From research to entrepreneurship: What role should governments play in joining the dots?

Dr David Yoon
David is an Assistant Professor in International Business. David’s current research interests are social evaluations and entrepreneurship in knowledge-intensive industries, liability of foreignness in international business, and technological innovation in megaprojects.

Do advancements in science and technology lead to the creation of innovative startup companies? And is it a country’s government that should take on the task of translating one into the other? Whilst working on international development projects with some development banks aimed at creating innovation hubs, these are questions that were posed time and again. Innovation hubs are communities of forward-looking firms, universities, incubators, entrepreneurs and government agencies that collaborate with each other to develop cutting-edge technology-based products and services for the marketplace.

 

Contrasting views

There are two sides to this debate. On the one hand there are those who believe in minimal government intervention and control, arguing that bureaucracy creates numerous barriers for entrepreneurs who are naturally inclined to appreciate autonomy and freedom to pursue their interests. On the other hand there are those who favour an interventionist state.

That is, the belief that governments should take risks and help budding entrepreneurs by allocating resources to support their innovation. Motivated by these contrasting viewpoints, I embarked upon an academic research project to understand the role of government in transforming knowledge into innovative entrepreneurship.

 

Science and technology

When considering knowledge, it’s important to distinguish between two kinds of knowledge:

  • Scientific knowledge corresponds to discoveries that are exhibited in, for example, academic journals. It is generally considered difficult for entrepreneurs to take advantage of scientific knowledge in a commercial manner
  • Technical knowledge is frequently referred to as the application of scientific knowledge and is therefore naturally more likely to support commercial exploitation

To find out the extent a government could influence the relationships between these two types of knowledge and subsequently innovative entrepreneurship, my study looked at five areas of government activity including:

  • Size of government defined by its budget
  • Legal structure and security of property rights
  • Access to ‘sound money’ (or money that has purchasing power)
  • Freedom to trade internationally
  • Regulation of credit, labour, and business

 

Interventionist or minimalist?

Interventionist: A higher degree of government intervention strengthens the relationship between scientific knowledge and innovative entrepreneurship. A government can proactively support the development and commercialisation of scientific knowledge with a long-term strategic intent and risk taking commitment.

Minimalist: A lesser degree of government intervention strengthens the relationship between technical knowledge and innovative entrepreneurship.

From looking at data from 47 countries over a period of 11 years, the study showed that technical knowledge has more economic potential than scientific knowledge.

These findings provide some practical solutions for policymakers to redefine the role of government in fostering innovative entrepreneurship. At a time when countries around the world dream of creating the next Silicone Valley it is clear that transforming knowledge into entrepreneurial power is undoubtedly influenced by the State.

Ideally a government should be proactive in making scientific knowledge accessible, whilst the private sector should provide the tools to instil technical knowledge into innovative startup companies.

Combining the best of interventionist and minimalist approaches can effectively drive innovative entrepreneurship. Government funding should go through universities and research institutions to keep the innovative scientific engines running, while venture capital helps put the insights of technical research to practical uses.

Find out more

  • Asset 25 A cross-national study of knowledge, government intervention, and innovative nascent entrepreneurship by D. Yoon, N. Kim, B. Buisson and F. Phillips is available here.
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