Abstract
This essay uses Edmund Phelps’ new book Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change (Phelps 2013) as inspiration to discuss innovation and entrepreneurship. The book is laudable for its discussion of what constitutes a “good life”. Phelps argues that true life satisfaction cannot be achieved through a purposeless quest for wealth and material consumption, but rather through adventure, entrepreneurship, and creative endeavors. Weaknesses of the book include an overly glossy characterization of the period before World War II, a niggardly evaluation of European innovation, and the lack of convincing empirical evidence for the claim that the rate of innovation has slowed. These flaws are regrettable given the importance of the book’s main message: innovation and creative entrepreneurship are not merely the keys to economic growth, but to life satisfaction as well. This essay discusses topics in entrepreneurship research linked to the book, including the link between innovation and entrepreneurship, the role of institutions for entrepreneurship, and the tendency of national accounts to under-record the social value of innovation and entrepreneurship. If the measures used do not capture the full social value of innovation, we are likely to underestimate the genuine rate of innovation. Government policy may also be misguided. Finally, the challenge to entrepreneurial capitalism posed by the postmodernist research paradigm is discussed.
Notes
Cited from http://www.whitehouse.gov/issues/economy/innovation. Accessed November 14, 2013.
Cited from http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=why. Accessed November 14, 2013. Bold emphasis in the original.
Here, empirical labor economics offers a useful template, where considerable knowledge has been gained from the study of quasi experiments, often using instrumental variable techniques (Angrist and Krueger 2001).
See Schuetze and Bruce (2004) for an overview of research on the effect of taxes on self-employment.
See, for instance, the collection of articles in Handbook of Research on Innovation and Entrepreneurship (Audretsch et al. 2011).
There is one reference to Richard Nelson, but only to an unpublished working paper from 2008. Strangely enough, Phelps does not even cite Hall (2011), which would give some support for him using productivity growth as the main proxy for the rate of innovation.
See Dutta (2012) for details about this index. In the 2012 ranking, the US is in 10th place, superseded by no less than seven European countries along with Singapore and Hong Kong.
Triadic patent families are a set of patents filed at three of the major patent offices: the European Patent Office (EPO), the Japan Patent Office (JPO), and the United States Patent and Trademark Office (USPTO). Patents included in the triadic family are typically of higher economic value: patentees only take on the additional burden of extending the protection of their invention to other countries if they deem it worthwhile.
See Coyle (2011) for a more thorough discussion of the increasing importance of this phenomenon.
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Acknowledgments
I am grateful for financial support from the Marianne and Marcus Wallenberg Foundation and for useful comments and suggestions on an earlier version of this paper from Niclas Berggren, Arvid Malm, Tino Sanandaji, Johan Tralau, Karl Wennberg, and Johan Wennström.
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Henrekson, M. Entrepreneurship, innovation, and human flourishing. Small Bus Econ 43, 511–528 (2014). https://doi.org/10.1007/s11187-014-9551-y
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DOI: https://doi.org/10.1007/s11187-014-9551-y