ABSTRACT
In a paper exploring the variation in rates of entrepreneurship in the United States from 1899 to 1988, Shane (1996) expanded on the work of Schumpeter (1939, 1947) to explain that it is entrepreneurs, rather than managers in established firms, who are recognizing the opportunities for most of the new production functions. His reasoning was that new technological developments often differ so much from the way current technology works that they cannot be incorporated into the technological framework of existing firms. The conflict between the demands of the new technology and the production function of the established firm means that managers in established firms are less likely than entrepreneurs—who are not reliant on the existing production function—to accept the new technology. With new technologies such as nanotechnologies, entrepreneurship tends to happen at the level of institutions or organizations like university spinouts or corporate start-ups because this is where one can find the vital combination of research and initial investments. Yet the same model is followed: entrepreneurs are not reliant on existing production functions. So when biotech or nanotech entrepreneurs want to utilize the opportunities created by scientific inventions to produce new combinations of production factors, they look for the most favorable environment in which to transform these opportunities into profitable business activities.
