Enterprise, Innovation and the Enviroment

This report aims to profile the activity of small and medium sized enterprises (SME) operating in the UK's environmental sector. The environmental sector is expected to be critical for the future economic development of the UK supporting a new low carbon economy. As many entrepreneurial and innovative firms require significant funding to support their innovative activities this report specifically investigates the innovation activity and financial requirements UK environmental companies. The survey report highlights the role of a variety of funding sources, including public investment for supporting these firms, particularly those active in R&D. Responding firms show a strong record of performance to date, particularly R&D active companies but also have expectations of additional finance being made available for the future in the form of loans, equity finance and government funding

Survey of the literature on innovation and economic performance

Despite very strong differences in their treatment of technological change in economic theory, both the neoclassical and the more Schumpetarian (and evolutionary) economic approaches often assume that market selection rewards the most innovative firms. However, despite such strong assumptions, empirical evidence on whether innovative firms perform better than non-innovative firms remains inconclusive. If innovators do not grow more, does this imply that market selection fails? And does the different impact of innovation on industrial performance (measured by firm growth and profitability) and financial performance (measured by market value and stock returns) signal differences in how industrial and financial markets react to firm level efforts around innovation? This discussion paper reviews the literature on the interaction between innovation and economic/financial performance, and outlines the way that work within FINNOV Work Package 2 (SELECTION), Co-Evolution of Industry Dynamics and Financial Dynamics, will contribute to better understanding this interaction

Firm growth dynamics under different knowledge regimes: The case of the pharmaceutical industry

The paper studies the dynamics of firm growth and firm size distributions in the pharmaceutical industry from 1950 to 2003 and in the biotechnology industry from the early 1980's to 2003. Growth dynamics are studied in the context of how the size composition of firms changes, how innovation patterns (patents) change, as well as locational decisions of firms (NJ vs. California). Results suggest that Gibrat's law (random growth) does not hold for the majority of the period under observation, and that the growth advantage of small pharma firms increases after the 1980's as the process of innovation becomes more guided and scale intensive and as small firm innovation becomes more persistent. Furthermore, at the end of the 1970's a bimodal firm size distribution emerges in the pharmaceutical industry precisely when a new division of labor between large and small firms sets in. We find that firms located in California are smaller, faster growing and more innovative than those in NJ

Serial innovators in the UK:does size matter?

This article aims to shed light on the presence and importance of a significant number of small firms amongst serial innovators. Contrary to the common expectation in the innovative persistence literature, we posit that small serial innovators also benefit from operating within patterns of creative accumulation. However, it is in the quality of the technology and in the very nature of the knowledge accumulation process that the differences between small and large serial innovators can be found. Using a sample of 811 UK-based, highly innovative companies that patented over 66,000 inventions from 1990 to 2006, we find evidence in support of our theory. While large serial innovators experience higher innovation rates due to the scale of their innovation efforts, small serial innovators benefit more from processes of search depth characterized by the internal recombination of their previous knowledge. We find that important differences exist also in the very nature of the technologies being developed by small and large serial innovators

The Impact of Regulatory Complexity upon Self-regulation: Evidence from the Adoption and Certification of Environmental Management Systems

This article focuses on environmental management systems (EMS) and aims to enhance our understanding of the relationship between environmental state regulation and self-regulation. Unlike previous studies that treat state regulation as uni-dimensional and focus on externally certified forms of environmental self-regulation, this article takes a more nuanced approach. It looks at how direct and indirect state regulation and its stringency influence both non-certified in-house and externally certified adoption of EMS. Methodologically, the study differentiates from previous research by acknowledging the interconnected nature of in-house and external certification decisions, viewing these decisions as sequential. Based on a survey of 2,076 UK firms, findings show that effective environmental protection entails collaboration between environmental state regulation and in-house adoption of EMS. Results also reveal that externally certified EMS substitute for state environmental regulation, filling the void that results from weakening state regulation in the context of neoliberalism

Technological diversification within UK's small serial innovators

This paper investigates the determinants of technological diversification amongst UK’s small serial innovators (SSIs). Using a longitudinal study of 339 UK-based small businesses accounting for almost 7000 patents between 1990-2006, this study constitutes the first empirical examination of technological diversification amongst SMEs in the literature. Results demonstrate that technological diversification is not solely a large-firm activity, challenging the dominant view that innovative SMEs are extremely focused and specialised players with little technological diversification. Our findings suggest a non-linear (i.e. inverse-U shaped) relationship between the level of technological opportunities in the environment and the SSIs’ degree of technological diversification. This points to a trade-off between processes of exploration and exploitation across increasingly volatile technology regimes. The paper also demonstrates that small firms with impactful innovations focus their innovative activity around similar technological capabilities while firms that have introduced platform technologies in the past are more likely to engage in technological diversification.<br/

Entrepreneurial practices in research-intensive and teaching-led universities

In recent years, there has been increased pressure on universities to deliver on their third mission. In the UK context, universities are encouraged to explicitly assume responsibility for facilitating economic growth, with a particular emphasis being given to the role played by the research-led institu- tions. Using a broad definition of entrepreneurial practices in universities, the aim of this paper was to extend the analysis of entrepreneurial activities to teaching-led universities besides their research-intensive counterparts. Results, based on micro-data on over 22,000 academics in the sciences, social sciences, arts and humanities across all higher education institutions in the UK, indicate that the levels and geographical reach of the diverse set of entrepreneurial practices conducted by research-intensive and teaching-led universities differ significantly. The underlying reasons for these differences are explored through the lens of institutional theory and by utilising the Blinder–Oaxaca decomposition technique

Born to be green: new insights into the economics and management of green entrepreneurship

While the number of green start-ups has steadily increased around the world in response to the environmental problems demanding immediate solutions, there are several unresolved questions on the behaviour and performance of such ventures. The papers in this special issue shed light on these issues by underscoring the role of several factors, such as industry life cycles, knowledge spillovers, institutions, and availability of external finance, in shaping decision-making and firm behaviour in green start-ups. This paper highlights the state-of-the art developments in the literature, discusses the key contributions of the papers put together in this special issue and presents a future research agenda for scholars interested in green entrepreneurship

Technological diversification within UK’s small serial innovators

This paper investigates the determinants of technological diversification among UK’s small serial innovators (SSIs). Using a longitudinal study of 339 UK-based small businesses accounting for almost 7000 patents between 1990 and 2006, this study constitutes the first empirical examination of technological diversification among SMEs in the literature. Results demonstrate that technological diversification is not solely a large firm activity, challenging the dominant view that innovative SMEs are extremely focused and specialised players with little technological diversification. Our findings suggest a nonlinear (i.e. inverse-U-shaped) relationship between the level of technological opportunities in the environment and the SSIs’ degree of technological diversification. This points to a trade-off between processes of exploration and exploitation across increasingly volatile technology regimes. The paper also demonstrates that small firms with impactful innovations focus their innovative activity around similar technological capabilities while firms that have introduced platform technologies in the past are more likely to engage in technological diversification