Entrepreneurial propensity of innovation systems: Theory, methodology and evidence

This paper develops theoretically, methodologically and empirically the notion of the entrepreneurial propensity of innovation system by integrating knowledge intensive entrepreneurship (KIE) and innovation system (IS) concepts. It first uses a composite index methodology to measure knowledge intensive entrepreneurship and entrepreneurial opportunities at the national level. It then applies cluster analysis based on composite indexes for the EU countries in order to group them by entrepreneurial opportunities. We also assess the influence of a system's complementary activities on the emergence of KIE by partial least squares path modelling (PLS-PM) method. PLS demonstrates that the EPIS is statistically sound concept and that KIE is affected by market, technological and institutional opportunities. The paper provides empirical evidence that institutions affect knowledge-intensive entrepreneurial experimentation not directly but via technology and markets. KIE is market driven process; however, its overall effects are determined not solely by market opportunities but by interaction of market with technological and institutional opportunities. Hence, we show that KIE is a systemic feature of IS and that new knowledge, innovation and entrepreneurship are inseparable elements of a dynamic IS.

► We develop the concept of entrepreneurial propensity of innovation systems.
► We develop indexes of knowledge intensive entrepreneurship and knowledge intensive entrepreneurial opportunities.
► The effects of knowledge intensive entrepreneurship are determined by interaction of market with technological and institutional opportunities.
► A formation of new enterprises is insufficient proxy for knowledge intensive entrepreneurship.
► The results demonstrate strong relevance of systemic policies which take into account co-evolution between three types of opportunities.