Iván Hernández

Structural change and the nature of innovative activity: Legal form and firm performance

Summary This paper studies the evolution of legal forms and its effects on innovation and productivity within Colombia’s manufacturing industry. The rise of a private legal structure is evidenced by the strategy of large and powerful conglomerates to increase their size and power by absorbing firms with a public setting. The paper argues that this institutional innovation is sub-optimal since adopting a private limited liability framework excludes intrapreneurial forces from access to ownership. This was the world that the classic political economy and scholars like Schumpeter were concerned with: one in which the institutional change would favour the divorce between ownership and entrepreneurship.

Social Entrepreneurship for the Generation of Networking Capabilities

Supporting networks within and between entrepreneurial companies to facilitate knowledge and innovation diffusion and to drive industrial change and economic growth are important for all countries. In less developed countries, despite a higher proportion of necessity based entrepreneurial firms relative to opportunity based entrepreneurial firms, policy tends to support the latter, leaving the former more vulnerable and exposed. In this paper, we explore the emergent role that individual behavior and networks of necessity-based and opportunity-based firms have in climbing the technological ladder and creating an economy and society capable of undertaking complex activities and adding value. We develop and simulate a model based on network theory, the exploitation and exploration of knowledge and individual and team motivations, and draw conclusions from the analysis about how technological diffusion and growth can stem from increased collaboration of necessity-based and opportunity-based firms within strong inter-firm networks. Our paper contributes to the current debate on the need for social and productive technological change in less developed countries and calls for increased collaboration between the two types of entrepreneurial firms: by generating organizational capabilities to build dense networks of cohesion, trust and inclusiveness, necessity-based firms can be integrated into the networks of opportunity-based firms, providing the conditions to stimulate innovation and growth.

Entrepreneurship, institutional variety and economic development

The contribution of entrepreneurship to economic growth varies across countries at different stages of economic development. The type of entrepreneurship also varies as countries develop: the ratio of necessity-based entrepreneurial firms (new entrepreneurial ventures born to escape unemployment) relative to opportunity-based entrepreneurial firms (new entrepreneurial ventures driven by business opportunities) changes as economies grow. Government has an interest in shaping the institutional environment in a way that supports dynamic entrepreneurial activity and contributes to economic growth. In this paper, we endogenize institutional variety into modern evolutionary models of diffusion; variety not only in organizational structures but also in investment financing of entrepreneurial firms. We discuss how our analysis updates understanding of modern evolutionary models of diffusion and we reflect on the practical implications for policy-makers to support entrepreneurial activities and stimulate economic growth.