National Innovation Systems and Entrepreneurship

Abstract

Porter (1990) argues that the future battles for competitiveness will not be fought just between organisations but also between nations. Looking at the nation as the unit of analysis, one way to become more competitive is to be innovative. Nelson (1993) directly addresses the innovativeness of nations using the concept of National Systems of Innovation (NSI). These are defined as "a set of institutions whose interactions determine the innovative performance....of national firms" (Nelson, 1993). The main premise of this concept is that innovation is central to competitiveness, and the key driver of innovation is knowledge, "the most fundamental resource in the modern economy" (Lundvall, 1992). NSI serve to stimulate the creation of knowledge. In the process they also stimulate economies, essentially taking on the role of a modern national production system.

In tandem with NSI is the concept of entrepreneurship, which "involves identifying and exploiting opportunities in the external environment" (Hitt et al. 2000), such as the opportunity to commercialise innovation. Given that National Systems of Innovation seek to foster innovation, and entrepreneurship has innovation as a central component, this paper proposes that the existence of a NSI should promote entrepreneurship within an economy. To date, academic research to support this conclusion has been lacking. As a result, this paper offers a preliminary investigation into the relationship between the strength of the national system of innovation within an economy and the level of entrepreneurship occurring within that economy.