established organizations and new innovative entrants, through spinoffs and acquisitions, is an important characteristic of vibrant entrepreneurial systems of innovation.

Keywords: Entrepreneurship; Experimentation; Innovation systems; New technology-based firms; Entrepreneurial systems of innovation; Scaling up; Growth

JEL-codes: L22; L26; O31; O33

31 pages, February 23, 2017

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