Entrepreneurship, innovation and regional growth: a network theory

Despite the growing acknowledgement that entrepreneurship is an important driver of regional innovation and growth, the role of the networks in these processes has been less formally examined. In order to address this gap, this paper proposes that the relationship between entrepreneurship, innovation and regional growth is governed by a series of network dynamics. Drawing upon aspects of endogenous growth theory and the knowledge spillover theory of entrepreneurship, it is proposed that the nature of the networks formed by entrepreneurial firms is a key determinant of regional growth differentials. In particular, network capital, in the form of investments in strategic relations to gain access to knowledge, is considered to mediate the relationship between entrepreneurship and innovation-based regional growth. It is suggested that network dynamics should be further incorporated into theories concerning the link between knowledge spillovers, entrepreneurship and regional growth. The paper concludes with a series of theoretical, entrepreneurial and policy implications emerging from the study.