Kathy Fogel, Ashton Hawk, Randall Morck, and Bernard Yeung
This article focuses on institutional obstacles to entrepreneurship. Entrepreneurs carry out a highly complicated composite act. They need intelligence to collect and digest information about business opportunities. They need foresight about the possibilities new technologies and other developments create. They need judgement and leadership skills to found a company and guide its growth. They need communication skills to enthuse financiers to back their vision. The number of active entrepreneurs therefore depends on how many individuals possess these skills. But skills are not endowments. Individuals decide to develop those skills that advance their well being and to forgo developing those that do not. The prospects of a career as an entrepreneur depend on the economic environment, which can be facilitative or detrimental. A multitude of factors determine this environment: rules and regulations, the quality of government, the availability of education, and the ambient culture.
Michael A. Cusumano and Andreas Goeldi
This chapter shows one of the most significant issues facing old and new businesses in the digital age – the development of new business models – and determines a wide range of business models enabled by new platforms for computing and communications over the Internet. It reviews the general impact of the Internet on firm-level strategy (how to compete in particular markets) and business models (how to generate revenues and profits), and then describes how the Internet has caused entrepreneurship and innovation. Entrepreneurs around the world believed that the Internet would develop magical scale economies as millions of users flocked to their websites. Online advertising is a ‘winner-takes-most’ market. The Internet has brought an almost unlimited ability to search the globe for the best products and services at the lowest prices.
This article first makes some clarifications regarding the terminology we use and assumptions we make, simply for expositional purposes. It then outlines the basic tenets of the concept of agglomeration and industrial districts, highlighting the mechanisms by which the spatial grouping of activities and the generation of localized economies of scale may be related. It reviews the various hypotheses which are evident in the literature concerning the relationship between the spatial organization of industrial activity and the spatial patterns of innovation. It explains the current trends in thought about these relationships, pointing out the recent popularity of the concept of a cluster. It then investigates the various notions of clusters and industrial districts from a transactions costs perspective, and provides an assessment of the insights generated from these cluster arguments.